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ENERGY CONSUMPTION DATA SUGGESTS INTERNET SAVINGS HAVE ALREADY STARTED
Unprecedented Energy Performance Gains in 1997 and 1998 Are Likely to Be Repeated This Year
This fall, the U.S. Department of Energy announced a startling economic development: despite historically low energy prices and rapid economic growth, the nation's energy intensity - indicating the energy required for each dollar of gross domestic product - fell by 4 percent in 1998. That came on top of a four percent improvement in 1997. Meanwhile the economy grew a total of 9 percent during the same two-year period, which means the energy figures are nothing short of remarkable.
Before oil price shocks of the early 1970s, demand for energy in the United States marched in lockstep with economic output: a 3 percent increase in economic output meant about a 3 percent increase in energy demand. In most sectors, energy efficiency grew very little. That changed with the Arab oil embargo. From 1973 to 1986, the U.S. gross domestic product grew 35 percent in real terms, while primary energy use remained virtually frozen. Americans bought fuel-efficient autos and appliances, insulated their homes, and adjusted thermostats. Businesses invested heavily in energy efficiency.
From 1970 to 1986, the energy consumed for each dollar of economic output - a figure called "energy intensity" - fell by a third, from almost 20,000 BTU per dollar to 14,000 BTU. U.S. energy intensity routinely declined by 2 percent per year from 1973 to 1986. The energy productivity gains achieved by United States during the period represent one of the great economic success stories of this century. The Department of Energy estimates the country continues to save as much as $200 billion annually as a result.
But starting in 1986, energy prices began a descent in real terms that has continued today. At the same time, federal investment in energy efficiency programs has declined - trends that contributed a 27 percent increase in U.S. energy demand from 1986 to 1996. Nevertheless, energy intensity - energy per dollar of output - continued to improve, but at a much slower rate, less than 1 percent per year over the 10-year period.
The Environmental Protection Agency (EPA) and Argonne National Laboratory conducted a preliminary analysis to try to understand what was behind the radical change represented in the 1997 and 1998 energy intensity numbers. They concluded that roughly one-third of the recent improvement in energy intensity is "structural" - the result of strong growth in sectors such as information technology, which have relatively modest energy needs - while the remaining two-thirds comes energy efficiency gains across all sectors, including heavy power users.
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