Intensity Of Energy Use In The U.S.A.: 1949 - 2003

Abstract

The particular role that energy plays in the economy of a country, and the relationship between energy consumption and economic growth are of interest to researchers, analysts, and policymakers. Energy consumption can be seen as either a cause of, or a symptom of economic growth. Therefore, understanding the nature of the interactions between energy consumption and gross domestic product (GDP) can help guide energy policies. This paper examines the energy-GDP relationship in the U.S.A. One common method used in analyzing the energy-GDP relationship is energy intensity (also called the intensity of energy use (IEU)), which is the amount of energy required to produce a unit of income (GDP). The paper begins with a substantial literature review of energy intensity studies from around the world. A summary of the findings is discussed, including the factors that were found to directly influence the intensity of energy use. The Kuznets environmental curve is then presented and used in developing a model for the IEU. The model is then tested with data for the U.S.A. from 1949 – to 2003. The results show that energy consumption is very sensitive to energy prices, which in turn impacts the GDP, and that the IEU has declined in the U.S.A. for the period tested, fitting the downward slopping segment of the Kuznets curve. These results imply that energy conservation policies are desirable.