Energy consumption in the US reconsidered. Evidence across sources and economic sectors

Abstract

This study analyzes the impact of GDP shocks in USA on primary energy consumption and the reverse impact in a comprehensive and novel framework, distinguishing by economic sectors (commercial, industrial, residential and transportation) and energy source, i.e., total fossil (coal, natural gas and petroleum), nuclear, and renewable (hydroelectric, geothermal and biomass) for the period 1973:1 to 2015:2. To this end, we apply Granger causality analysis through the Hatemi-J [1] and Toda and Yamamoto [2] approaches from a time series perspective to evaluate the existence of asymmetries on this bidirectional relationship. The empirical results suggest that the impact of GDP on primary energy consumption is heterogeneous and energy source-specific, and an asymmetric behavior appears among cycles. Moreover, it seems clear that the US economy is highly dependent on petroleum energy consumption. The renewable energy sources do not seem to show any relationshipsources seem to show no relationship with economic growth, and finally, our results suggest that energy consumption in the industrial sector is key to economic growth and is also very sensitive to negative economic shocks.