Productive efficiency and energy use: An historical perspective

The paper discusses long-term trends in relationships between energy use and the overall productive efficiency of the American economy. While total energy consumption grew strongly during the twentieth century, the intensity of energy use (i.e. the energy/GNP ratio) fell persistently much of the time. Thus, there were simultaneous long-term improvements in labor productivity, total factor productivity,and energy productivity. The historical record appears to be at odds with conventional beliefs that gains in productive efficiency depend upon the rising intensity of energy use in production processes. A key role in bringing about these counter-intuitive results is assigned to what is referred to as the energy-technology-productivity nexus, in which the quality of particular energy forms such as electricity and liquid fuels (along with closely linked changes in energy-using technologies) played a critical part in leveraging the overall efficiency of production. As a result of these energy form-dependent improvements in productive efficiency, outputs grew more rapidly than all inputs, including the inputs of energy. The more recent past stands in sharp contrast to the long-term record. While energy efficiency (as measured by energy/GNP) showed strong gains during the late 1970's and early 1980's, the growth in overall productive efficiency was severely retarded. Implications for the future of suggested linkages between the quality of particular energy forms and technological progress are considered.