The Impact of Sector Expansion on Energy Intensity in OPEC Countries vs. the Rest of the World

ABSTRACT The relationship between energy intensity and economic expansion is important because countries need to grow within the current high-price energy environment. This study estimates the impact that production structure on energy use across countries and how changes in production over time have influenced energy intensity. The impact of expanding different economic sectors on energy intensity in OPEC countries is compared with the rest of the world during 1980-2005 using panel data with fixed and random effects regression models. Expansion of the agriculture, transportation and communication sectors, plus an increase in total economic production, is the main reasons behind a fall in energy intensity internationally. The results show that OPEC countries have higher energy intensity due to their smaller service sectors and unused economic growth capacity