Slide 4 of 5

Notes:

• The third chart shows the relative size of petroleum and total energy expenditures as a share of the aggregate economy.

• Prior to the embargo of 1973-74, total energy expenditures constituted 8 percent of the output of the economy, measured by GDP. The share of petroleum expenditures was just under 5 percent.

• The price shocks of the 1970s and early 1980s resulted in the energy and petroleum shares rising dramatically to approximately 14 percent and 8 percent, respectively, by 1981.

• Since that time, the shares have fallen consistently. Part of the reason is the decline in world oil prices. The other reason is the steady decline in energy intensity, measured by the energy to GDP ratio. This ratio has declined due to structural shifts in the economy and improvements in energy efficiency. By 1995, total energy expenditures had fallen to 7 percent of the economy, while petroleum had fallen even further, to 3.2 percent.

• Also, since 1981, petroleum consumption as a share of total energy consumption has declined from 42 percent to 38 in 1995.