How does energy relate to the overall economic performance of a country?
Definitions
- Gross Domestic Product (GDP)
- Monetary value of all goods and services created by an economy.
- Per capita GDP (GDP per person)
- The GDP of an economy divided by the number of persons in that economy.
- Per capita energy use (Joules per person)
- Energy intensity of GDP (Joules per GDP)
Energy and GDP
There is a correlation between energy use and the gross domestic product in countries.
US GDP
- 2006
- GDP 14 trillion USD 14 \cdot 10^{12}
- Population 300 million
- Energy use 100 Quads
Energy per unit of GDP
We can think of energy intensity as a form of efficiency. How much energy does it take a country to create economic value?
Energy and the Human Development Index
Energy use is correlated with quality of life in many countries. However, improvements in this quality of life (HDI) level off at higher levels of energy consumption.
Energy per capita
The Resource Curse
Experts have observed that discovering petroleum wealth in a country often doesn’t lead to better economies or health for the country. This idea is called the resource curse.
Several countries that have oil as a significant fraction of their economics have low ratings for the HDI and democracy.
Solar Learning Curve
Supply and Demand
Subsidy and Taxes
If we want to change the amount of a good or service that is provided, we must change the intersection of the supply and the demand curves.
We do this by lowering or raising the price of a good.
For example, if the government creates a carbon tax, the price of gasoline will rise, and there will be less gasoline sold and less carbon emitted.
If instead we want more electric cars, the government can provide a subsidy to electric cars that lowers the price and the market will produce more cars.
