Abstract
The US economy and use of oil and gas energy grew rapidly together for many decades. This seemingly symbiotic relationship ended when nominal oil prices jumped eight-fold (1973–81), triggering the worst US recession since World War II. Subsequent recessions have followed every significant, if generally short-term, oil price hike. Economic growth has happened when oil prices were either relatively low or stable. The oil price jump of the '70s also correlates with a nine-fold increase in natural gas price, a four-fold increase in coal price, a three-fold increase in cost of electricity, and a significant drop in energy demand. These events provide bases for better understanding of the relationship between energy use and economic growth.
Although the conventional measure of "economic growth" is percentage change in GDP, other criteria – inflation, interest rates, unemployment, relative strength of currency, imports and exports, corporate profitability, etc. – are also important and are reviewed since the "economy" is complex and multidimensional.
Sudden energy price changes provide measures of elasticity (effect of price on supply and demand) essential for better understanding and predictions of energy use and economic growth. Knowledge of elasticity is vital for forecasting, planning and policy development.
Inevitable constraints imposed by changing environmental and political considerations impact both future US energy use and economic activity not unlike actual physical shortages. Possible means for alleviating adverse impacts, and for transitioning from oil and gas to other energy sources must be explored. Importantly, the potentially significant impacts of both anticipated and unforeseen technological breakthroughs must be evaluated and incorporated into any meaningful view of the future.
