Annual Energy Outlook 2006 with Projections to 2030 - Usinfo.org

Trends in Economic ActivityOutput Growth for Energy-IntensiveIndustries Is Expected To SlowEnergy Expenditures Relative to GDPAre Projected To DeclineFigure 26. Sectoral composition of output growthrates, 2004-2030 (percent per year)Figure 28. Energy expenditures as share of grossdomestic product, 1970-2030 (nominal expendituresas percent of nominal GDP)Total gross output2.9Services3.2HistoryProjections25Industrial2.1Energy intensityManufacturing2.3(thousand Btu per20real dollar of GDP)Nonmanufacturing1.417.49.3Agriculture: crops1.2155.8Agriculture: other 0.7Coal mining1.6101973 2004 2030Oil and gas extraction 0.1Other mining1.55All energyPetroleumConstruction1.7Natural gas00.0 1.0 2.0 3.0 4.0 1970 1980 1990 2000 2010 2020 2030The industrial sector (all non-service industries) hasshown slower output growth than the economy as awhole in recent decades, with imports meeting agrowing share of demand for industrial goods. Thattrend is expected to continue in the reference caseprojections.Within the industrial sector, the output of manufacturingindustries is projected to grow more rapidlythan that of nonmanufacturing industries, whichinclude agriculture, mining, and construction (Figure26). With higher energy prices and more foreign competitionexpected, however, the energy-intensivemanufacturing sectors [84] are projected to grow byonly 1.3 percent per year from 2004 through 2030,compared with a projected 2.6-percent averageannual rate of growth for non-energy-intensive manufacturingoutput (Figure 27).Figure 27. Sectoral composition of manufacturingoutput growth rates, 2004-2030 (percent per year)ManufacturingEnergy-intensiveFoodPaperInorganic chemicalsOrganic chemicalsResinsAgricultural chemicalsGlassCementIron and steelAluminumPetroleum refineriesNon-energy-intensiveMetal-based durablesOther manufacturing-1.0-0.51.11.31.92.30.60.90.12.11.10.90.81.02.63.01.90.0 1.0 2.0 3.0The ratio of total expenditures for energy relative tototal GDP (both in nominal dollars) provides an indicationof the importance of energy expenditures inthe aggregate economy. Before the oil embargo of1973-74, total energy expenditures were equal to 8percent of U.S. GDP, petroleum expenditures justunder 5 percent, and natural gas expenditures 1 percent.Following the price shocks of the 1970s andearly 1980s, those shares rose dramatically—to 14percent, 8 percent, and 2 percent, respectively, in1981. Since then they have fallen consistently, to2004 levels of about 7 percent for total energy expenditures,4 percent for petroleum expenditures, andjust over 1 percent for natural gas expenditures.Although recent developments in the world oil markethave pushed the shares upward, they are projectedto decline from current levels in the referencecase. In 2030, total nominal energy expenditures areprojected to equal 5 percent of nominal GDP, petroleumexpenditures 3 percent, and natural gas expendituresless than 1 percent (Figure 28).The overall decline in energy expenditures relative toGDP has resulted in large part from a decline in worldoil prices (in real dollar terms) from their peak in1981. And although oil prices have risen recently,their long-term trajectory in the AEO2006 referencecase is relatively flat in real terms. Another reason forthe declining share of energy expenditures has been asteady decline in the energy intensity of the U.S.economy, measured as energy consumption (thousandBtu) per dollar of real GDP. Structural shifts inthe economy and improvements in energy efficiencyhave allowed for the decline in energy intensity,which is projected to continue through 2030.Energy Information Administration / Annual Energy Outlook 2006 63