Wars and revolutions, booms and busts, OPEC successes and failures, and every other monumental event in the last 35 years left their imprint on oil markets but didn’t alter oil intensity’s steady, downward crawl. Since 1984, oil intensity has fallen every year in an almost perfectly linear fashion: the amount of oil used per dollar of global GDP has dropped by roughly the same amount each year. What is worth a closer look, and is the focus of this paper reporting on oil and gas related research at Columbia University’s Center on Global Energy Policy, is the pattern by which this progress has been achieved. Oil has become a lot less important and humanity has become more efficient in making use of it. By 2019 (the last data set before Covid) global oil intensity was 0.43 barrel per $1,000 of global GDP-a 56% decline. In 1973, for example, when oil intensity was at its zenith, the world used a little less than one barrel of oil to produce $1,000 worth of GDP (2015 prices). ![]() The efficiency of oil use has improved, in other words oil intensity has declined, over the years and decades. Measured simply in barrels per dollar, it is often viewed as a broad measure of oil efficiency it certainly demonstrates the importance of oil in a society. Oil intensity is the volume of oil consumed per unit of gross domestic product (GDP). It’s an additional challenge to model the structure of a market that sometimes appears to be highly cartelized, and at other times populated by a large flock of peaceful price takers.īut a remarkably steady metric-and possible tool for projecting consumption into the future-has been identified in this paper: oil intensity. Anticipating oil prices and production from year to year is not easy identifying even basic ingredients of aggregate demand and supply schedules, such as price or income elasticities, is notoriously difficult. ![]() Oil is the largest primary fuel, and the trajectory of oil consumption is of great concern and consequence for economic, political, and, not least, for climate change reasons.
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