Here’s What’s Shoring Up the Global Economy During the Energy Shock

Oil reserves, leaps in energy efficiency and the AI boom have helped stave off a slump for now

By Jason Douglas of The WSJ. Excerpts:

"This resilience reflects ample energy reserves, policies to help consumers and the offsetting effects of the artificial-intelligence boom that is powering trade and business investment in the U.S. and beyond.

It also highlights an underappreciated shift in the workings of the global economy. Over the years, countries have become steadily more energy efficient, squeezing more economic activity out of each drop of oil or cubic meter of natural gas burned. The energy needed to generate a dollar of gross domestic product, adjusted for inflation, has since 2000 fallen by about a third in the U.S. and Europe and by about 40% in China, according to World Bank data."

"Better energy efficiency “cushions the shock” from supply disruptions, International Monetary Fund Managing Director Kristalina Georgieva said in April. Underlining the global economy’s resilience, the IMF said that assuming energy flows through the strait resume by midyear, it expects only modestly slower growth this year than in 2025, at around 3.1% versus 3.4% last year."

"A deeper reason for the global economy’s resilience compared with previous energy shocks is greater energy efficiency. Advanced economies have shifted to less energy-intensive services such as finance and healthcare from more energy-hungry manufacturing."

"Renewables have also played a role—both solar and wind lose less energy as heat than burning fossil fuels. Consumer appliances have been re-engineered to use less electricity and firms have squeezed out improvements in industrial processes to save energy."

"German engineering giant Thyssenkrupp has improved its use of energy through measures including capturing waste heat, reducing leaks and replacing lighting and other components with newer, more energy-efficient alternatives"

A French company is "using AI to monitor and adjust energy use in its fiberglass furnaces to boost efficiency, and is replacing natural gas with more efficient fuels such as hydrogen."