[MonteQuest]

It is a good thing for per capita energy consumption to fall while GDP is growing. It means we are using our energy inputs more efficiently to achieve higher economic outputs.

No, it means were are using cheap debt to replace cheap energy to create asset inflation to grow GDP. The EIA says only 27% of US households use LED lighting. It goes without saying that there has been energy reductions due to efficiency gains at the micro-level, but most has come from sub-normal GDP growth and lingering GFC effects.

US GDP growth is driven by debt, not energy. US consumers--who are 70% of GDP--just set a new household debt record of $14.3 trillion. $1.6 trillion higher than during the GFC.

[kublikhan]

You cannot explain everything away with your cheap debt theory. The number of households grew. The amount of commercial office space has grown. The amount of goods and services provided to consumers has grown. Also, your 27% figure for LED bulbs is out of date. According to the EIA, as of 2018 LED bulb shipments hit 65% of all bulb shipments. Also, the drop in per capita electricity consumption exactly matches the drop in electricity consumption for lighting:

The figure below plots U.S. residential electricity consumption per capita 1990-2015. Consumption dipped significantly in 2012 and has remained flat, even as the economy has improved considerably.

Broad Decreases
The decrease has been experienced broadly, in virtually all U.S. states. The figure below shows that between 2010 and 2015, per capita residential electricity consumption declined in 48 out of 50 states. This pattern stands in sharp contrast to previous decades. During the 1990s and 2000s, for example, residential electricity consumption per capita increased by 12% and 11%, respectively, with increases in almost all states. Previous decades experienced much larger increases.

Energy-Efficient Lighting
So what is different? Energy-efficient lighting. Over 450 million LEDs have been installed to date in the United States, up from less than half a million in 2009, and nearly 70% of Americans have purchased at least one LED bulb. Compact fluorescent lightbulbs (CFLs) are even more common, with 70%+ of households owning some CFLs. All told, energy-efficient lighting now accounts for 80% of all U.S. lighting sales.

Is this really big enough to matter? Yes! Suppose that between LEDs and CFLs there are now one billion energy-efficient lightbulbs installed in U.S. homes. If operated 3 hours per day, this implies savings of 50 million megawatt hours per year, or 0.16 megawatt hours per capita, about the size of the decrease above. Thus, a simple back-of-the-envelope bottom-up calculation yields a similar decrease to the decline visible in aggregate data.

Evidence of a Decline in Electricity Use by U.S. Households

What exactly do you think the US consumer did with all that extra debt? They used it to purchase goods and services. These goods and services require energy to be produced. I mean look at this. US consumer spending went from around $10.5 trillion in 2007 to $13.4 trillion last year. All that debt sure buys alot of widgets and services.

[MonteQuest]

You cannot explain everything away with your cheap debt theory. Also, your 27% figure for LED bulbs is out of date.

Sure can. And it's not a theory, it's reality. It's been the case since we went off the gold standard in 1971. Debt drives GDP. We are at the End of Growth. The EIA data of 27% is current on their website for the period 2015-2017 which is in the decade in question. https://www.eia.gov/todayinenergy/detail.php?id=31112

What exactly do you think the US consumer did with all that extra debt? They used it to purchase goods and services. These goods and services require energy to be produced.

Yes, this contributed to GDP and energy use. But GDP growth has been entirely from debt. Even when GDP is negative, energy is used.

[kublikhan]

The EIA data of 27% is current on their website for the period 2015-2017 which is in the decade in question. https://www.eia.gov/todayinenergy/detail.php?id=31112

Back in 2015 CFL bulbs were more popular. They also have a very significant energy savings compared to incandescent. And if you look at the data you will see that CFL bulbs were in 72% of homes in 2015. ElectroBOOM just did a video on all of the differences between these bulb types if you are interested: Difference of Light Technology

Sure can. And it's not a theory, it's reality. It's been the case since we went off the gold standard in 1971. Debt drives GDP. We are at the End of Growth.
...
Yes, this contributed to GDP and energy use. But GDP growth has been entirely from debt. Even when GDP is negative, energy is used.

Consumers consumed 22% more goods and services than they did a decade ago. From an energy perspective, it doesn't matter if the consumer used a credit card to purchase the goods and services or used cash. The FED cannot print oil. Those goods and services require real energy to produce. Yet even with a 22% increase in real goods and services, the energy needed to produced those goods was exactly the same as the energy required to produce 22% less goods a decade ago. Debt does not explain this. An increase in energy efficiency does.

[MonteQuest]

Consumers consumed 22% more goods and services than they did a decade ago. From an energy perspective, it doesn't matter if the consumer used a credit card to purchase the goods and services or used cash. The FED cannot print oil. Those goods and services require real energy to produce. Yet even with a 22% increase in real goods and services, the energy needed to produced those goods was exactly the same as the energy required to produce 22% less goods a decade ago. Debt does not explain this. An increase in energy efficiency does.

Didn't say they didn't. But GDP isn't measured just by good and services that are produced now. Much of it is from financial speculation which has grown to 40% of GDP. Buying and reselling things already produced like real estate and other financial assets that require no energy to be added to GDP. Debt explains this. Increases in efficiency do not.

Just one of many articles on debt and GDP.

U.S. growth would have contracted without trillions in government, consumer debt:

[kublikhan]

Didn't say they didn't. But GDP isn't measured just by good and services that are produced now. Much of it is from financial speculation which has grown to 40% of GDP. Buying and reselling things already produced like real estate and other financial assets that require no energy to be added to GDP. Debt explains this. Increases in efficiency do not.

Just one of many articles on debt and GDP.

U.S. growth would have contracted without trillions in government, consumer debt:

And if that debt was not there and GDP shrank, energy would shrink even more. All that debt was driving economic activity. All that economic activity was driving energy use. If the debt was not there, energy consumption would fall along with economic activity. A decade long recession where we would see GDP fall would have definitely been painful, but we would have realized very large savings in energy consumption along with it. This is exactly what happened during the great depression(the 1930's one, not the more recent one). Financial shenanigans stopped, overall real economic activity fell, but energy consumption also fell hard.

[ralfy]

I got some points from these articles:

https://phys.org/news/2011-05-nuclear-p ... nergy.html

http://www.anthropocenemagazine.org/howmuchenergy/

https://en.wikipedia.org/wiki/List_of_c ... _footprint

https://www.givingwhatwecan.org/get-inv ... rich-am-i/

That is,

Current energy consumption is probably around 20 TW.

Up to 80 pct of people don't receive basic needs because they earn less than $10 daily.

In order to ensure that the remaining 80 pct receive basic needs and economic growth is maintained, around 50 TW will be needed.

In order to meet the same for a population of around 10 billion, around 90 TW.

In order to adjust to biocapacity, which may lead to diminishing returns, even more.

[REAL Green]

In order to meet the same for a population of around 10 billion, around 90 TW. In order to adjust to biocapacity, which may lead to diminishing returns, even more.

Yea, the idea we are going to grow population and consumption by that much is simply craziness. This is why I say science is corrupt and the pseudo-science of economics worse. Science is good with the study of the various problems but then goes horribly wrong with the forecasts and solutions. Agriculture alone can't meet that kind of growth. Vast green new deals are not physically or economically realistic. So, anyone with a brain will acknowledge a decline process is ahead not a period of fantasy growth. This is insane and points to why the global economy was brought to its knees by a lame virus. There is no more Chinas like in the early 2000 to generate that kind of GDP. Africa is not going to do it. The BRI is a dead man walking. This is all human hubris of the techno optimist. The problem is people love the thought of it so techno optimism sells in this marketing-based world. Nobody wants to talk about pain and suffering much less buy into it. This is the fatal flaw of the modern human. We are fat, lazy, and like fantasy.

[MonteQuest]

A decade long recession where we would see GDP fall would have definitely been painful, but we would have realized very large savings in energy consumption along with it. This is exactly what happened during the great depression(the 1930's one, not the more recent one).

But that’s exactly what did happen in the GFC. GDP did fall.

I think this chart illustrates my case. The United States hasn’t had a year of above-average GDP growth since 2005. Many more manufacturing jobs were also outsourced. Which is more likely, that under-average GDP growth since the GFC explains flat per capita energy demand growth over the last decade, or efficiency gains largely in the electrical sector? It's already been admitted that 3.5% GDP growth would require more energy use than 2%. Sure, there have been some efficiency gains, but since most of the huge efficiency gains were wrung out of the US energy system decades ago, they are at the margins and largely centered in the electrical sector which is only 25% of energy demand. I won’t belabor the point further.

[MonteQuest]

Yea, the idea we are going to grow population and consumption by that much is simply craziness. This is why I say science is corrupt and the pseudo-science of economics worse. Science is good with the study of the various problems but then goes horribly wrong with the forecasts and solutions. Agriculture alone can't meet that kind of growth. Vast green new deals are not physically or economically realistic.

Yes, energy and food demand is projected to double by 2050. I can't see how possibly those demands can be met. Green New Deals still expect huge job creation and consumption and a more equitable sharing of a ever-shrinking pie. From my perspective, we need a cap on unsustainable growth. We might cap energy growth, but never population growth--short of draconian measures that no one will accept. In our hubris, I think the only thing we can't expect is a bottleneck where there will be a fight over resources. This pandemic is merely a harbinger of things to come.

[kublikhan]

But that’s exactly what did happen in the GFC. GDP did fall.

I think this chart illustrates my case. The United States hasn’t had a year of above-average GDP growth since 2005. Many more manufacturing jobs were also outsourced. Which is more likely, that under-average GDP growth since the GFC explains flat per capita energy demand growth over the last decade, or efficiency gains largely in the electrical sector? It's already been admitted that 3.5% GDP growth would require more energy use than 2%. Sure, there have been some efficiency gains, but since most of the huge efficiency gains were wrung out of the US energy system decades ago, they are at the margins and largely centered in the electrical sector which is only 25% of energy demand. I won’t belabor the point further.

Incorrect. You are making several erroneous assumptions to support your theory.

Flaw #1: Per capita energy consumption growth started falling after the financial crisis. This is incorrect. In reality per capita energy consumption started falling years before that:

U.S. TPE[Total Primary Energy] consumption per capita peaked before the two oil crises of the 1970s and declined in response to them. Irregular growth resumed from a low in 1983 to reach another peak in 2000 (3% lower than the peak of 1979) before beginning a long but uneven decline of 14% through 2017. The ongoing decline in TPE has occurred through significant variations in economic and political conditions. The current level of TPE consumption per capita was last seen in 1967.

Review of the United States energy system in transition

Flaw #2: Most of the huge efficiency gains were wrung out of the US energy system decades ago, there is not much room for addition improvement. In reality gains in efficiency and productivity over the last decade are larger than in the past, not less:

Global energy intensity – measured as the amount of primary energy demand needed to produce one unit of gross domestic product (GDP) – fell by 1.8% in 2016. Since 2010, intensity has declined at an average rate of 2.1% per year, which is a significant increase from the average rate of 1.3% between 1970 and 2010.

The energy intensity of the global economy continues to fall

Flaw #3: The lack of growth in energy consumption can only be caused by a slowdown in real economic activity. In reality the energy intensity since 2010 has been falling at just over 2%. The US GDP was also growing at around this rate. It makes perfect sense that energy consumption growth is relatively flat when the energy intensity decline rate is about equal to the economic growth rate.

[ralfy]

What matters isn't energy intensity but energy needed to meet basic needs and, as most worldwide demand, maintain "business as usual."

[REAL Green]

A dismal picture of renewables primary power penetration in the US:

“Visualizing America’s Energy Use, in One Giant Chart”
https://www.zerohedge.com/s3/files/inli ... k=zZBmJm5K

[MonteQuest]

A dismal picture of renewables primary power penetration in the US:

“Visualizing America’s Energy Use, in One Giant Chart”
https://www.zerohedge.com/s3/files/inli ... k=zZBmJm5K

Yes, especially the almost nonexistent penetration into heating and transportation which comprises the majority of overall energy demand.

Here's the dismal penetration in the world.

[MonteQuest]

It makes perfect sense that energy consumption growth is relatively flat when the energy intensity decline rate is about equal to the economic growth rate.

Isn't that what I said? "Energy demand is flat due to the GFC and declining GDP." Case closed.

[kublikhan]

Isn't that what I said? "Energy demand is flat due to the GFC and declining GDP." Case closed.

Declining GDP growth rate. GDP is still growing. GDP growth rate is what fell.

[asg70]

Wow. This thread is a study in bias. Some people will only see what they want to see (complete with your typical zerohedge links). Kub, keep up the good work. Your arguments are impeccable.

[MonteQuest]

Isn't that what I said? "Energy demand is flat due to the GFC and declining GDP." Case closed.

Declining GDP growth rate. GDP is still growing. GDP growth rate is what fell.

LOL! You actually think I was saying that GDP went negative following the GFC? GDP declined from the past normal average of 3.19% that the chart I posted reflects. And what positive growth did occur was fueled entirely by debt and speculation--as the other chart I posted showed. GDP used to measure “things you can drop on your foot.” No more. Following the 87' crash and the run-up to Tech stock crash in 2001, our economy switched away from manufacturing that produces real goods and services that provide real value and towards speculative, financial activity for income--also reflected in the chart. The advent of the computer age made it possible for financial firms to engage in speculative actions that were not possible in an earlier era. Speculation in the money markets is even more stark. As recently as 1975, roughly 80% of foreign exchange transactions involved the real trading of a product or a service. The remaining 20% were speculative; bets made on the value of currencies going up or down. Today, less than 0.6% of foreign exchange can be traced to trade in goods and services. Of the rest, a minimum of 80% was directly attributable to exchange rate speculation.

[MonteQuest]

Wow. This thread is a study in bias. Some people will only see what they want to see (complete with your typical zerohedge links). Kub, keep up the good work. Your arguments are impeccable.

No, it's an example of "motivated reasoning" versus rational reasoning. My position is backed by the facts, not what I want to believe. I have done my homework and it isn't selective to support my position. The chart is from the BEA. His arguments conflate and misconstrue and grab at straws. Energy use has been flat due to anemic GDP growth, debt, and speculation. Some efficiency gains have occurred in micro-economics, but not on any scale to offset such a decline in GDP growth and the massive issuance of debt that inflated stocks, bonds, and real estate and the soaring incomes that followed from it.

[kublikhan]

Monte you are the one conflating. Debt and energy and not interchangeable. GDP does not measure asset prices or financial speculation, it measures goods and services. Rising asset prices do not raise GDP. Rising production of goods and services raises GDP. Now when rising asset prices are eventually liquidated, they can be used to purchase more goods and services, but those extra goods and services also require more energy to be produced. The FED cannot print oil. Any rise in GDP is caused by a rise in goods and services which require real energy to be produced. If goods and services rise but energy consumption does not, then this means an increase in productivity occurred.

Measuring Real Economic Growth
Real economic growth doesn't result from more money changing hands. Workers don't become more productive and the standard of living won't rise just because the Federal Reserve adds to the monetary base and hands out lots of dollar bills, so to speak.

An economy grows when its productive capacity increases. Real items – not money – represent real wealth and rising standards of living.

In an attempt to quantify this, economists track the total value of all final goods and services produced through GDP. It's a rough proxy, but it's the most common figure.

Why Rising Asset Prices May Be Misleading
Rising asset prices are potentially misleading signs of a growing economy. Even if the stock market grows or houses are more valuable, no real economic goods are directly produced.

How asset-price inflation and economic growth differ