Resources and Energy 13 (1991) 1-21. North-Holland Sources of change in energy use in the U.S. economy, 1972-1982 A structural decomposition analysis zyxwvutsrqponmlkjihgfedcbaZY A. Rose* zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCB Pennsylvania State University, University Park, PA 16802, USA C.Y. Chen National Cheng Kung University. Tainan, Tatwan Final version received May 1990 Energy use patterns in industrial nattons have gone through dramatic changes over the past 20 years. This paper offers a major advance in the methodology of structural decomposition analysis (SDA) and applies it to the determination of the relative prominence of various ‘sources’ of change in energy use in intermediate sectors of the U.S. economy between 1972-1982. These sources correspond to the pure form of input changes in the context of production theory. We derive a mutually exclusive and completely exhaustive set of estimatmg equations at the level of detail of the two-tier KLEM production function. It IS our contention that these equations can yield as much msight as more elaborate and data-intensive approaches utilizing flexible functronal forms. Our results indicate that the major sources of upward pressure on energy use were economic growth, KLEM substitution, and the joint effects of technological change, while the major sources of downward pressure were energy conservation and technological change in materials. 1. Introduction The pattern of energy use has changed dramatically over the past dozen years. Several reasons for this phenomenon have been advanced, including: the Arab oil embargo, OPEC price hikes, development of more energy- efficient technology, and structural shifts in the economy away from more energy-intensive heavy industry. A few studies have authoritatively explained the impact of a small subset of stimuli [see, e.g., Mork and Hall (1980), Hirst et al. (1983), Jorgenson (1984)], but none have been able to determine the *The authors wish to acknowledge the assistance of Shih-Mo Lin in helping to compile the necessary data. Peter Blair, Andrew Wyckoff, David Wood, and Timothy Considine provided helpful comments on earlier versions of the manuscript; however, the authors alone are responsible for any remaining errors or omtssions. 01654572/91/$03.50 0 1991-Elsevier Science Publishers B.V. (North-Holland)