New EIA Report Shows Economy Gets Smart on Energy Expenditures
Watching our country optimize energy usage while the economy grows is exciting to say the least. Late last month, the U.S. Energy Information Administration (EIA) released a report detailing U.S. energy expenditures per unit GDP. The report’s findings shed new light on our nation’s efforts to curtail energy consumption.
The report focuses on 2016 energy expenditures (the amount of money spent to consume energy). In 2016, energy expenditure in the U.S. declined for the fifth year in a row. The total cost associated with these expenditures went down to $1.0 trillion, representing a 9 percent decrease from 2015 levels.
The numbers show that 2016 was a banner year for smart energy use. In the report, total energy expenditure is exhibited as a percentage of our gross domestic product (GDP). That percentage was 5.6 percent in 2016, which is no small feat. It’s the lowest percentage since 1970.
All of this is great news, considering that the U.S. GDP has shown year over year growth since 2010. That’s right, we are spending less on energy, at the very same time our nation’s economy is actually growing. What’s even more interesting is that our total energy consumption has more or less stayed the same since 2013; the entire reason behind the decrease in energy expenditures in 2016 can be attributed to lower energy prices. That means our energy sectors have found less expensive ways to generate energy—mostly likely due largely to investments in energy innovation.
The report clarifies how the EIA comes up with the energy costs for the purpose of analysis: “The U.S. total energy price is calculated as the consumption-weighted average prices of all energy sources consumed in each of the four end-use sectors: transportation, industrial, residential, and commercial.”
That means that the energy price reflects how prominent energy consumption is in the four main categories, and it also accounts for the amount of energy each category used in relation to each other.
Although the price of energy was low in 2016, energy is still a top concern for consumers. Energy expenditures in 2016 accounted for 74 percent of residential expenditures, 80 percent of commercial expenditures, and 37 percent of industrial expenditures.
The report also explains how our energy costs are “heavily influenced by prices of petroleum products such as motor gasoline, distillate fuel oil, and hydrocarbon gas liquids.” Petroleum’s influence on our economy is so strong due to the amount of consumption attributed to the transportation and industrial sectors. Both of these sectors heavily rely on petroleum energy sources; but increasingly, clean energy sources are being developed.
Unfortunately, energy prices are now on the rise. The report takes 2017 and 2018 data into account, and notes that the average prices of products like motor gasoline, natural gas, and retail electricity have all gone up since 2016.
A smart way to offset the recent price increase for traditional energy sources is to diversify the nation’s energy portfolio. The technology needed to harness and distribute energy from alternative sources is constantly improving and taking these methods into account could slash the price of the U.S.’s total energy expenditure for good. CRES advocates for a true “all of the above” policy approach to domestic energy, which we strongly believe will help continue the trend this report describes.