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.