Why have rising oil prices not wrecked the global economy? The consensus five years ago was that every $10 increase in oil prices slashed at least 1/2% off real global GDP growth. Answer: energy consumption per dollar of GDP has declined — a lot. In 1950 the US used almost 20 British Thermal Units (BTU) to produce $1 of GDP. In 1970 it was 17.44 BTU. Today it takes 8.78 BTU. (From The Gartman Letter, 7 May 2008, based on data from the EIA and Dr. Mark Perry of the University of Michigan)
This is not because we "no longer make things." US manufacturing as a % GDP has been flatish for a generation.
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