Disposable energy

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An interpretation of Maslow's hierarchy of needs, represented as a pyramid with the more basic needs at the bottom.[1]

Life requires energy. Maslow's hierarchy of needs observes that physiological needs of food (energy), water and air dominate our nature at the base of the pyramid.

Disposable energy[2] is an economic metric of the energy that people have available to them to pursue happiness. Disposable energy is estimated by dividing the average family disposable income[3] by the price of gasoline[4] then normalizing relative to 1986.

Growth of GDP, oil supply and disposable energy

"Metrics: Replace GDP with Disposable Energy". OilPrice.com.  is being proposed as a metric linked directly to the Declaration of Independence statement of rights and the Constitution's mission to defend liberty.

Because oil is currently the lifeblood of industrial economies, the price of gasoline is used to represent all energy costs. As resources expand to track this metric the cost of food and electricity should be factored in.

Because technological progress reduces the energy needed for various purposes, such as lighting and to a lesser extent transportation, heating and air conditioning, disposable energy is a pessimistic measure of prosperity.

As a metric of economic health, Ddsposable energy (DE) has advantages relative to gross domestic product (GDP):

  • Life requires energy. DE directly measures access to energy.
  • DE is easily measured. Changes in gas prices, pay checks, taxes, interest rates are easily seen and understood by people.
  • DE is bottoms-up and forward looking. Add all the energy people have to apply to generating economic work, and growth or decline of the economy becomes apparent.
  • GDP is complex and backwards looking. GDP refers to the market value of all officially recognized final goods and services produced within a country in a given period. What is "official and final" can be complex to measure.
    GDP growth vs disposable energy
  • GDP can mislead. As an example, GDP was growing in the US at about 3% per year approaching the 2007–2012 global financial crisis. Contributing to GDP growth, gasoline prices increases from $1.39 in 2002 to $3.30 in 2008.[5] In contrast, rising gasoline prices forced more and more families to choose between paying for their commute to keep their jobs or paying for their mortgages. Families used their mortgage payments to buy energy. DE indicated the economy was crashing.

The economy has momentum, like a flywheel:[citation needed]

  • Disposable energy indicates the economic work (applied energy) that adds or diminishes momentum of the economic flywheel.
  • GDP is a snapshot of how official goods and services are valued at a point in time.

Applying worker disposable income to buy energy and apply it in the pursuit of happiness determines how much economic work is added to the economic flywheel.

External links[edit]

  1. ^ Maslow's hierarchy of needs
  2. ^ "TWIP Report Warns of Much Higher Gas Prices". SeekingAlpha. 
  3. ^ "1929–2010 income". Census Bureau, United States Federal Government. 
  4. ^ "Historical Price of Gasoline". Energy Information Administration. United States Federal Government. 
  5. ^ "US All Grades All Formulations Retail Gas Prices". Energy Information Administration. United States Federal Government. 

Other references: