Abstract

This paper re-examines the hypothesis that there is a constant relationship between U.S. energy consumption and gross national product (GNP). If this ratio is constant then providing incentives for energy conservation may be an unacceptable policy since economic activity in some sectors of the economy may be adversely affected. Further, if the energy-GNP ratio has begun to rise over time, as some researchers have suggested, then expectations of the future demand for various energy resources must be revised accordingly. Berndt and Wood (1974) have shown that the energy-GNP ratio is consistent with standard economic theory only under highly restrictive conditions, and argue that changes in the ratio may not represent structural shifts in the economy but may be due to rational responses of firms to changes in the relative price of energy. Regardless of the possible economic reasons for shifts in the energy-GNP ratio, the question of its stability still remains. This paper presents evidence that the rate of change in the energy-GNP ratio has been linear over the 1947-1976 period, and that the ratio itself has not undergone a shift, but is in fact decreasing at a constant decreasing rate and will continue to do so for approximately the next several hundred years.

Meeting Name

3rd Annual UMR-MEC Conference on Energy (1976: Oct. 12-14, Rolla, MO)

Document Type

Article - Conference proceedings

Session

Perspectives on Energy Policy

Document Version

Final Version

File Type

text

Language(s)

English

Rights

© 1977 University of Missouri--Rolla, All rights reserved.

Publication Date

13 Oct 1976

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