The production of electricity is outpacing sales
If you follow the energy sector, you know we’re living through interesting times. Energy sources are going through a slow but steady transformation: from traditional fossil fuels such as oil and coal to natural gas, wind, and sun. Given these changes, new companies are entering the energy production industry.
The graph above shows that electricity production in the United States has steadily grown; and, about 10 years ago, it plateaued. Electricity sales, however, have barely increased in the past decades. What’s happening? The divergence between the two measures is, to a large extent, due to more and more electricity production never hitting the market. Many firms and even households produce their own energy for their own use. This could be energy extraction from byproducts of production such as biogas or burning waste or running one’s own wind or solar farm. The recent flattening of electricity production reflects the fact that electricity demand is not increasing as it has in the past, thanks to improved energy efficiency all around. A major reason is also that the U.S. economy continues its natural evolution from energy-intensive heavy industry toward more specialized energy-efficient manufacturing and services.
How this graph was created: Search for “industrial production electricity,” select the two series, and click “Add to Graph.” From the “Edit Graph” menu, choose units “Index,” which should default to the starting date of 1972-01-01. Then click on “Apply to all.”
Suggested by Christian Zimmermann.
View on FRED, series used in this post: