Last time I checked, oil prices were hovering just below $100 per barrel. This reminds me of something I used to obsess about: high oil prices hit some places harder than others.
All else being equal, oil-efficient economies are more insulated from oil price shocks than are economies that require large oil inputs to function. I’m not talking about the amount of oil consumption, but about the "oil-intensity" of an economy. New York state consumes a lot of oil, and it also produces a lot of wealth. Other states, such as Louisiana, consume a lot of oil, but don’t produce anywhere near as much wealth per unit of energy. (In fact, New York produces five times as much wealth per barrel of oil as Louisiana.)
Just so, when oil prices skyrocket, Rhode Island suffers less pain than Texas. And Massachusetts feels less of a pinch than Wyoming. So at the risk of oversimplification, I’ll propose a little schema for the future:
- If the future is likely to bring high oil prices, and
- we’d like to remain prosperous, then
- we should probably start weaning our economies from petroleum.
Brilliant, I know.
I guess one potential lesson here is that our big capital investments shouldn’t expose us to decades of oil price shocks. (Yeah, I’m talking to you, highway.) They should insulate us from high oil prices. (Oh, hi there, compact walkable neighborhood.)
So, how do all 50 states stack up? Find out below the jump …
For context, on average, the U.S. consumes 25 gallons of oil for each $1,000 of GDP it produces.
Gallons of oil per $1,000 of economic activity | ||
1 | New York | 15 |
2 | Rhode Island | 17 |
3 | Massachusetts | 17 |
4 | Colorado | 18 |
5 | California | 18 |
6 | Maryland | 18 |
7 | Illinois | 19 |
8 | Connecticut | 19 |
9 | Nevada | 19 |
10 | Delaware | 19 |
11 | Michigan | 20 |
12 | Arizona | 21 |
13 | Oregon | 21 |
14 | Wisconsin | 22 |
15 | North Carolina | 22 |
16 | New Jersey | 22 |
17 | Virginia | 23 |
18 | Minnesota | 23 |
19 | Ohio | 23 |
20 | Pennsylvania | 24 |
21 | Georgia | 24 |
22 | Washington | 24 |
23 | Utah | 24 |
24 | Florida | 25 |
25 | Nebraska | 25 |
26 | Idaho | 26 |
27 | Missouri | 26 |
28 | Tennessee | 27 |
29 | Indiana | 28 |
30 | South Dakota | 28 |
31 | New Hampshire | 29 |
32 | Iowa | 29 |
33 | New Mexico | 30 |
34 | Vermont | 31 |
35 | Kansas | 31 |
36 | Alabama | 33 |
37 | South Carolina | 33 |
38 | Arkansas | 34 |
39 | Oklahoma | 34 |
40 | Kentucky | 40 |
41 | West Virginia | 41 |
42 | Hawaii | 41 |
43 | North Dakota | 43 |
44 | Maine | 44 |
45 | Mississippi | 46 |
46 | Texas | 47 |
47 | Wyoming | 48 |
48 | Montana | 49 |
49 | Alaska | 67 |
50 | Louisiana | 75 |
Obviously, there are about a trillion reasons for the way these rankings play out. (And keen-eyed readers may notice that energy-producing states are also the most oil-intense economies.) But it sort of doesn’t matter why an economy is oil-inefficient. After all, it’s not as if Kansas is going to get a discount on gas prices because it’s rural and spread out. Rather, places that need a lot of oil to drive their economies will simply find it tougher to keep up if high prices become the norm.
As a postscript, the United States and Canada are two of the most energy-intensive economies in the world. Countries like Japan and Germany can produce two or three times as much wealth with the same amount of energy. So, all else being equal, when oil prices get high, the North American economy feels two or three times the pain as some of our principal competitors.
So there’s your Turkey Day conversation starter. You’re welcome.
I calculated the figures above using 2004 oil consumption data from the US Energy Information Administration, and 2004 gross state product data from the US Census Bureau.