 | The Failure of Networked Systems: The Repercussions of Systematic Risk | The Oil Drum: Australia/New Zealand | Oil Supply and Petrol Prices |  |
112 comments on Oil, House Prices, Credit? Three parts of the same story
Comments can no longer be added to this story.
| Show without comments | PDF version
112 comments on Oil, House Prices, Credit? Three parts of the same story
Comments can no longer be added to this story.
| Show without comments | PDF version
User login
Contact
- anz at theoildrum dot com
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
Archives
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
GAIA Host Collective
The whole energy intensity measure is flawed mightily. It uses GDP in the denominator and that is the flaw. GDP is a horrible measure of the economy since it includes all dollar transactions as income. It does not correct for maintenance and defensive spending such as repairs from hurricane Katrina or the military budget. It is not a measure of the health of the economy; most economists know this, but argue we haven't got anything better.
Then consider that we now claim to have a service economy. If you take a hard look at what these so-called services entail you discover that most of them are just moving paper (or bits) around from one place to another. Or they involve fast food and broker services. Each of these kinds of jobs involves far less energy consumption than, say, automaking. These are the jobs that have accounted for most of the growth over the last twenty years or so. I'm betting that the growth of the service sector will go a long way to explain the reduction in energy intensity. Use a corrected GDP and I bet most of this so-called efficiency disappears. Actually I bet a lot of the so-called growth disappears as well.
Question Everything
George
George Mobus:
Energy efficiency is a tricky thing. Alone, it will not solve our problems. As our economy has grown more energy efficient, energy consumption has risen - contrary to what the New York Times continuously advocates. Look at this chart from the EIA:
www.eia.doe.gov/pub/international/iealf/tablee1g.xls
Our btu's per dollar gdp has dropped significantly, yet energy consumption is rising - the EIA expects these trends to continue. This situation is even more interesting in the automobile sector.
A recent study by the National Commission on Energy Policy examined the federal mandate for automakers to meet certain efficiency targets, the Corporate Average Fuel Economy (CAFÉ) standard. The Commission found that even if Congress forced the U.S. auto fleet to raise its average fuel economy from 27.5 to 44 miles per gallon (a massive increase of 60%), fuel consumption would still jump by nearly 4 million barrels of oil per day by 2025. The Jevons Paradox at work.
Well understood in modern economics, the Jevons Paradox is a very important concept when it comes to energy efficiency. William Jevons first described the phenomena in his 1865 book, The Coal Question. Increasing the efficiency with which a resource is used tends to increase (not decrease) the rate of consumption of that particular resource.
Jevons first discovered the idea after observing England's consumption of coal soon soared after James Watt introduced his coal-fired steam engine, which greatly improved the efficiency of the previous design by Thomas Newcomen.
What this really means is we need "all of the above" approach that McCain discusses. We need more energy solutions such as clean coal, EOR, CCS, etc.
Which all assumes that demand reduction is impossible.
By which reasoning, Melbourne and Brisbane's reduction of water consumption which has happened over the last decade was impossible, and that we should still have most people being smokers, and the Chinese should still have a big opium problem.
Efficiency goes up -> cost goes down -> usage goes up
That can be attacked in the middle, with cost. Peak oil by itself could do some of that, the state of the economy could increase the relative cost vs. income, and carbon taxes could increase the cost (capturing what would otherwise go to an oil company windfall).