Rising demand for energy can be met by increasing supply, or the demand itself can be reduced through conservation. Conservation includes changes in behavior as well as the substitution of non-energy inputs or goods in place of energy. The amount of energy used by households or firms can be reduced by substitution toward other inputs, other goods or other activities. Energy use can be reduced via innovation and technological change, or by substituting capital for energy (e.g., energy efficient windows, lighting or home insulation). Changes in behavior can also conserve energy (e.g., bicycle versus car, walking versus driving, putting on a sweater versus turning up the thermostat). Energy conservation can, and has, been influenced by government policy. Policy can have a positive effect as with the US Energy STAR program to encourage purchases of energy efficient appliances, and the US CAFE (corporate average fuel economy standards) for automobile fuel efficiency. Policy can have the opposite effect as well, as in the case of energy subsidies. The effect of pricing differences on energy use can have dramatic effects, as exemplified by the way in which energy consumption per person tends to be lower in countries where gasoline prices are higher as illustrated below. Follow these links for additional data on per capita gas consumption and gasoline price indexes by country.

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