Saturday, January 15, 2011

The Wide World of Energy as a Percentage of Personal Income/Consumption

I've been mucking about with data from the U.S. Bureau of Economic Analysis (BEA), attempting to get a handle on how much we spend on energy; after all, if it's not a major component of one's budget, who cares how high the price goes? The obvious first rejoinder is that with a boost in fuel prices the price of everything else will be inflated in toto/lockstep/subsequently/never/immediately/initially, before government price controls are set/etc. Such a simple thing, but there seem to be an infinite number of ways to dice this carrot.

For starters, my graph of "Gasoline fuel oil and other energy goods" from the BEA's table 2.5.3, available via their "underlying data" for their national income and product account (NIPA) tables.

BEA Gasoline Fuel Oil and Other Energy Goods as Personal Consumption Expenditures 1959-2010

Looks straightforward enough, right? As time goes by energy is becoming less and less a part of total "Personal Consumption Expenditures," which one handy econo dictionary informs me is also known as "consumption." Had enough weasel words yet? Just you hang on! This is just one of a whole calvacade of different slices of the pie - you can also plug in "Gasoline and oil," or "Fuel oil and coal." Yeah, lots of Americans still buying coal out to heat their homes.

My graph does show a substantial bottoming out in the last five years or so of the trend of decline which has been going on for decades. One thing I found out about PCE is that is quite the juggernaut, only breaking stride in the BEA data for a brief spell 2008-2009. Clusterstock made fun of American's verrrrrrrry brief dalliance with austerity thus: CHART OF THE DAY: American Consumers Return To Their Historical Pattern Of Going Nuts

Remember when it looked as though consumers might enter into some new age of thrift and austerity?
Well, it's true that there was in fact a brief, unprecedented dip, but the key word is: brief.
As you can see, the steady march higher continues apace.


Cool, eh? Americans spending more each year is as predictable as death, taxes, increased VMT. Wonder what you see in other nations here. I was able to recreate this chart with BEA Table 2.8.5., "Personal Consumption Expenditures by Major Type of Product Monthly," if you want to fiddle about yourself.

I'd also like to see an even longer data series, which might exist, but BEA only goes back to 1959 at best, and unfortunately their data with indexes in chained 2005 dollars only start in 1995; I'm very interested in how things transpired during the 80s recessions, and would really like to know how the fuel spikes back then hit peoples' wallets.

An august commentator on this issue is James Hamilton, and last month he had a post at his Econbrowser blog delving into how bullish oil prices might impact our current ostensible economic recovery: Worrying About Oil Prices. Here's his chart of "Energy expenditures as a percentage of consumer spending":


Which yields a much different shape than my attempt; mine would really do the job for a BAU politician or cornucopian, though. The Prof knows his stuff so I'm going to recreate his data/chart for future ref.

Here's another take on this subject, focusing on gasoline this time:


From Adjusted for Income & Fuel Efficiency Increases, Gas Today is Almost 50% Below Record High - Seeking Alpha. Note that this was published July 01, 2008, before data covering energy's ascent into the stratosphere and subsequent crash to ground was in. But it looks to largely follow Hamilton's curve, yet uses a quite different approach. It was a refinement on a chart of 1k gallons of gasoline as a % of per capita disposable income. Slapping all of these sets on one graph would be very instructive, I'd say.

To conclude, and get back to what kicked off this line of investigation, the nice folks at inflationdata.com provide a table/chart of Inflation Adjusted Crude Oil Prices. In a future post I'll look into this in more detail.

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