This article originally appeared on http://www.econmatters.com, written by Kurt Cobb.
Energy Costs and Productivity Growth
|Chart Source: Economist View, April 2015 (added by EconMatters)|
From an energy perspective, productivity gains are facilitated by technical advances that enable laborers to empower their efforts with greater quantities of high-quality fuel embodied in and used by capital structures.
We found that in the U.S. manufacturing sector, output per worker-hour is closely related to the quantity of fuel used per worker-hour. A similar relation exists in the U.S. agricultural industry.
Technical improvements in the extractive sectors have made available previously uneconomic deposits only at the expense of more energy-intensive forms of capital and labor inputs. Physical output per kilocalorie of direct fuel input in the U.S. metal mining industries has declined 60 percent since 1939, although a few exceptions to that trend are known. The energy cost per ton of metal at the mine mouth for industrially important metals such as copper, aluminum, and iron has risen sharply as their average grade declined. For all U.S. mining industries (including fossil fuels), output per unit input of direct fuel declined 30 percent since 1939.