This will no doubt be interesting but why the focus onf "decarbonization" and of the "US economy"
I get that climate scientists have identifide the accumulation of CO2 in the atmosphere as damaging to human health and pros[erity althought the quantifiction of the relationship is still not well undestood. And of course combuation of fossil fuels and adds CO2 to the atmosphere so one very important way of reducing net CO2 emissions is to combust less fossil fuels.
But less fossil fuel combustion has to be balanced against the value that said combustion yields. Therefore "decarbonization" per se seems like the wrong objective since some policies that reduce fossil fuel combustion could have higher costs than benefits of reducing CO2 accumulation.
In addition, decarbonizing the US economy would not make much sense if the measures taken led to greater or offsetting carbonization of other economies.
Grnated all of this is prety conceptual. Anything cost effective policy that we do to contribute to reducing global net emissions of CO2 will entail some "decarbonizing of the US economy, so eacminng that process in this series is worthwhile, but its good to keep in mind that it is a partial indicator of a larger objective.
Very interesting, a few points that I would like to see you explore further
Electricity usage and coal consumption were both increasing in absolute terms until 2008-2010, while decreasing in physical intensity relative to GDP. The argument that electrification was replacing hydrocarbons is in no way supported by the data you presented. It might be true but different decline rates in physical intensity is no evidence of substitution. It could also be a shift whereby energy intensive industry relocates out of the US and less energy intensive industries stay. This would reduce coal intensity but does not equate to a substitution.
Yes. Coal is a more complex story than the other fuel sources because of its industrial use as a feed material for the steel industry - which the US almost completely ceased during the last quarter of the 20th Century. I know petroleum also has non-fuel uses, e.g., as a source for the polymer industry, but none were of the same size as coal in steel making. ... I think?
Interesting perspective on energy use. In shipping we have seen a year-on-year increase in fuel efficiency of 1-1.5% since about 1970. We do not have much in the way of reliable data prior to that. In the same period, trade has increased 2-4% per year, leading to an overall increase in fuel use.
Fuel use in 1970 was around 130 MTOE, today it is north of 320 MTOE. In 1970, around 2.7 billion tons of goods were transported by sea, in 2024 around 12.7 billion tons. More than 99% of this was and still is fossil fuels, the majority being heavy fuel oil. Ships burn the residue from refineries, basically the asphalt that is not used for roads.
I have always said that energy efficiency does not lead to less use of energy. I do not think it should, since the use of energy is not the problem.
As an engineer, my training always focused on how we can get more out of the resources we have, than the ones before us had already managed. That is an eternal goal, built on the wisdom that taking many small steps over time gets you further than waiting for that potential big leap.
This is quite interesting. As someone who has intensively studied energy for some time, I have never looked at it as a function of GDP.
Several people have commented that there has been reduction in energy usage as a function of deindustrialization. That is incorrect. What is fascinating about this article is that energy usage in the U.S. has steadily increased since 1980. The cell phone in everyone's hand uses more energy than your refrigerator when you count the energy used by You Tube to send you cute cat videos.
The conclusion is that use of that energy has allowed GDP to grow faster than the increase in energy usage - at least as far as fossil fuels are concerned. I do not think that conclusion will change once nuclear, hydro and inverter-based resources are added in, but I will be interested u in future installments on this subject and your final conclusions
How does EROEI fit into the picture? We exploit the low-hanging fruit first and then the harder to reach and develop, increasing the costs and reducing the EROI.
At some point, surely all resources will become uneconomic to develop. What then?
Funny thing, that. I was working in R&D within oil&gas recovery, and especially on enhanced recovery of existing wells, back in time. I was a bit perplexed by the idea that we had figures on what was already produced, what were planned reserves, what were known reserves and even what was unknown reserves. How could we have numbers on unknown reserves?
Then I saw an article on copper. It had a paragraph showing how much had been produced by 1970, and what was the published "known reserves" at that point in time. Then it showed that in 1990, what had been produced by then was twice the sum of the two figures in 1970, and the new "known reserves" were now similar to what had already been produced by 1990. The conclusion was that "known reserves" is an important figure for the market, since indicating a huge reserve brings prices down. So the "known reserves" is also market driven.
We also see that high cost of crude oil increases reserves, as more assets become economical.
The world has never run out of a nonrenewable resource because the economic signals for those resources are relatively easily managed by market mechanisms. Scarcity (or abundance, for that matter) drives prices in a way that incentivizes people to adjust supply and/or demand appropriately.
No. It is observed human behaviour with no known exceptions.
Behaviour not only adjusts consumption, it also substitutes alternatives. As needed, we will find efficiencies in usage of copper and fossil fuels and, eventually, substitutes. the same is true for steel, aluminium and all the other "necessities" of our current lives.
I made one edit to my original statement, which is to swap out "adjust consumption" for "adjust supply and/or demand", which is more accurate for how that mechanism operates. You may think that this is "over simplistic", but that's been the reality. Do you know how many times there have been prophecies of doom about various nonrenewable resources that always turn out to be proven wrong? Roger even mentions several of them in his article. And yes, even "ffs, copper" is not immune to this.
The irony of this is that the world has indeed run out of multiple renewable resources. It turns out market mechanisms don't work very well in many of those cases.
In 1969 I took my first Freshman geology course. I was told that we are running out of oil and gas. 57 years later, during which I have had a long career in O&G, I keep hearing the same thing. Technical advances in O&G extraction keep pushing the time farther and farther into the future.
The answer to your question is: We don’t have a firm answer. Most experts in the field believe that we have a 50+ year supply of natural gas in the U.S. and a 50+ year supply of proven oil reserves globally. However, how much reserves we have depends on the price. The higher the price, the more economically recoverable O&G we have and the larger the reserves numbers is.
The other unknown is future technological advances. The shale revolution was a true game changer. We have known for years that shales were full of oil, but we did not know how to get it out. In 2005, the U.S. was producing around 5.5 million barrels of oil per day (MMBOPD) Now we are at 13,828 MMBOPD. The next frontier is secondary recovery within the shales. At present we are recovering around 5%-10% of the oil in place in shales. Pilot studies suggest that we may be able to get that number up to 30%
We cannot ignore the fact that the shift from energy-intensive heavy industry to energy-light services and electrification has had both good effects and serious strategic risks. I recall driving through St. Louis and the Kanawa River valley of West Virginia in 1963. I coughed my lungs out in air I could see. Snow in Pittsburgh used to be grey, not white, from the cinders puffed out of the steel mills thereabouts. That foul air and those cinders are gone now, but so are the steel mills and coal-fired chemical plants that created them. Nowadays the US makes 80 million tons/year of steel, just 4.2% of the world's total. China makes 950 million tons of steel per year, 50% of the world's total. Where would the advantage lay, to produce warships and cargo ships in a hot war? I understand that the US makes about 600,000 Nato-standard 155 mm artillery shells per year, and is hoping to expand that to 1,200,000 per year some time in 2026. The Russian equivalent, their 152 mm shell, is currently rolling out of Russian forges at the rate of 3 million shells per year. Drones? Russia fires 600 home-made drones PER DAY at Ukraine. Here in the US, try to go buy yourself a drone that is not made in China.
My father was an infantryman in WWII, made four amphibious landings, was awarded the Bronze Star for service at Anzio. To the end of his life he had a healthy respect and dread of the prowess of WWII's German soldiers. "We never did out-fight them," he told me once. "We just out-produced them, is all." The US may still be the world's largest economy, but we should not delude ourselves that we can out-produce China, or Russia, or both in making the weapons of hard power.
The shriveled state of our heavy industry is simply not up to it.
In my opinion the strategic implications are profound.
Roger, this is a great article and very well researched. I got to wondering about the timeline and geopolitical, policy, trade agreements, and the change in energy consumption as America offshored industries to China and other low cost countries, and did some analysis. These charts are interactive - enjoy. Can't wait for Vol2. https://rpielke-energy-intensity-vol1-rlf.netlify.app/
Same in Australia. However, that reduction in electricity demand which was dominated by coal and some gas fired generation is now being offset by the growth of data centres. Coal is still the dominant means of power generation in Australia (59% over last 12 months), all done with ageing power stations
I had come to make a similar comment. While this industry movement would not have much impact on gasoline usage, I was thinking that coal, gas and electricity generation would drop as the US moved to more of a service economy and energy usage for manufacturing would have just been moved overseas
Great historical perspective on energy trends and associated costs. Would your gasoline related charts include aircraft fuel? I would guess that fraction is increasing but still small. Your opening cartoon suggests suggests fossil fuels and energy in general has been holding back humankind and we're finally "breaking free." I don't know what an optimal picture would look like but energy abundance the associated fossil fuel consumption his lifted humanity up as opposed to tying it down (grumpy perspective from a retired oil&gas Geophysicist).
One more point, there was a huge decrease in the number of farmers, farms and ranches in the 1980s. Also, the new EPA rules shut down almost all mining. My family went from a family of farmers to a family of store owners in that period. Why? The cost of diesel. The remaining farmers had to use diesel more efficiently, you wouldn't believe how much diesel it takes to work a farm or a mine. With farms consolidating and becoming more efficient and mines disappearing, diesel consumption plummeted.
Great, informative article! Physical energy units of measure don’t change over time, but dollar units of economic expenditure do. I see that “ real GDP “ implies inflation adjusted dollars as the economic unit of measurement, but what does that really mean? What is Claude AI‘s adjustment mechanism for calculating economic changes over time, and to what extent is it reliable in comparing varying economic conditions?
The U.S. is a bit of a special case. The period after 1980 saw the effects of EPA regulations, the movement of U.S. industry overseas, and the transition from a manufacturing economy to a services economy. Not to mention a rapid increase in productivity, which was partially a function of technology, but mostly a function of exporting manufacturing. The picture globally is very different. The fossil fuel use (especially coal use) did not disappear, it simply moved. See here:
Overall a solid article with good analysis and supporting data. Perhaps send this to the NYT and WAPO as an example as to how to incorporate such things into their journalism.
Two things really stand out to me, firstly, how good markets are at increasing efficiency and thereby lowering costs and secondly, how really bad government planners are at seeing the future and directing economic activity.
It’s a great observation that in 1978 congress decreed that all new electricity generation be coal as they thought we were running out of natgas. We live under a mountain of inexpensive natgas. Also, the nuclear regulatory commission, since its founding in 1974 has succeeded in stopping almost all new reactors through unnecessary regulation on construction standards that significantly increase costs and delay construction.
Were it not for this, and other harmful government intervention in energy markets, we’d have more natgas and nuclear electricity generation and a lot less higher cost, unreliable renewable generation that has led to increases in retail electricity prices.
Lastly, as a nation, we have a real cost advantage in most types of energy intensive manufacturing. That’s what should get re-shored quickly as we have a structural cost advantage that can overcome higher labor costs in many instances.
This will no doubt be interesting but why the focus onf "decarbonization" and of the "US economy"
I get that climate scientists have identifide the accumulation of CO2 in the atmosphere as damaging to human health and pros[erity althought the quantifiction of the relationship is still not well undestood. And of course combuation of fossil fuels and adds CO2 to the atmosphere so one very important way of reducing net CO2 emissions is to combust less fossil fuels.
But less fossil fuel combustion has to be balanced against the value that said combustion yields. Therefore "decarbonization" per se seems like the wrong objective since some policies that reduce fossil fuel combustion could have higher costs than benefits of reducing CO2 accumulation.
In addition, decarbonizing the US economy would not make much sense if the measures taken led to greater or offsetting carbonization of other economies.
Grnated all of this is prety conceptual. Anything cost effective policy that we do to contribute to reducing global net emissions of CO2 will entail some "decarbonizing of the US economy, so eacminng that process in this series is worthwhile, but its good to keep in mind that it is a partial indicator of a larger objective.
Very interesting, a few points that I would like to see you explore further
Electricity usage and coal consumption were both increasing in absolute terms until 2008-2010, while decreasing in physical intensity relative to GDP. The argument that electrification was replacing hydrocarbons is in no way supported by the data you presented. It might be true but different decline rates in physical intensity is no evidence of substitution. It could also be a shift whereby energy intensive industry relocates out of the US and less energy intensive industries stay. This would reduce coal intensity but does not equate to a substitution.
Yes. Coal is a more complex story than the other fuel sources because of its industrial use as a feed material for the steel industry - which the US almost completely ceased during the last quarter of the 20th Century. I know petroleum also has non-fuel uses, e.g., as a source for the polymer industry, but none were of the same size as coal in steel making. ... I think?
Excellent information and look forard to the next pats of this series
<Edited typo 5 March, changing MBOE to MTOE>
Interesting perspective on energy use. In shipping we have seen a year-on-year increase in fuel efficiency of 1-1.5% since about 1970. We do not have much in the way of reliable data prior to that. In the same period, trade has increased 2-4% per year, leading to an overall increase in fuel use.
Fuel use in 1970 was around 130 MTOE, today it is north of 320 MTOE. In 1970, around 2.7 billion tons of goods were transported by sea, in 2024 around 12.7 billion tons. More than 99% of this was and still is fossil fuels, the majority being heavy fuel oil. Ships burn the residue from refineries, basically the asphalt that is not used for roads.
I have always said that energy efficiency does not lead to less use of energy. I do not think it should, since the use of energy is not the problem.
As an engineer, my training always focused on how we can get more out of the resources we have, than the ones before us had already managed. That is an eternal goal, built on the wisdom that taking many small steps over time gets you further than waiting for that potential big leap.
This is quite interesting. As someone who has intensively studied energy for some time, I have never looked at it as a function of GDP.
Several people have commented that there has been reduction in energy usage as a function of deindustrialization. That is incorrect. What is fascinating about this article is that energy usage in the U.S. has steadily increased since 1980. The cell phone in everyone's hand uses more energy than your refrigerator when you count the energy used by You Tube to send you cute cat videos.
https://www.eia.gov/todayinenergy/detail.php?id=4690
The conclusion is that use of that energy has allowed GDP to grow faster than the increase in energy usage - at least as far as fossil fuels are concerned. I do not think that conclusion will change once nuclear, hydro and inverter-based resources are added in, but I will be interested u in future installments on this subject and your final conclusions
How does EROEI fit into the picture? We exploit the low-hanging fruit first and then the harder to reach and develop, increasing the costs and reducing the EROI.
At some point, surely all resources will become uneconomic to develop. What then?
Funny thing, that. I was working in R&D within oil&gas recovery, and especially on enhanced recovery of existing wells, back in time. I was a bit perplexed by the idea that we had figures on what was already produced, what were planned reserves, what were known reserves and even what was unknown reserves. How could we have numbers on unknown reserves?
Then I saw an article on copper. It had a paragraph showing how much had been produced by 1970, and what was the published "known reserves" at that point in time. Then it showed that in 1990, what had been produced by then was twice the sum of the two figures in 1970, and the new "known reserves" were now similar to what had already been produced by 1990. The conclusion was that "known reserves" is an important figure for the market, since indicating a huge reserve brings prices down. So the "known reserves" is also market driven.
We also see that high cost of crude oil increases reserves, as more assets become economical.
The world has never run out of a nonrenewable resource because the economic signals for those resources are relatively easily managed by market mechanisms. Scarcity (or abundance, for that matter) drives prices in a way that incentivizes people to adjust supply and/or demand appropriately.
You appear to be saying that we can’t run out of our resources such as ffs, copper etc because the price mechanism will always adjust behaviour.
I think that is over simplistic and ignores the certainty of a falling EROI at some point.
No. It is observed human behaviour with no known exceptions.
Behaviour not only adjusts consumption, it also substitutes alternatives. As needed, we will find efficiencies in usage of copper and fossil fuels and, eventually, substitutes. the same is true for steel, aluminium and all the other "necessities" of our current lives.
I made one edit to my original statement, which is to swap out "adjust consumption" for "adjust supply and/or demand", which is more accurate for how that mechanism operates. You may think that this is "over simplistic", but that's been the reality. Do you know how many times there have been prophecies of doom about various nonrenewable resources that always turn out to be proven wrong? Roger even mentions several of them in his article. And yes, even "ffs, copper" is not immune to this.
The irony of this is that the world has indeed run out of multiple renewable resources. It turns out market mechanisms don't work very well in many of those cases.
In 1969 I took my first Freshman geology course. I was told that we are running out of oil and gas. 57 years later, during which I have had a long career in O&G, I keep hearing the same thing. Technical advances in O&G extraction keep pushing the time farther and farther into the future.
Have a Snickers. It is going to be a while 😃😃😃
I’ll pass on the snickers thanks.
I agree that it’s going to be a while, but it still leaves my question unanswered.
If you don't have the patience to wait for the answer, we can't help you. :)
The answer to your question is: We don’t have a firm answer. Most experts in the field believe that we have a 50+ year supply of natural gas in the U.S. and a 50+ year supply of proven oil reserves globally. However, how much reserves we have depends on the price. The higher the price, the more economically recoverable O&G we have and the larger the reserves numbers is.
The other unknown is future technological advances. The shale revolution was a true game changer. We have known for years that shales were full of oil, but we did not know how to get it out. In 2005, the U.S. was producing around 5.5 million barrels of oil per day (MMBOPD) Now we are at 13,828 MMBOPD. The next frontier is secondary recovery within the shales. At present we are recovering around 5%-10% of the oil in place in shales. Pilot studies suggest that we may be able to get that number up to 30%
Thank you. I have little doubt that these resources will last for longer than many currently think, but it remains certain that they are not infinite.
We cannot ignore the fact that the shift from energy-intensive heavy industry to energy-light services and electrification has had both good effects and serious strategic risks. I recall driving through St. Louis and the Kanawa River valley of West Virginia in 1963. I coughed my lungs out in air I could see. Snow in Pittsburgh used to be grey, not white, from the cinders puffed out of the steel mills thereabouts. That foul air and those cinders are gone now, but so are the steel mills and coal-fired chemical plants that created them. Nowadays the US makes 80 million tons/year of steel, just 4.2% of the world's total. China makes 950 million tons of steel per year, 50% of the world's total. Where would the advantage lay, to produce warships and cargo ships in a hot war? I understand that the US makes about 600,000 Nato-standard 155 mm artillery shells per year, and is hoping to expand that to 1,200,000 per year some time in 2026. The Russian equivalent, their 152 mm shell, is currently rolling out of Russian forges at the rate of 3 million shells per year. Drones? Russia fires 600 home-made drones PER DAY at Ukraine. Here in the US, try to go buy yourself a drone that is not made in China.
My father was an infantryman in WWII, made four amphibious landings, was awarded the Bronze Star for service at Anzio. To the end of his life he had a healthy respect and dread of the prowess of WWII's German soldiers. "We never did out-fight them," he told me once. "We just out-produced them, is all." The US may still be the world's largest economy, but we should not delude ourselves that we can out-produce China, or Russia, or both in making the weapons of hard power.
The shriveled state of our heavy industry is simply not up to it.
In my opinion the strategic implications are profound.
It sure looks as if we are just exporting our energy intensive industry which should focus on non-energy intensive design, paper shuffling and finance. See https://www.higherrockeducation.org/glossary-of-terms/balance-of-trade
Not all bad bad but sure looks to be correlated to you other graphs.
Roger, this is a great article and very well researched. I got to wondering about the timeline and geopolitical, policy, trade agreements, and the change in energy consumption as America offshored industries to China and other low cost countries, and did some analysis. These charts are interactive - enjoy. Can't wait for Vol2. https://rpielke-energy-intensity-vol1-rlf.netlify.app/
Fantastic!
You forget we transferred a lot of our industry abroad.
Same in Australia. However, that reduction in electricity demand which was dominated by coal and some gas fired generation is now being offset by the growth of data centres. Coal is still the dominant means of power generation in Australia (59% over last 12 months), all done with ageing power stations
I had come to make a similar comment. While this industry movement would not have much impact on gasoline usage, I was thinking that coal, gas and electricity generation would drop as the US moved to more of a service economy and energy usage for manufacturing would have just been moved overseas
Great historical perspective on energy trends and associated costs. Would your gasoline related charts include aircraft fuel? I would guess that fraction is increasing but still small. Your opening cartoon suggests suggests fossil fuels and energy in general has been holding back humankind and we're finally "breaking free." I don't know what an optimal picture would look like but energy abundance the associated fossil fuel consumption his lifted humanity up as opposed to tying it down (grumpy perspective from a retired oil&gas Geophysicist).
Don’t take the header images here too seriously 😎
One more point, there was a huge decrease in the number of farmers, farms and ranches in the 1980s. Also, the new EPA rules shut down almost all mining. My family went from a family of farmers to a family of store owners in that period. Why? The cost of diesel. The remaining farmers had to use diesel more efficiently, you wouldn't believe how much diesel it takes to work a farm or a mine. With farms consolidating and becoming more efficient and mines disappearing, diesel consumption plummeted.
Great, informative article! Physical energy units of measure don’t change over time, but dollar units of economic expenditure do. I see that “ real GDP “ implies inflation adjusted dollars as the economic unit of measurement, but what does that really mean? What is Claude AI‘s adjustment mechanism for calculating economic changes over time, and to what extent is it reliable in comparing varying economic conditions?
Thanks!
Claude just relies on OMB and BEA data for this, no novel methods. The econ data will be in the full spreadsheet shared in part 3.
The U.S. is a bit of a special case. The period after 1980 saw the effects of EPA regulations, the movement of U.S. industry overseas, and the transition from a manufacturing economy to a services economy. Not to mention a rapid increase in productivity, which was partially a function of technology, but mostly a function of exporting manufacturing. The picture globally is very different. The fossil fuel use (especially coal use) did not disappear, it simply moved. See here:
https://ourworldindata.org/grapher/global-fossil-fuel-consumption?time=1940..latest
Good point. Could U.S. special case be expanded incorporate most first world democracies?
Interesting stuff and great charts (courtesy of you & AI). Look forward to the rest of the series. Keep up the good work!
Overall a solid article with good analysis and supporting data. Perhaps send this to the NYT and WAPO as an example as to how to incorporate such things into their journalism.
Two things really stand out to me, firstly, how good markets are at increasing efficiency and thereby lowering costs and secondly, how really bad government planners are at seeing the future and directing economic activity.
It’s a great observation that in 1978 congress decreed that all new electricity generation be coal as they thought we were running out of natgas. We live under a mountain of inexpensive natgas. Also, the nuclear regulatory commission, since its founding in 1974 has succeeded in stopping almost all new reactors through unnecessary regulation on construction standards that significantly increase costs and delay construction.
Were it not for this, and other harmful government intervention in energy markets, we’d have more natgas and nuclear electricity generation and a lot less higher cost, unreliable renewable generation that has led to increases in retail electricity prices.
Lastly, as a nation, we have a real cost advantage in most types of energy intensive manufacturing. That’s what should get re-shored quickly as we have a structural cost advantage that can overcome higher labor costs in many instances.