Friday, June 14, 2013

The Wealth of Nations 2013

Yes, it’s that time of year again. It's summer time, and it's also the time of year when BP releases it updated data of world production and consumption of coal, oil, gas, and electricity. There are a few surprises this year...well surprises to me at least. But in general the overall trends are the same:  Brazil, India and China are growing while everybody else is stagnant. I'll start with the surprises, and then I'll present some graphs using data from the 2013 BP Statistical Review of World Energy workbook.

(1) The US economy (as measured in [TW-hrs] of electrical and mechanical work produced) decreased slightly in 2012 compared with 2011. This means that we are not putting the work we generate to good use. Countries like Brazil, India and China are putting the work they generate to good use. The US (like a lot of other countries) is getting ~0% return on work invested. The reason that this is a surprise to me is that I'm confusing the feeling of growth recently (since Nov 2012), and forgetting that in 2012 the US was focused on the 2012 election rather than trying to grow its economy. 
(2) Japan's economy grew by 3%. This was a surprise to me because they shut down all of their nuclear power plants. I was expecting to see their economy significantly shrink in size. So, you could understand why I was shocked to see Japan's rate of growth exceed the US's rate of growth. (To put it sarcastically, an election in the US can cause more economic damage than a tsunami that causes a country to shut down all of its nuclear power plants.)
(3) China's economy continues to catch up with the U.S. economy. China's rate of growth was 5%/yr compared with the -1%/yr for the US. If China maintain a rate of growth that is 6%/yr larger than the U.S., then in roughly a year and a half years China will be able to generate as much electrical and mechanical work as the U.S. This means that when I do this calculation again using the 2015 BP Statistical Review of World Energy, there is a good chance that China will have the world's largest economy in terms of economic output as measured in [TW-hrs].
(4) The purchasing power parity GDP (i.e. PPP GDP) is a pretty good reflection of the wealth of country, i.e. the capability to do mechanical and electrical work. However, the calculation of the GDP appears to be biased against a few countries, especially Canada and Russia. I can understand why it would be biased against Russia (i.e. black markets and collective farming), but I have no clue why the IMF and other world organizations consistently underestimate the size of Canada's economy.  (Any ideas?)

So, now I'm going to present the data in graphical form. If you are interested in seeing these graphs for prior years (as well as a discussion of the methodology), check out the graphs from previous posts in 2011 and in 2012 on the Wealth of Nations.