Thursday, February 23, 2012
The above picture shows the amount of gross domestic product produced by the US economy per barrel of oil consumed on a quarterly basis from 1965 through the end of 2011. The data are from the BEA and the EIA and are expressed in $2005.
The graph tells an interesting story. Prior to the late 1970s, the US economy used oil very inefficiently (because it had been very cheap for a long time). After the oil shocks of 1973 and particularly 1979, oil efficiency began to rise rapidly in the early 1980s. Then it slowed down after the price pressure was off, but continued to rise at a steady moderate pace from the late 1980s through the mid 2000s. In the later stages of the 2005-2008 oil shock, it rose sharply, but then appeared to be set back by the great recession. Then in 2010-2011 it has again been rising very sharply, presumably under the influence of fairly high prices.
Overall, there has been a 150% improvement in this ratio since the lows of the mid 1970s. There has been almost a 25% improvement just since the beginning of 2005.
Americans do seem to be slowly getting the message. With sustained high prices, when there is at least modest economic growth, people focus on making their operations use oil more efficiently, and the results are showing up in the national statistics.