This is an update of the a chart presented in several earlier posts. It is clear that the U.S. economy still faces the drag of significant energy cost, which represents over five percent of GDP. In earlier periods of prosperity, fuel cost was consistently below four percent. It is likely that this continued high cost has a lot to do with the current economic doldrums; money spent for energy cannot be spent on other things. The energy cost would be noticeably higher were it not for the dramatic decline in the cost of natural gas, due in large part to the burst of production from the shale plays. In 2012, coal consumption(1) was down significantly, while gas consumption was up. If there's a "war on coal," natural gas is leading the charge. Natural gas is not a ready substitute for liquid fuels based on petroleum however, and this cost remains by far the biggest portion.(2)
Notes
(1) Coal price data for 2012 is not yet available from EIA; it is assumed the same in 2012 as in 2011
(2) The oil price for 2011 and 2012 is the Brent price, not the West Texas Intermediate price. The cost of these two benchmark crudes, virtually identical from the 80s through 2010, diverged in 2011, with Brent consistently higher. Brent essentially represents the cost paid by most U.S. refiners; the price trend of gasoline, for example, closely tracks the price of Brent.
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