By Abby Yu and Ruinan Liu
As we make energy consumption more efficient, would we use more or less energy? Logic would say that higher efficiency results in less wasted energy consumption. Large cities are especially concerned with their energy consumption and ability to save on future costs. However, according to the Khazzoom-Brookes postulate, increased energy efficiency only causes higher energy demand and therefore more consumption. This argument is based on household demand and the perception that gains from energy efficiency are decreases in price. Gains in efficiency will also create gains for labor or other capital from saved revenue; however, this means more energy is consumed from saving on using human or machine capital.
The graph below shows the steady rise in energy consumption with coal being the one to drop the most. As for energy efficiency, the EPA said in 2016 that the average mpg for new vehicles increased to a record 24.8. However, we do not see fuel efficiency and consumption moving together.
In the macroeconomy, as efficiency improves, prices will fall and consumer demand will increase. According to the New Yorker, energy production increased by 66 percent from 1984 to 2005 despite better energy efficiency. This resulted from both population growth and more consumption per capita. Another example from the article was fuel oil; the average driver gets more out of a gallon of gas than a driver from 1920. However, the population as a whole now consumes more energy.
Do you think we should go so far as to produce inefficient forms of energy production (slower cars) to decrease consumption? What are the ways we can actually reduce energy consumption? What would it take to disprove this postulate?