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Energy Consumption per Unit of GDP Decreases in Missouri

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In the previous post, I found that the amount of energy consumed per person per year grew until 2007, then decreased, and now has begun increasing again. Overall, there was no trend toward reduced energy consumption per person. This post looks at similar data, except instead of looking at energy consumption per person, I look at energy consumption per unit of GDP. A state’s GDP is the total amount of goods and services produced in the state during a given year.

Figure 1. Data source: U.S. Dept. of Energy and Bureau of Economic Analysis.

Figure 1. Data source: U.S. Dept. of Energy and Bureau of Economic Analysis.

Figure 1 at right shows how many thousands of British Thermal Units (Btus) of energy were consumed per dollar of Gross State Product for Missouri and four neighboring states: Arkansas, Iowa, Illinois, and Kansas. The data is for chained 2009 dollars; that is, it is adjusted for inflation, with 2009 being the baseline year. Notice that the data series begins in 1997, whereas the data series in the previous post begins in 1980. The Bureau of Economic Analysis changed its method for calculating state GDP in 1997.

(Click on chart for larger view.)

For all states, the number of 1000 Btus consumed per dollar of GDP has decreased over time. This means that we are consuming less energy per dollar of economic output: it is taking less energy to produce a unit of economic output. Compared to 1997, it declined most in Arkansas and Kansas, where it decline 25.13% and 22.32% respectively. It declined least in Missouri and Iowa, where it declined 9.32% and4.57% respectively.

Figure 2. Data source: Bureau of Economic Analysis.

Figure 2. Data source: Bureau of Economic Analysis.

Figure 2 shows the cumulative percent change in GDP from 1997 for the 5 states (cumulative means each year is compared to 1997). You can see that there has been a marked difference in economic growth between the states. Kansas, Arkansas, and Iowa have each grown their GDP by more than 30% since 1997, while Missouri and Illinois have been slower growers.

Cumulative change in State GDP was negatively correlated with change in energy consumption per capita in Arkansas, Missouri, Illinois, and Kansas, but positively correlated in Iowa. This means that in Arkansas, Missouri, Illinois, and Kansas, increased GDP was associated with lower per capita energy consumption, but not in Iowa. Why Iowa should differ from the other four is not immediately clear.

Well, this data set is small, and several of the correlations probably do not reach statistical significance. Thus, these analyses are interesting and suggestive, but far from conclusive. They suggest that economic growth may be associated with greater energy efficiency, both on a per capita and per unit of GDP basis. It would be a fascinating study for a university student.

Even if it is so, do not make the mistake of thinking that greater energy efficiency wipes out the increase in energy consumption that comes from increased population or increased economic activity. All 4 states showed increases in total energy consumption between 1997 and 2014. It is like buying stuff on sale: if you buy more stuff, it more than wipes out the savings you get from the sale.

It is an unfortunate fact that the very energy that enables our modern life style also creates many of our most serious problems.

Sources:

State Energy Data System (SEDS), U.S. Department of Energy. This is a data portal. Select Consumption Statistics, then Sector, Total end-use. Data downloaded 6/14/2016 from http://www.eia.gov/state/seds/seds-data-complete.cfm?sid=IL#Consumption.

Real GDP by State (millions of chained 2009 dollars), GDP & Personal Income, Regional Data, Bureau of Economic Analysis. Data downloaded 6/14/2016 from http://www.bea.gov/iTable/iTable.cfm?reqid=70&step=1&isuri=1&acrdn=2#reqid=70&step=10&isuri=1&7003=900&7035=-1&7004=naics&7005=-1&7006=05000,17000,19000,20000,29000&7036=-1&7001=1900&7002=1&7090=70&7007=-1&7093=levels.

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