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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. I have written recently about the close long-term relationship between energy consumption and economic growth. 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.
I tried to consolidate a number of employment-related issues into one post, so in this post I also show that employment is shifting to Asia and other less developed countries, as energy costs (and total costs) are lower there.
In the case of high oil prices and lay-offs, less energy of all types–not just oil–is used.
As I have mentioned previously, James Hamilton (2011) has shown that 10 out of 11 recessions in the United States since World War II were associated with oil price spikes. If there is a possibility of international trade, manufacturing and some types of services will tend to move to areas where costs are lowest.
Besides direct energy costs, wages are another part of the difference in costs from one part of the world to another. Figure 3 below shows that there has been a striking difference in how energy consumption has grown in various parts of the world. Energy consumption has been quite flat in the grouping of industrialized countries I show first (European Union-27, USA, and Japan). Other countries, especially Asian countries like India, also ramped up their energy consumption at a similar time.
While I don’t have employment data for Figure 3 groupings, I do have economic growth data (Real GDP is Gross Domestic Product, adjusted to remove effects of inflation), shown in Figure 5, below. Figure 5 indicates that the economy of the “Rest of World” has been growing much faster than the EU, USA, and Japan grouping since 2001. One point that many people miss is that the Great Recession of 2007-2009 was to a significant extent a phenomenon of the older industrialized countries. Oil had been our largest source of energy, and our own domestic production was dropping quite rapidly. As a result, the period 1972-1982 was a time when energy consumption was relatively flat, but employment rose.
It is hard to tell what the relative impacts were of the many changes that took place in the 1972 to 1982 time period.
On a positive note, one factor that had helped keep quality of life up is increased efficiency in using energy. Another thing that has helped improve living standards is the amount of manufactured goods we are now importing from China and other countries around the world, especially Asian countries. While the percentage of people with jobs was rising between 1960 and 2000, in recent years it has dropped. The percentage of US population employed outside the home or farm has grown for a very long time. The combination of rising energy costs (especially oil) and increased international trade gave China and other Far Eastern countries an opportunity to ramp up their manufacturing and service industries (call centers in India, for example).
There had always been some foreign trade, but the amount of trade increased in the late 1970s, when we started importing smaller cars from Japan, as well as more oil. Figure 12  shows that while Kyoto Protocol may have helped reduce emissions in some countries, world carbon dioxide emissions have grown more than what would have been expected, based on the 1987-1997 trend in emissions. It is striking to me that since the mid-1970s, we have seen what could perhaps be interpreted as increased hierarchical behavior in humans and corporations. Increased use of part-time and contract jobs might be considered a trend in this direction as well.
Gail TverbergGail Tverberg is a casualty actuary whose prior work involved forecasting and modeling in the insurance industry.
Scott Edward Anderson is a consultant, blogger, and media commentator who blogs at The Green Skeptic.
Christine Hertzog is a consultant, author, and a professional explainer focused on Smart Grid.
Gary Hunt Gary is an Executive-in-Residence at Deloitte Investments with extensive experience in the energy & utility industries.
Jesse Jenkins is a graduate student and researcher at MIT with expertise in energy technology, policy, and innovation. Geoffrey Styles is Managing Director of GSW Strategy Group, LLC and an award-winning blogger.
Contributed by the Computers and Information Division of ASME for publication in the JOURNAL OF COMPUTING AND INFORMATION SCIENCE IN ENGINNERING. Excessive energy consumption has become a worldwide issue in today's design and manufacturing industry.
From figure 1 below, it is clear that the level of energy consumption has increased over the period for all household indicators.
From figure 3, it is evident that the share of coal in household energy use presented an upward trend and accounted for the greatest share in the fuel type analysis during the period 2009-2012.
The results of the above analysis quantify conclusively that urban household lifestyle does have significant impact on energy consumption and associated carbon emissions. The trend analysis on total household energy consumption (figure 5) shows that the Chinese economy would experience a tremendous growth in energy consumption from 46 million Kwh in 2009 to 282 million Kwh in 2030 which represents over 500% growth in energy demand over the next two decades. The main policy implication emerging from these findings is that policy makers must take into consideration the impact of a growing urban population on energy consumption as a key macroeconomic determinant in policy formulation. Osasohan Agbonlahor is a PhD Economics Student at the University of Nevada-Reno and a member of the United States Association of Energy Economics (USAEE). Please note that sometimes after confirming your order contents, can be delivered in as little as one week delayed somewhat by the inventory situation. Employment is the total number employed at non-farm labor as reported by the US Census Bureau.
We know that economic growth is tied to job creation, so it stands to reason that energy consumption would be tied to job growth1.
It also would seem to suggest that a shortage of energy supplies (as reflected by high prices) can lead to unemployment.
I also show that the US appears to have reached “peak employment” as a percentage of population in 2000, likely as a result of this shift in employment to Asia. This pattern is quite different from the US pattern we saw in Figure 1, which was much flatter. Energy Consumption divided among three parts of the world: (1) The combination of the European Union-27, USA, and Japan, (2) The Former Soviet Union, and (3) The Rest of the World, based on data from BP’s 2012 Statistical Review of World Energy.
The Former Soviet Union (FSU) collapsed in 1991, and the consumption for those countries has never recovered.


If we look at China’s fuel consumption by itself, we see that its huge rise in energy consumption (Figure 4, below) came mostly from increased coal consumption starting at that time.
China’s energy consumption by source, based on BP’s Statistical Review of World Energy data.
India also uses coal as its primary fuel, with 53% of its energy consumption in 2011 coming from coal (based on BP 2012 data). Three-year average real GDP growth for (1) EU-27, USA, and Japan, (2) Former Soviet Union, and (3) Rest of the World, based on data by Angus Maddison through 2008, and USDA since then. In fact the Rest of the World’s growth has been much faster for nearly the entire period shown on the graph.
EU, USA, and Japan all were hit very hard, while the “Rest of the World” almost sailed along.
Oil was cheap, as were other energy sources, so not too much thought was given to how efficiently it was used. By 1973, the Arabs had discovered our vulnerability, and the 1973 Oil Embargo began, leading to a sharp rise in gasoline prices.
Employment and Energy Consumption using data similar to that used in Figure 1 and 6, but for the 1972-1982 time period. A big part of this rise reflected the addition of women who had not previously worked outside of the home to the work force. Clearly, lower average wages (with more women in the work force) and flatter wages were a big part of the change. The amount of debt we need to keep amassing to buy all of the goods we buy abroad is a problem, however, because we are not earning enough to pay the full amount of these goods.
The recent drop seems to be at least in part related to the shift in energy consumption growth (and jobs) to the “Rest of the World,” which includes China, India, and many other developing countries and oil exporting countries.
Jobs migrated to China and to other countries with low energy costs (thanks to lots of coal in the mix) and low costs of  living, thanks in part to better solar heating.
It increased again later, especially after China entered the World Trade Organization in late 2001.
Figure 3 suggests that world trade makes a huge difference in the amount of energy consumed. If world trade were, for some reason, interrupted or seriously scaled back, this would likely significantly reduce energy consumption (and employment) around the world. Figure 3 and Figure 4 suggest that adding China to the World Trade Organization had far more impact, and in the opposite direction. Actual world carbon dioxide emissions from fossil fuels, as shown in BP’s 2012 Statistical Review of World Energy.
The manifestation of this instinct tends to be greater as there is greater crowding, and greater competition for resources (Dilworth, 2009).
Wage dispersion has tended to become greater since the mid-1970s, when we started encountering energy supply problems.
Job sharing has been proposed as a way of dealing with having an inadequate number of jobs in the older industrialized countries, but this tends to act in the same way (pushes the wages of lower paid works down, while leaving the top wages untouched). Economic models seem not to take into account the very substantial shift in percentage of the population employed. This change will tend to push the percentage of population employed down further, all other things being equal. Governments in Europe are particularly affected now, partly because of the generous benefits they offer. For example, coal is not an option for running today’s gasoline-powered cars, and public transport is not an option in most of the US. Starting in 2005-2006, she decided to apply her skills to the question of how oil and other limits would affect the world. The household lifestyle has undergone significant change due to the rapid economic growth it has experienced in the last decade. This suggests that changing lifestyles are having proportional changes on energy consumption. That is, energy demand and use as well as related carbon emissions are all directly and indirectly impacted by changing lifestyles in the country. There is a dire need for policy makers to focus on policies that will conserve energy through the use of taxation, rigorous energy efficiency standards and price ceilings in the energy markets. She holds an MS.C degree in Energy Studies with specialization in Oil and Gas Economics from the Centre of Energy, Petroleum, Mineral Law and Policy (CEPMLP) of the University of Dundee, United Kingdom.
Energy consumption is the total amount of energy of all types consumed (oil, coal, natural gas, nuclear, wind, etc.), in British Thermal Units (Btus), as reported by the US Energy Information Administration.
But I will have to admit that I was surprised by the closeness of the relationship for the period shown. The Kyoto Protocol may indirectly have helped enable a shift in production to Asia, through its emphasis on local production of carbon dioxide, without considering the indirect impact on world markets2.
Each laid-off worker would have used oil to get to their job, and this will no longer be required. If people’s incomes are squeezed by high oil prices, and some are being laid off, there will be less demand for homes as well. A manufacturer with cheap electricity costs will have an advantage over one with higher electricity costs. In part, this is because energy from the sun provides much of the needed energy for heating homes, so there is less need for supplemental energy.
Energy consumption for the “Rest of the World” has been increasing amazingly rapidly since 2002. Based on the steeper rise in energy consumption of the “Rest of World,” in Figure 3 compared to the old industrialized countries grouping, this might be the predicted result. This can be seen in the energy consumption data on Figure 3, and the economic growth data on Figure 5.
Also, as we will see in Figure 9, wages for workers were rising much more quickly (in inflation-adjusted terms) than they have been in more recent times. With the higher price of oil, salaries did not go as far, so having another family member working was helpful.
Based on Census Historical Income Tables: People, Table P5 – Regions by Median Income and Sex.
But there were other changes as  well, including more imported manufactured goods, changes to fuels other than oil, and more efficient use of oil, all contributing to the differences we see between Figure 1 and Figure 6. Energy consumption from US EIA, number of non-farm workers from US Bureau of Labor Statistics. If we could count on economic growth forever, perhaps we could simply “grow” out of this debt, but this seems increasingly unlikely, for reasons I will discuss in later posts.


If we truly wanted to reduce our energy consumption (which I doubt world leaders are really interested in), we could reduce world trade through taxes on imports, or some other mechanism. Patterns in other countries are likely to vary, in part because of the different specializations (amount of services vs manufacturing, for example) of different countries, and different wage levels in different countries. In fact, additional carbon taxes on goods that require high energy input may have encouraged competition in countries without such controls. Fitted line is expected trend in emissions, based on actual trend in emissions from 1987-1997, equal to about 1.0% per year.
If one necessary ingredient is in short supply, the economy behaves as if it is making a “smaller batch”.
The intent in the animal kingdom is survival of the fittest, with those at the bottom of the hierarchy being starved out, if there is not enough to go around. Even if it was primarily Europe and Japan that were attempting to reduce carbon use, it helped provide an opportunity for Asian competition to arise. If there is a long enough lead time and citizens can afford the transition, substitutions might be made, but it is not something we can count very much in the short term.
S., Editor, Output, Employment and Productivity in the United States after 1800, National Bureau of Economic Research.
This change has led to an increase in incomes, demand for goods and services as well as energy consumption.
The share of diesel, electricity and natural gas is rising indicating a transition in home energy use of urban households. The trend shows that this would grow from 19.7 million Kwh in 2009 to 75 million kWh in 2030, indicating a growth of more than 300%. Prior to this, she worked as a Commercial Analyst at the Nigerian National Petroleum Corporation (NNPC) Headquarters in Abuja.
Registration or use of this site constitutes acceptance of our Terms of Service and Privacy Policy. For example, they may go out to restaurants less, make fewer long-distance vacation trips, put off buying a new car, or contribute less to their favorite charities.
The jobs experiencing layoffs themselves may have required fuel use of various types, such as heat for buildings, fuel for airplanes, or electricity used in making new cars, and this is reduced as well. This lower demand can be expected to reduce housing prices, especially in areas where commuting distances are longest (and thus, oil use for commuting greatest). As energy costs rise (as they have in recent years), they get to be more important in determining where manufacturing will be done. The rest of the world includes China, India, Bangladesh, and many small countries, plus oil exporters, such as Saudi Arabia and Mexico. The US became a net importer during this period as well, and thus began running up external debt (based on US Bureau of Economic Analysis data). It shows that energy consumption per employed person was rising prior to 1972, came down for a variety of reasons in the 1972-1982 period, and is now pretty close to flat (decreasing slightly). Businesses have worked hard to keep energy use down, because energy is a major factor in their cost structure.
The number of people employed would likely drop as well, although perhaps part of the difference could be made up by greater efficiency and by lower wages for individual workers. Furthermore, reduced oil consumption through, say, higher taxes on gasoline, left more oil on the world market, to be used by developing countries. It contracts in a way that leaves out those who were most marginal to begin with–such as employees of discretionary industries, and borrowers who could only barely make payments on loans (subprime borrowers), and countries with the highest energy costs. These large businesses have been increasingly favorably taxed, because they can choose tax havens around the world to incorporate. If economists miss this change, as well as the fact that the percentage now seems to be headed down, their models will be wrong. The pattern involves a software energy estimation framework and various software energy computational tools. The increase in growth of Urban China accounts for a greater portion of the overall growth, which has led to significant increase in demand for energy.
The purpose of this study is to examine the impact of change in urban household lifestyle on energy consumption and related carbon emissions.
The forecast shows that carbon emissions growth will be less than the growth in energy consumption. There are also likely to be layoffs in the construction industry, as there is less demand for new homes and new buildings of all sorts.
Although I don’t break it out separately on Figure 3, the increase in energy consumption since 2002 has been especially marked in Asia. There was great demand for more fuel-efficient cars, leading to the import of cars from Japan (a country that had been making smaller cars for years), and the down-sizing of US cars.
Employment is reduced, and unemployed people tend to move in with friends or their family, to cut expenses.
Using this pattern, energy can be calculated by an energy estimation framework which can be attached with diverse energy computational tools. To support such rapid economic growth, China’s energy consumption has quadrupled from 603 million tons of coal equivalent (Mtce) in 1980 to over 3,000 Mtce in 2010 and it is still on the rise (National Bureau of Statistics of China (NBS), 2010). The study employs the use of the Consumer Lifestyle Approach (CLA) in measuring the direct and indirect effects of household lifestyle changes on energy demand. The share of food production in carbon emissions is growing over the years as food demand increases.
These computational tools can be designed for any purpose to calculate energy consumptions during a product life-cycle and for various manufacturing processes. The results show that energy consumption and annual carbon emissions have increased throughout the study period, while energy intensity has shown a declining trend. The framework involved in this pattern features to be domain independent and flexible so that it will be expandable for different manufacturing domains and customizable for users. According to the IEA (2010), China’s share will surge to 22% through 2035 and will account for over 30 per cent of the projected growth in global energy demand. With help of this pattern, energy estimation framework and energy computational tools can interact smoothly, and the development of computational tools can be extended or expanded for any purpose.
Knowledge engineers who exert to integrate knowledge into computer systems can interpret domain-specific knowledge and share their expertise to improve the framework. The framework also assists users who have little knowledge about energy computations to estimate energy consumptions during the design stage, leading to products with reduced energy.



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