Tuesday, September 4, 2012

US Total Energy Consumption Falls To 1998-99 Levels & Energy Efficiency Revolution Quickens

The shale gas revolution properly attracts barrels of ink, but scant attention is paid to another big energy change rolling through homes, offices, factories, and vehicles--the US energy efficiency revolution.

Stunningly, total US energy consumption is back to 1998-99 levels, according to EIA data. Wow!
www.eia.gov/totalenergy/data/monthly/pdf/mer.pdf at page 21.  That demand fact is shaping our economy, environment, the energy business, and the shale gas revolution itself.

Part of the decline is an historical trend to toward more energy efficiency or productivity, apparent since 1973, when the EIA began keeping such data.  In 1973, it took 15.41 thousand BTU to produce one dollar of GDP; by 1995 10.02; and today 7.31 thousand BTU per dollar of GDP.

While the economy became more energy efficient, it still used more total energy each year.  No longer. Total energy consumed peaked in 2007 at 101,926 quadrillion BTU.

Since that peak, total energy consumption declined in 3 out of 4 years from 2008 to 2011. The first 5 months of 2012 indicate that energy consumption this year is on course to drop another 1.5% to about 95.7 quadrillion BTU.  We are going back to the future in total energy consumed.

Some would dismiss this emerging trend toward lower energy usage as simply a function of economic trouble.  But since July 2009, the economy has grown for 13 straight quarters, and our 2012 GDP will be bigger than the 2007 GDP, when energy usage peaked, and considerably bigger than the 1998 or 1999 GDP.

This drop is especially remarkable when one remembers that, like our economy, the US population is 30 million bigger than it was just in 2000. A bigger population; bigger economy; and lower energy consumption. What explains it?

Structural changes in energy markets and consumption are the major explanation for the decline in total energy consumed and the energy intensity of the economy.  Stronger energy standards for buildings, appliances, vehicles have all been adopted in the last 20 years and are creating tipping points. Environmental initiatives like the green building movement have gained momentum and scale.  More people are embracing energy thrift as a personal value.

As individuals, families, companies increasingly go green, more states join California and require electric and gas utilities to invest extra billions to cut usage, as a low-cost way to meet the energy demands of consumers.  Wholesale electric markets have reformed and allow both energy efficiency and demand response to bid into their capacity auctions.  Programs paying electricity consumers to cycle their air conditioning on high heat days are proliferating. As a result, a friend enrolled with three air conditioners enrolled in such a program   tells me that his electric bill was zero in July.

And persistently high oil prices have made consumers of all sorts watch every drop and virtually every one of the 14 million plus vehicles bought annually get close to 20% better mileage than the ones they replace.

All that adds up to a real energy efficiency revolution that is quickening in 2012 and producing a stunning fact of the day!


  1. Our increased outsourcing of manufacturing-energy consumption could explain scores of percent of the drop.

    1. After decades of losing manufacturing jobs, manufacturing jobs increased in 2010, 2011, and are up in 2012. Manufacturing has been a bright spot in the recovery. Again US 2012 GDP is bigger than in 2007, before the Great Recession, and about 40% bigger than in 1998-1999.

  2. I still think it's mostly just the economy. It's true that capacity utilization in the U.S. has gone up a bit from 2009 to 2012 (http://www.federalreserve.gov/releases/g17/current/) but new business investment in the U.S. is still way down. (http://online.wsj.com/article/SB10001424052702304141204577508792418545490.html)