There’s an interesting article over at the Christian Science Monitor you might want to take a gander at. That it supports a point I’ve been making here for some time is purely a coincidence. The author, Gail Tverberg, an actuary interested in energy, notes the close relationship between growth in employment and energy consumption:
Since 1982, the number of people employed in the United States has tended to move in a similar pattern to the amount of energy consumed. When one increases (or decreases), the other tends to increase (or decrease). In numerical terms, R2 = .98. (Click on Figure 2 above.)
I have written recently about the close long-term relationship between energy consumption and economic growth. We know that economic growth is tied to job creation, so it stands to reason that energy consumption would be tied to job growth1 . But I will have to admit that I was surprised by the closeness of the relationship for the period shown.
This close relationship is concerning, because if it holds in the future, it suggests that it will be very difficult to reduce energy consumption without a lot of unemployment. It also would seem to suggest that a shortage of energy supplies (as reflected by high prices) can lead to unemployment.
She looks at the relationship in an interesting way. As oil prices go up faster than wages, as has been the case for many years, a greater proportion of disposable income is used paying for oil which leaves less for everything else.
She goes on to suggest that rapidly rising oil costs resulted in lower real wages for most workers, particularly male workers. One of the great under-reported stories of the last century is how declining real wages forced women into the workplace.
Read the whole thing.
One always has to deal with the issue of correlation vs causality, but we seem to share a common view.
Perhaps one of my top three criticisms of our current President is his boneheaded view on energy. In the news just the past two days are coal producer layoffs. I’ve also commented on the now real bids and latent consumer energy costs because of Mr Obamas stance on coal.
This is truly ridiculous policy. Does it get reported? Not a chance. Too many “journalists” with standard issue knee pads. Do those screaming for manufacturing reshoring criticize this policy? Not a chance, they are counting on subsidy.
But the fact of the matter, as I’ve commented on so many times, for both economic and foreign policy reasons, is that we should be promoting N American energy production to the hilt.
That Obama still plays to his radical base for political reasons is unconscionable, in my opinion.
I don’t know how I’d go about disaggregating the effects of the Obama Administration’s policies on coal production from those of the the low cost of natural gas. That isn’t to say that I don’t think that the Administration’s energy policies are wrong-headed. I think they’re wrong-headed in another way.
There is an abundance of cheap energy, and it will be a long, long time before it is depleted. The US chooses not to use it. Countries that choose to use it are able to manufacture goods cheaper. Her conclusions are based upon the US using expensive energy. The solution is for the US to switch to cheap energy.
Science does not change often, and when it does, many of the previous “laws” still work.
@Dave Schuler
Natural gas does not produce as much energy as coal, but it is easier to transport than coal. There are numerous factors that are never considered by the policymakers or economists or journalists, but these factors have a far greater impact than they realize. Of course, many of them could not get basic algebra.
Dave
I thought I had posted it here before. I’ll try to find the link again. But the “energy ROI” of various sources is amazing to look at. Solar and wind? Absurd.
Yes, nat gas is cheap right now, but nothing compares to coal. Nat gas and coal can compete, and only time will tell, and things will fluctuate, but a full fledged war on coal is asinine. Bizarre, actually.
LOL…good God that is hilarious. Here the usual complaint is that economists are too mathematical and Tasty is tell us economists are too stupid to even grasp basic algebra.
The mistake you are making is that you are confusing political results with economic analysis. Economic analysis is based in mathematics and is, if anything, hyper-rational. Political outcomes on the other hand are totally non-rational.
What that heck…the second quote should have been,
The mistake you are making is that you are confusing political results with economic analysis. Economic analysis is based in mathematics and is, if anything, hyper-rational. Political outcomes on the other hand are totally non-rational.
@Steve Verdon
The mistake you are making is that you are confusing political results with economic analysis. …
Politics and economics cannot negate science.
@Steve Verdon
When I refer to economists, I am thinking of Paul Krugman and the other big names. These may be macro economists. The economists employed by companies in the various energy industries do have knowledge about the scientific factors. Many of them have extensive knowledge, and some of them have more knowledge about these factors than the experts.
I have never seen these guys and gals being consulted, and to my knowledge, other industry economists are not consulted.
One thing about Paul Krugman is that the fully grasps mathematics at a very high level. That he refuses to be constrained by what mathematics would tell him is not a problem of economics anymore than it is a problem of mathematics.
Seriously dude, get some professional help regarding that bias. I could point the the Union of Concerned Scientists and say, all scientists are fucking boneheads and should be forcibly removed from the gene pool. I don’t because I know they are but a segment of a much larger group.