Sources of change in energy use in the U.S. economy, 1972–1982

Energy use patterns in industrial nations have gone through dramatic changes over the past 20 years. This paper offers a major advance in the methodology of structural decomposition analysis (SDA) and applies it to the determination of the relative prominence of various ‘sources’ of change in energy use in intermediate sectors of the U.S. economy between 1972–1982. These sources correspond to the pure form of input changes in the context of production theory. We derive a mutually exclusive and completely exhaustive set of estimating equations at the level of detail of the two-tier KLEM production function. It is our contention that these equations can yield as much insight as more elaborate and data-intensive approaches utilizing flexible functional forms. Our results indicate that the major sources of upward pressure on energy use were economic growth, KLEM substitution, and the joint effects of technological change, while the major sources of downward pressure were energy conservation and technological change in materials.