The Economy - Energy - Oil to 1980 (Revisited)
Authors: Heydinger E.R. , Bovaird W.R. 
Published: December 2007

This paper was prepared for the 47th Annual Fall Meeting of the Society of Petroleum Engineers of AIME, to be held in San, Antonio, Tex., Oct. 8–11, 1972 Permission to copy is restricted to an abstract of not more than 300 words. Illustrations may not be copied. The abstract should contain conspicuous acknowledgment of where and by whom the paper is presented. Publication elsewhere after publication in the JOURNAL paper is presented. Publication elsewhere after publication in the JOURNAL OF PETROLEUM TECHNOLOGY or the SOCIETY OF PETROLEUM ENGINEERS JOURNAL is usually granted upon requested to the Editor of the appropriate journal, provided agreement to give proper credit is made. provided agreement to give proper credit is made. Discussion of this paper is invited. Three copies of any discussion should be sent to the Society of Petroleum Engineers Office. Such discussions may be presented at the above meeting and, with the paper, may be considered for publication in one of the two SPE magazines.

Certain relationships between U. S. economic growth and energy demand have changed enough in recent years that historic guidance to future trends is not so reliable. The ratio of energy demand to real GNP generally declined for many decades prior to the mid-Sixties but has since tended to rise. We concluded several years ago that economic growth would become increasingly energy-intensive over the next 10–15 years, and we maintain that position even though the ratio has leveled off in 1971–72.

Introduction

Most of us have become aware of apparently fundamental changes in the American life-style. However, while economic forecasters may philosophically have either embraced those changes or been dismayed by them, few have publicly explored the effects upon forecasting when many historical economic patterns do not offer reliable guidance to future trends. Similarly, most energy forecasters remain skeptical of suggestions that the U. S. energy/GNP ratio will continue rising rather than revert to its historic decline. About two years ago we concluded that U. S. economic growth during the Seventies would be slower than in the Sixties, that energy demand would nevertheless increase more rapidly and oil would tend to hold or increase its share of the energy market. When our outlook was first made public, it represented an amalgam of changing trends which we had foreseen but had not fully quantified. In the interim, we have expanded the analysis to include multivariate correlations and, of course, we have been able to use more recent empirical data. Our correlation analysis, using econometric techniques, suggests that we can apply a fairly high level of confidence to the forecasted rising energy/GNP ratio. We regard 1971–72 developments, some of which may appear to negate our earlier ideas, as normal deviations to be expected about any long-term trend. Also, several parameters essential to our prior parameters essential to our prior conclusions are still in the embryo stage, but their evolving impact has not been retarded.

BASIS OF DISCUSSION

An enormous number of energy studies have been completed or are now waterway stimulated by the growing realization that energy supply is increasingly tight.