The Wall Street Waltz: 90 Visual Perspectives, Illustrated Lessons From Financial Cycles and Trends, Revised and Updated Edition

Chart 71

Electricity Use and Economic Growth

This chart is probably the hardest to understand in this book, but it tells a fascinating story, and is well worth the effort. Between its lines, it tells how we got in over our heads with the 1970s OPEC oil crisis.

The chart plots kilowatt-hours of electricity sold versus GNP as expressed in inflation-adjusted dollars (using 1947 as a base). Each dot represents the relationship of kilowatt-hours with GNP for a single year. A number by each dot is meant to mean that the dot depicts the year (52 means 1952). Two lines are drawn: Line A represents the average trend from 1929 to 1945, and it is flatter than line B, which represents the trend from 1946 through 1956. The 1960 and 1965 dots represent projections, because this chart was published in 1958. Actually, the projections came out right on target.

The degree to which line B is steeper than line A depicts a major change in power usage after World War II. Before then, as shown in Chart 72, the United States was able to produce almost all of its own energy via the domestic oil giants that were created around the turn of the century, such as Standard Oil. If you carefully pick points on the chart, you'll see that during that period (along line A), a doubling of GNP resulted in about a 150 percent increase in electricity usage.

But after World War II, things changed. Consumers became gadget buffs. The next doubling in GNP generated a fivefold increase in electricity consumption. Use of ...