Defining 'total energy use' in economic studies: does the aggregation approach matter?

In economic models, the aggregate consumption of energy resources is normal ly expressed either in terms of its total heating value (e.g. Btus or barre ls of oil equivalent) or in terms of its economic value (e.g. Divisia indic es or total expenditures). For most major OECD countries, we find that it m atters little whether various energy resources consumed in the industrial s ector are aggregated in terms of their heating value or their economic valu e - similar trends emerge regardless of which measure is adopted. Consequen tly, as a practical matter, macroeconomic and energy modeling efforts need not be too concerned about which measure of total energy usage is adopted. The prominent exceptions are the United States and Mexico, where measures o f total industrial sector energy use based on heating values and economic v alues diverge greatly due to some unique trends in electrification and ener gy prices. Consequently, attention to aggregation issues may be an importan t consideration in efforts to model the energy consumed in the US or Mexico . (C) 1999 Elsevier Science B.V. All rights reserved. JEL classification: Q 40.