Okay, welcome back to Energy 101. we're talking about energy and society
and how society and energy is coupled and why society likes to use energy.
And today we're going to focus on, well, energy and the economy.
How's the economy is affected by energy or energy consumption is affected by the
economy. the, we're reminding ourselves that, of
the flow, the energy flow in society where the society use is the, the tail
that wags the dog that creates the need to use the earth's natural resources and
then convert that energy into the form. That society wants.
The linkage between energy use and the economy has been studied and is fairly
clear in the literature. What this graph shows is the change from
the previous year of energy use, which is the blue.
is energy used which is the red line, excuse me, and the gross domestic product
in the US which is the blue line and, from 2000 and 2009, it shows the, the
change in energy consumption and the change in the economy measured by the
gross domestic product from the prior year.
Is it just from the prior year. So you see from 2000 to 2001, there was a
drop in the gross domestic product, because we were dealing with a recession
then, and a slow down of the economy. And then there was a growth up until
about 2004, and the GDP majored on the blue line
there and energy consumption increased also.
then it started declining and it fell off the curve in 2008 when we had a major
recession, which dropped the economy into a recession and dropped energy
consumption into a recession. Both numbers going negative compared to
the previous year's use. So we could look at many, many types of correlations like
this, but if you look at the literature, you'll find that there's an
indistinguishable linkage between energy consumption and GDP, not just in the US,
but worldwide and we'll see that later on.
Another connection in between the economy and energy consumption is that when
energy demand decreases worldwide then the energy price decreases.
We could say the flip side of that also. And talk about the fact that an increase
energy ban world wide increases energy price.
But let's look at the energy price history here.
From 1986 over to 2012. this is oil price in particular and we're
looking at the demand for oil and the, over this period.
and what the economy was doing. you see the big spike there in 2008 when
oil reached as high as $150 a barrel. A barrel of oil is 42 gallons.
That's crude oil. And here it shows it at about 130.
But the difference between that is that 130 is an average over the year.
So it's a, we saw that it peaked. And that declined very rapidly from 2007
up to 2008. And we see that.
the price increased dramatically. As soon as the major recession came in
2008, you can see the price absolutely plunged from an average of $130 a barrel
all the way down to $40 a barrel.That's a factor of Three drop.
And you notice the, the price drops faster than it rises, because the economy
generally changes faster on the down side than it does on the up side.
We can it's easy to have the The economy fall off a cliff is a little more
difficult to grow it, and climb, climb back up the mountain, takes a little
longer. But there's a distinct relationship there
and it takes a while for people to slow down their oil production, so if you put
a surplus of oil out there And everybody's tanks are full, and nobody
has anywhere to put it, and nobody's using it, then the price effectively goes
almost to zero. If you put out a barrel of oil for sale,
and nobody's got a need for it or a place to store it Then the value goes down
dramatically, and that's what happened in 2008.
It has since climbed back up, and it's about $80 or $90 at this point in time.
So, we see a linkage between the price of energy, in this particular case, oil.
Which is more volatile than other forms of energy and the economy.
if you look at the developing countries, the, let's look at national standards of
living. the standard of living is something
that's difficult to get a quantitative measure on but the Per universal major
that is used is the gross domestic product that we looked at earlier.
And if you improved the gross domestic product, people generally accept that you
improve the standard of living. Because you're producing more goods with
the same number of people. And if you raise everybody's standard of
living on the average. But we'll see that it also increases
energy consumption. There's a linkage between standard of
living measured by gross domestic product and energy consumption.
So let's look at some, some quantitative data here.
This is a plot on the vertical scale that shows gross domestic product per capita
and there's plotted on that graph several countries.
Along the horizontal axis, it's the energy used per capita.
So we are plotting the energy, the gross domestic product per capita on the
vertical scale versus energy used per capita.
And start off with the US all way up to the right hand corner.
U.S. is up at the right hand corner using
about 7 units of energy per capita. And the gross domestic product per
capita, which is a measure of the standard of living, a good quantitative
measure, is about 37. if we move over to the left, you can see
[INAUDIBLE] is up almost equal to our gross domestic product per capita.
But they are using it much more efficiently.
but generally, as you move to lower energy use per capita, the standard of
living, measured by the gross domestic product, declines.
You move on down, you see France. Is down about 25 gross domestic product
dollars per capita, and their energy consumption is about four.
Saudi Arabia, I put that one on there to show, that, they're using a lot more
energy than they're Economy indicates, or economic activity.
But they, one reason is, is they have very cheap energy.
They produced it and they've got a lot of surplus.
And it's a major export. And they supply it through their citizens
in a very subsidized manner. So that was a little bit off the chart
but if you take that one off the chart which is an outlier, then you can see a
good correlation. Let's move all the way down to China.
You see that China is a devloping nation and it's down about 1 and 3 quarter
Energy used per capita. And with about a 10 gross domestic
product per capita. If they were to rise to it.
Now, remember, this is per capita. If they were r-, were to rise to our
standard of living, measured by gross domestic product per capita.
Then, their energy use would go up. To around, 6 or so.
So it would go up about a factor of 3 or 4.
And, but the, you've got to remember, this is per capita.
They have three times more people than we have in the U.S.
And, so, their energy consumption would far outscale ours.
And that's one thing that frightens people, is that look at China and see
them climbing up this energy use per capita line correlation as they are
trying to improve the standard of living for their citizens, and the implications
on Worldwide energy supply and the resource.
you, you move on down. India's another one you hear about as a
developing nation, is down all the way down in the left bottom corner but this
shows that the standard of living. Measured by the gross domestic product
per capita is closely correlated with the energy use per capita.
So if you want to move up the ladder to a better standard of living in any of these
countries, including our own, then you would means, that you're going to use
more energy per capita. So what were seeing here, is a linkage
between, in society, between the economy and energy use, and this will conclude
our Our subtitle section under society and energy.
And we'll move down next time to where we get this energy from in the next module
from the natural energy flow. where are we getting it from.
Where is the energy coming from that we're using today? Thank you.