Energy. It makes nations go. The reality is that we simply have to have energy, and lots of it. It has been understood for a very long time that cheap energy means economic prosperity and better Paychecks, but is that going to continue?
Here are Five Fast Facts on why energy matters so much:
- ♻️ It’s A Cycle - The connection between your Paycheck and energy is very nuanced, but, generally speaking, as cheap energy becomes more available, economic growth occurs. That brings more cheap energy, which makes more economic growth, and so on. It’s a more modern chicken-and-egg thing, apparently.
- 🤔 Complications - There is a lot of stuff involved that complicates our understanding of the situation. For example, depending on where you live, every time you fill your car with gas, up to 70% of the cost is not for the actual gas or anything to do with oil…but taxes to the government! Things like this help obscure just how much energy costs (but not how much government costs!)
- 📈📉 The Trend Is Clear - Still, the trend over the last century (if not much, much longer) is clear: energy use and economic growth are linked. Estimates say that averaged across all nations, a 10% increase in energy costs slows economic growth by 0.15%. It could be more for nations that use more energy. This is why the economy tanks when oil and natural gas get pricey.
- 🤓 Things Are A-Changin’...? - It may not always be this way, though. A recent massive study suggests that the link is weakening…slightly. As nations advance, they tend to go from industrial to service-oriented, and service sectors tend to use less energy, maybe as much as 1/20th the amount. I bet you never thought corporate America would be more efficient than something, did you?
- 💻 Tech Talks - Another reason we may see some de-linking is that technology is really improving our energy efficiency. So, while we may use more and more energy, it becomes more efficient along the way, for a net reduction overall. People are more focused on energy conservation now than ever before, and smart devices make it easy to reduce our usage without thinking about it. Alexa, turn off my lights every night at 10pm…
🔥Bottom line: Someday there may be a big gap between energy usage and economic growth, but at least for right now they are tied firmly together. That’s why we like to see low energy costs – whether oil, coal, natural gas, nuclear, hamsters running on a tiny wheel, whatever – whenever possible. That just paves the way for economic growth, and that means better Paychecks for everyone!
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