Tuesday, March 26, 2013

The Changing Relationship Between Electricity Production and GDP Growth in the U.S.

From the EIA:
U.S. economy and electricity demand growth are linked, but relationship is changing

 Graph of U.S. electricity use and economic growth, as explained in the article text
Source: U.S. Energy Information Administration, Annual Energy Outlook 2013 Early Release.

A country's economy and its energy use, particularly electricity use, are linked. Short-term changes in electricity use are often positively correlated with changes in economic output (measured by gross domestic product (GDP)). However, the underlying long-term trends in the two indicators may differ. All else equal, a growing economy leads to greater energy and electricity use. However, in developed countries like the United States, the relationship has been changing for some time, as economic growth now outpaces electricity growth.

As suggested by data over the past 60 years, EIA's Annual Energy Outlook 2013 Reference case projections through 2040 show that U.S. electricity use and economic growth will continue to be linked. However, the long-run trend of slowing growth in electricity use relative to economic growth will also continue: the rate of projected growth in electricity use will be less than half the rate of economic growth. In particular, EIA does not expect any sustained return to the situation between 1975 and 1995, when the two growth measures were nearly equal in value, or the earlier period in which the growth rate in electricity use far exceeded the rate of economic growth....MORE