The Energy Balance
THE energy balance is a simple but effective way to record energy consumption, production, and the residual, which is net exports or imports. As a statistical construct the balance records ex post what actually occurred. As a planning device it expresses what planners hope will occur. It is also useful to project what is likely to occur, not necessarily what planners hope for. In all three cases the apparent simplicity of the balance is deceptive. Behind the figures for energy supplies, consumption, and net exports lies a complex set of interconnections spanning the entire economy. It is important to have the main outlines of those interconnections in mind before considering the Soviet energy balance. I discuss those here solely with reference to the Soviet economy, although most of my observations apply to any country.
Energy production is determined by the factor inputs--capital and labor--used in the production process. The capital stock (machinery, mines, infrastructure) is itself a reflection of years--sometimes decades--of previous investments. The productivity of the labor and capital is determined not only by geographical conditions but also by the intensity and success of years of exploratory efforts. Energy supplies change over time primarily because of actions taken over many years; little can be done in any particular year to increase energy supplies the following year unless most of the necessary measures were taken some time earlier. Similar limitations apply to the ability to transform energy