Tags: Dolan | cheap | energy | myth

Economist Dolan: Benefits of Cheap Energy a ‘Myth’

By    |   Thursday, 18 Oct 2012 01:24 PM

Many economists — and both presidential candidates — say lower energy prices represent a key element for non-inflationary economic growth, but independent economist Ed Dolan sees it differently.

“In my view it is a myth that cheap energy — affordable energy, as many people say -- is vital to growth,” he tells Oilprice.com.

“The idea that there is a lockstep relationship between growth of gross domestic product and use of energy is widespread, but the data simply does not bear it out.”

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

What it’s really about is energy efficiency, Dolan says.

“[T]he world’s best-performing economies have become dramatically more energy efficient over time. … From 1980 to 2010, the high-income countries in the OECD [Organization for Economic Co-operation and Development] have increased their average energy efficiency by 55 percent.”

To be sure, while the United States has increased its energy efficiency by 81 percent over that period, “we still have a long way to go,” Dolan says, according to Oilprice.com.

“The U.S. economy is still 15 percent less energy efficient than the average for high-income OECD countries.”

Many energy experts are impressed with the recent explosion of U.S. oil and gas output. Daniel Yergin, vice chairman of consulting firm IHS, is one of them.

“Over 1 million jobs have been created by the development of unconventional gas,” he tells The Wall Street Journal.

“It makes the U.S. more competitive. You can see how the growing recognition of the economic impact is changing the political discourse about energy in the U.S.”

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

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Many economists — and both presidential candidates — say lower energy prices represent a key element for non-inflationary economic growth, but independent economist Ed Dolan sees it differently.
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2012-24-18
Thursday, 18 Oct 2012 01:24 PM
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