This paper reconciles conflicting explanations for the decline in U.S. energy intensity over the last 40 years of the 20th century. Decomposing changes in the energy-GDP ratio into shifts in the structure of sectoral composition and adjustments in the efficiency of energy use within individual industries reveals that while inter-industry structural change was the principal driver of the observed decline in aggregate energy intensity, intra-industry efficiency improvements played a more important role in the post-1980 period. Econometric results attribute this phenomenon to adjustments in quasi-fixed inputs-particularly vehicle stocks, and disembodied autonomous technological progress, and show that price-induced substitution of variable inputs generated transitory energy savings, while innovation induced by energy prices had only a minor impact.
© 2007 Elsevier B.V.