Energy Intensity, a Mesurable Result of How Efficiently We Use Energy

One of the most useful ways to measure how efficiently we use energy is to calculate how many units of energy are required to produce a unit of wealth – this is known as energy intensity. In theory energy intensity can be measured in a variety of ways, but a useful convention is to divide the total annual energy consumption for a nation, expressed in British Thermal Units (BTUs), by that nation’s Gross Domestic Product for the same year. The fewer BTUs per dollar of GDP, the better the score.

BTUs are a universal energy measurement favored by economists – one BTU is defined as the amount of energy it takes to heat one cubic centimeter of water by one degree centigrade at room temperature. One kilowatt-hour is equal to 3412 BTUs. One gallon of gasoline has about 130,000 BTUs. When looking at entire economies, the standard unit is one quadrillion BTUs. The USA, for example, consumed about 101 quadrillion BTUs of energy in 2007. California consumed 8.4 quad BTUs in the same year.

You can get recent information on energy production and energy intensity by country from the U.S. DOE Energy Information Administration’s country index. You can also calculate energy intensity by U.S. state from the EIA website; for example, California’s energy intensity can be found in the EIA’s energy profile for California. The wide range of energy intensity calculations across various nations and states is quite revealing.

Among nations, the worst energy intensity is found in nations where energy is extremely cheap and abundant. Saudi Arabia, for example, has an energy intensity of 17,979. Russia has an energy intensity of 14,935. In Russia’s case, cheap energy, a cold climate, far flung cities, and aging energy infrastructure all combine to give it a poor score. But even in Canada, a nation with modern energy infrastructure, but otherwise similar to Russia – relatively cheap energy, cold climate, far flung cities – their energy intensity at 13,825 is not much better.

The most advanced European nations might be looked to for the best energy intensity, while they have cold climates, they are densely populated and have modern infrastructure. And energy is very expensive in Europe, which has encouraged efficient energy use. So it is logical that their energy intensity is dramatically better than the vast northern nations of Canada and Russia – indeed, France only requires 7,243 BTUs per dollar of GDP, Germany scores 7,021, and the United Kingdom logs 6,048.

And what about the USA? Most Americans still live in cold climates, there are vast areas to cover which requires heavy consumption of transportation fuels, infrastructure is relatively modern – so America’s energy intensity of 9,113 should also come as no surprise. California’s energy intensity is an impressive 4,840, partly due to her warm climate and densely populated urban centers, partly due to large sectors of California’s industries being exceptionally profitable with very little energy input – the high tech industry creates GDP with a far higher energy intensity than, say, auto manufacturing. No doubt, California’s extraordinary energy intensity is also partly due to government policies enacted over the past few decades to encourage Californian’s to use energy efficiently.

An important dimension to energy intensity is to correlate it to per capita income. It appears that pre-industrial economies have very efficient energy intensities – Sierra Leone, to use one example, has an energy intensity of 2,459, with per capita GDP of $700. As a nation industrializes, its energy intensity worsens, but per capita income rises. India, for example, whose process of industrialization is now well underway, has an energy intensity of 4,001 and a per capita GDP of $2,700. China, a nation somewhat closer to completing their process of industrialization, has an energy intensity of 7,906 and a per capita GDP of $5,300.

Returning to California, whose high-tech economy might loosely be characterized as post-industrial, their energy intensity of 4,840 combines with a per capita GDP of $47,186. The rest of the United States – measured with California’s population and GDP subtracted – delivers an energy intensity of 9,904 BTUs per dollar of GDP, and a GDP per capita of $34,885. There is no economic region on earth that delivers anywhere near California’s combination of extraordinarily efficient energy intensity alongside per capita GDP that ranks among the highest in the world. The reason – as the preceding statistics might indicate – is because California’s economy runs on brainpower more than horsepower. California’s state government would do well to see to it they do not drive these brains elsewhere, by making California even more business unfriendly than it already is.

As California’s legislators flirt with a descent into pure socialism, cloaked in radiant and rhetorically unassailable green rationalizations, they might consider the example of Russia, a nation blessed with extraordinary scientific talent, whose innovators were strangled for nearly seventy years on the alter of socialism. California’s dream has survived in spite of a government that is grotesquely hostile to business innovators. California’s government has been squandering the prosperity of the golden state on obscenely generous pensions and benefits for state employees, and entitlement programs that have undermined the work ethic of entire subcultures – while only creating more government jobs. Unless California’s slide into state socialism is reversed, the golden state’s century of economic growth will become only a memory.

One Response to “Energy Intensity, a Mesurable Result of How Efficiently We Use Energy”
  1. JamesG says:

    You seem to see only black and white but most real systems are shades of grey. While the USSR was bad that was hardline communist, not socialist. Have you considered that California is successful precisely because it is more liberal? Consider it! Then consider the economies of Germany, Japan, Sweden, Norway, Denmark, Holland, Belgium, France, UK – all successful with modern social democracies based on a large dose of safety-net socialism. Now look again at the current US economy with it’s obsession for consumerism and individualism. Not looking so great is it? Sure it looked fine a few years back but spending other people’s money does seem great until its time to pay it all back. When the US recovers from this crisis it’ll surely be California in the lead. Granted though, the US venture capital system will help a lot.

    But what’s killing Ford and GM? They say it’s health care and pension costs which, of course, all their competitors can lay off onto the state. Yet the US spends much more on health per capita than anybody else. Where does this wonderfully efficient capitalist system spend it all?

    Despite the rhetoric, there is no actual evidence that a pure free market system is intrinsically better. Canada is after all, rather better off than the USA. The USSR isn’t a fair comparison but modern Russia is – in a different way. Their first flirt with capitalism (under total advisement from US economists) was a complete disaster. They are far better off now because Putin removed this free-ness which was encouraging only rampant corruption and reinstated some proper state regulation. State energy companies like Petrobras or Statoil work very well while 5-minute wonders like Enron go down the pan owing millions. The difference is not in the wonders of competition, which is illusory, it is purely good versus bad management. The free market ideology, has been extensively tested in latin America since it was being shoved down their throats by the IMF and World bank and it resolutely failed everywhere. Latin America is much now better off because they rejected it. And guess what? The world bank and the IMF now admit it!

    Having said all that, yes I do agree that when socialism goes too far, it utterly stifles companies and creates too many pampered, leeching bureaucrats. France is an absolutely perfect example of that. Yet France is still doing fine. The quality of life there is excellent, somewhat better than the US I assure you, and they are 80% nuclear – thanks to good socialist state decisions free of competition. There is definitely a sweet-spot to be struck somewhere in the middle between laissez-faire and regulation. That’s what experience really tells when you look more carefully at the facts and ditch all that simplistic and crappy ideological theory – mainly taught by people who were never in business themselves.


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