Energy-Supply Security and Energy Intensity: Some Observations from the 1970–2005 Interval

Abstract

As a consequence of the powerful changes that have occurred over the last three decades in the principal ‘drivers’ of economic change, there have been significant realignments in the global patterns of production and consumption of natural resources, as well as in the intensity of their use, in the quest to raise the level of material wellbeing throughout the world. In this paper, three large energy-consuming (and/or -producing) countries are examined – the USA, China and Russia – and the story of a generation's economic progress (or decline, as the case may be) is seen through the lens of energy consumption – the ‘stuff’ that fuels a modern ‘standard of living’. After presenting data on gross domestic product, population, the observed levels and annual growth rates of consumption and production of three fuel minerals over a 35-year interval ending in 2005 for these countries and for the world, the paper includes a description of these countries' growing import dependence (or, as the case may be, their enhanced or reduced role as an exporter to the world economy) for some, or all, of these critical resources over this time period. These changing trends contribute to one of today's ‘front-burner’ public policy issues: energy-supply security. The last section of the paper examines the changing ‘intensity-of-use’ of oil and total energy. The paper concludes with some remarks on the geopolitical/environmental dilemma associated with these energy resources, which is intensifying as we approach the beginning of the second decade of the twenty-first century.

Acknowledgements

I am grateful to Linda Doman of the Energy Information Agency at the US Department of Energy for providing me with the fossil fuel and total energy consumption data, as well as the GDP and population data covering the 1970–2005 period used in this study.

I thank Rod Eggert, Director of the Division of Economics and Business at the Colorado School of Mines in Golden, Colorado, who facilitated my visit to CSM in the summer of 2008, where most of the work for this paper was carried out. I thank Claudia Binaghi for her great help in preparing the tables that gathered all the disparate data from many sources and organized them efficiently so they tell a coherent and convincing story of the changing role resources play over a large slice of time for three large global players. Finally, I acknowledge the Department of Economics and Finance, the School of Business and the Global Education Center at Montclair State University, who, jointly provided the required funding that enabled me to present the paper at the Tenth Annual Conference of the National Business and Economics Society in March 2009 on St. Kitts, BWI.

Notes

Because this paper is ‘data-intensive’ and the data come from different sources (and, more importantly, are of uneven quality for some years and countries), it is useful to document the sources of the data, some of the problems that were encountered with this data, as well as how these problems were resolved. The macro-economic data – population and GDP levels (expressed in 2000 $US, ppp) – were provided by the Energy Information Agency of the US Department of Energy (EIA/DOE). The production data for the three energy minerals – coal, natural gas and petroleum – were obtained from the BP Statistical Review of World Energy (June 2008). As was mentioned, generally speaking, minerals data for Russia (proper) were not available before 1991. Therefore, some accommodations had to be made using the production data of the Soviet Union in 1970 and 1980 to estimate production levels for Russia in those years, and they were based on more recent ratios of Russia/former Soviet Union output levels (see the relevant footnotes in Tables 5A–C for the specific shares used to estimate Russian production levels of the energy minerals for 1970 and 1980). The consumption levels of the fuel minerals and the total energy consumption levels were provided by the EIA/DOE. Since the consumption and production data are from different sources, for those knowledgeable about minerals data – especially data from 35 years ago – it would be nothing less than miraculous if world consumption and world production were equal. In my opinion, this loss of precision does not impair the general trends displayed by the data over the 35-year interval, nor the conclusions that are based on the analysis of the data.

 Despite these obstacles – and the compromises they triggered – I believe that the tables in sections three and four still tell a credible story of the growing dependence on imported energy resources by the US and China and the potential geopolitical consequences that could bring, despite the increasing efficiency of energy over time for these two large consumers of one of the principal components of modern living standards.