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68 comments on Is the Economy Less Sensitive to an Oil Shock?

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Stuart Staniford on October 19, 2005 - 3:24am Permalink | Subthread | Parent | Comments top
Sure - the trade deficit is 5% or so of the economy, and I'm happy to grant you that O(5%) of the energy savings per unit GDP come from outsourcing. Even 10% at this time of night and without going to do a real calculation. But we have a factor of 2 to explain since 1970. There's no way that's outsourcing - that has to mostly be efficiency gains. It isn't particularly hard to think things are 2x more efficient now - just remember what everybody was driving in the US in 1970.
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mw on October 19, 2005 - 3:52am Permalink | Subthread | Parent | Comments top
Sure... "consumer" efficiency has gone up.

My beef with Greenspan et al is that they glow on about how much less energy dependent the economy is... and while there is truth to that, in that some new industries have a low cost component of energy, the bottom line is that we are consuming (there is that word again) more than ever.

Besides... Hummers and 300 HP family wagons probably don't get much worse or better mileage than a souped up Dodge Charger of the past, which, ironically, is now reintroduced with a big engine.

That trade deficit is just going to get larger and larger as oil costs more and more, but somewhere there must be a limit to how much production one can outsource (for lower other costs) before the whole system breaks. On that note... time for a nap!

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