Implications of Energy Return on Investment, Peak Oil and the Concept of “Best First”

The following is a post by both Dr. Charles Hall and EROI Guy. Most of the material comes from a recently published book chapter titled “Peak oil, EROI, investments and the economy in an uncertain future.” The book can be found here. Dr. Charles Hall is a professor of Systems Ecology at the College of Environmental Science and Forestry in Syracuse, New York, and has written about energy issues many times on The Oil Drum, found here.

The enormous expansion of the human population and the economies of the United States and many other nations in the past 100 years have been accompanied by, and allowed by, a commensurate expansion in the use of fossil (old) fuels, meaning coal, oil and natural gas. To many energy analysts that expansion of cheap fuel energy has been the principal enabler of economic expansion, far more important than business acumen, economic policy or ideology although they too may be important (e.g. Soddy 1926, Cottrell 1955, Georgescu Roegan 1971, Odum 1972, Kummel 1982, Kummel 1989, Jorgenson 1984 and 1988, Hall et al. 1986 (and others), Dung 1992, Ayres 1996).

While we are used to thinking about the economy in monetary terms, those of us trained in the natural sciences consider it equally valid to think about the economy and economics from the perspective of the energy required to make it run. When one spends a dollar, we do not think just about the dollar bill leaving our wallet and passing to some one else’s. Rather, we think that to enable that transaction, that is to generate the good or service being purchased, an average of about 8,000 kilojoules of energy (equal to roughly the amount of oil that would fill a coffee cup) must be extracted from the Earth and turned into roughly a half kilogram of carbon dioxide (U.S. Statistical Review, various years).

History has shown that removing the energy supply from the economy will cause it to contract immensely or even stop. Cuba found this out in 1991 when the Soviet Union, facing its own oil production and political problems at that time, cut off Cuba’s subsidized oil supply. Both Cuba’s energy use and its GDP declined immediately by about one third, all groceries disappeared from market shelves within a week and the average Cuban lost 20 pounds (Quinn 2006). Cuba subsequently learned to live, in some ways well, on about half the oil as previously, but the impacts were enormous. While the United States has become more efficient in using energy in recent decades, most of this is due to using higher quality fuels, exporting heavy industry and switching the way we define economic activity (e.g. Kaufmann 2004). Many other countries, including efficiency leader Japan, are becoming substantially less efficient (Hall and Ko, 2007, LeClerc and Hall 2007, Smil, personal communication).

So if energy is required for economic growth and maintenance, then the important question is how much oil and gas (i.e. energy) is left in the world? The answer is a lot, although probably not a lot relative to our increasing needs, and maybe not a lot that we can afford to exploit with a large financial and, especially, energy profit. Therefore a more precise question might be, “How much oil is left that will yield a large energy profit?" Energy return on investment is a way to answer the latter.

Energy Return On Investment (EROI or EROEI) is simply the energy that one obtains from an activity compared to the energy it took to generate that energy. The procedures are generally straightforward; simply divide the Energy Gained (Out) by the Energy Used (In), resulting in a unitless ratio. The running average EROI for the finding and production of US domestic oil has dropped from greater than 100 kilojoule returned per kilojoule invested in the 1930s to about 30 to 1 in the 1970s to between 11 and 18 to 1 today. This is a consequence of decreasing energy returns as oil reservoirs are depleted and as energy costs increase as exploration and development are shifted deeper and offshore (Cleveland et al. 1984, Hall et al. 1986, Cleveland 2004). Even that ratio reflects mostly pumping out oil fields that are half a century or more old since we are finding few significant new fields. In other words we can say that new oil is becoming increasingly more costly, in terms of dollars and energy, to find and extract. The increasing energy cost of a marginal barrel of oil or gas is one of the factors behind their increasing dollar cost, although if one corrects for general inflation the price of oil has increased only a moderate amount.

The same pattern of declining energy return on energy investment appears to be true for global petroleum production. Getting information on global oil production is very difficult, but a study currently submitted for publication indicates that the global EROI for petroleum production has been declining over the past 8 years and is currently about 18:1 (Gagnon and Hall, submitted). In fact, if the rate of decline continues linearly for several decades then it would take the energy in a barrel of oil to get a new barrel of oil. While we do not know whether that extrapolation is accurate, essentially all EROI studies of our principal fossil fuels do indicate that their EROI is declining over time, and that EROI declines especially rapidly with increased exploitation rates (e.g. drilling).

This decline appears to be reflected in economic news also. In November of 2004, The New York Times reported that for the previous three years oil exploration companies worldwide had spent more money in exploration than they had recovered in the dollar value of reserves found. Therefore it is possible that the energy “break-even” point has been approached or even reached for finding new oil. Whether we have reached this point or not the concept of EROI declining toward 1:1 makes irrelevant the reports of several oil analysts who believe that we may have substantially more oil left in the world, because it does not make sense to extract oil, at least for a fuel, when it requires more energy for the extraction than is found in the oil extracted.

Declining EROI rates for US and World oil exploration and production indicate that our [society’s] ability to weather the coming peak oil storm will depend in large part on how we manage our investments now. From the perspective of energy, there are three general types of investments that we make in society. The first is investments into getting energy itself; the second is investments for maintenance of, and replacing, existing infrastructure; and the third is discretionary expansion. In other words, before we can think about expanding the economy we must first make the investments into getting the energy necessary to operate the existing economy, and into maintaining the infrastructure that we have, at least unless we wish to accept the entropy-driven degradation of what we already have. Declining EROI means that the required investments into the second and especially the first category are likely to increasingly limit what is available for the third. In other words, the amount of energy and dollars spent supplying the energy for economic maintenance will likely increase, while the remainder left for discretionary purposes will likely decrease.

Declining EROI is mainly a consequence of the “best first” principle. This is, quite simply, the characteristic of humans to use the highest quality resources first, be they timber, fish, soil, copper ore or, of relevance here, fossil fuels. This is because economic incentives are to exploit the highest quality, least cost (both in terms of energy and dollars) resources first, as was noted 200 years ago by economist David Ricardo (1821). For instance, the peak in finding oil was in the 1930s for the United States and in the 1960s for the world, and both have declined enormously since then. An even greater decline has taken place in the efficiency with which we find oil; that is the amount of energy that we find relative to the energy we invest in seeking and exploiting it. The pattern of exploiting and depleting the best resources first is occurring for natural gas as well. US natural gas originally came from large fields in Louisiana, Texas and Oklahoma. Its production has moved increasingly to smaller fields distributed throughout Appalachia and, increasingly, the Rockies. The largest fields that traditionally supplied the country with natural gas peaked in 1973, and then as “unconventional” fields were developed second by drilling a vast amount of wells, a somewhat smaller peak occurred in 2007.

In summary, there are three related forces that may reshape societies and economies around the world: peak global oil production, declining EROI of global oil exploration and production, and the “Best First Principle”. They imply that we no longer have the ability to substantially increase oil production without substantially increasing the amount of oil used to get that oil, and finally, that any new discoveries will invariably cost increasing amounts of money and energy to produce. The interplay of these three forces will most likely limit the amount of money designated for discretionary spending, while increasing the amount of money and energy needed just to sustain economic function.

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Soddy, F. (1926). Wealth, virtual wealth and debt. (New York: E.P. Dutton and Co.)

This might be the clearest, most concise statement of the EROI problem I have yet seen. Will print and post it at the office -- see if anyone but us geeks will get it.

This is happening in real time with US/Canadian natural gas production right now. I will try and work up a longer essay on the topic but essentially the marginal and average cost are both well above current commodity price. The energy community has a) conflated 'resource in the ground' with 'affordable and producible at a profit', b)consistently underestimated costs. There are rumours this morning that a major US NG companies service contractors are having trouble getting paid, etc. I suspect that Haynesville shale play (which is probably best of all remaining shale plays Marcellus, Woodford, Fayetville, etc), is a one or 2 trick pony - wells deplete up to 80% in first year - we are looking for gas in all the wrong places...e.g source rock! Publicly declared cost estimates of $2 or $3 per MCF in retrospect look way conservative after future 'work-ups' are factored in.

If nat gas prices remain low due to lower industrial demand, nat gas companies can't make money, and lay down rigs and drop capex. That results in higher prices and brings rigs back on line. In a best-first environment, a 'cliff' will be eventually be reached as the treadmill runs faster and faster. This cliff will manifest (in a functioning economy) in price cycles that go from low to high with ever shortening time amplitude, ultimately pricing out the companies who are sitting on 'plenty of uneconomic gas'. $15 per mcf created flood of gas - then back down to $5 - eliminates production at margin - $20 per mcf - floods us with gas even in depression - back down to $8 - eliminates more production, etc. Each time the tide goes out, more and more companies/reserves are seen to not be wearing bathing suits....

At the highest levels this needs to be looked at and a plan envisioned (of which, reduced consumption is the only answer I can see). The problem is that the advisors to those at the highest levels are the same folks running these nat gas companies. One look at Chesapeakes financials and stock should give anyone that doesn't understand net energy at least a clue that something's not right.

More rigs are being laid down -but depletion THUS FAR, is being more than offset by demand drop from industry. Given the average decline rate of all north american production at over 40%, this won't last long. To me, the natural gas EROI situation is far more urgent than that of oil, particularly because nat gas is large energy input in petroleum extraction.

More details welcomed if others are hearing same...(or different)

p.s. nice work EROI guy

(*Edit - todays BHI rig count drop caused a sharp rally in Nat Gas (==>9%). US down 98 to 1,623, Nat Gas down 80 to 1,267 (down 339 from 1,606 peak in Sept-08), Land down 98 to 1,547 (down 391 from 1,938 peak in Aug-08), GOM down 1 to 63, Canada down 49 to 230 (Canada rig count down 50% in 3 WEEKS!!)

u s industrial demand shows a declining trend since about 2001. '08 ytd through october is up 7% from ytd '07 through october.
october '08 is down about 1.7% yoy vs '07.

This confuses me from an EROEI versus economics standpoint.

If a dollar is worth about 8000 kJ as quoted in the essay, this is approximately 7582 BTU per dollar. The DOE website says that current average natural gas prices are $5.79 per million BTU, which equals about $0.044 per 7582 BTU or $0.044 per dollar worth of energy.

So, while I agree that economics can make it untenable, the economics say that the natural gas currently being extracted has an EROEI of something like 20:1. I remember from a previous essay that things stop making any sense to do at around 3:1, but let's say that instead we use 10:1 because that seems to be roughly where alternative energy sources sit (at which point it probably makes more sense even in the short term to invest in windmills, solar thermal, etc than natural gas). That suggests that the the maximum price natural gas should ever be able to sustain is about $0.10 per dollar, $13.20 per million BTU, or $13.57 per mcf.

There are $765 worth of energy at 8000kJ/dollar in each barrel of oil, so at an 18:1 EROEI, this suggests the a clearing price of about $42.50 per barrel to break even energetically (which is actually surprisingly close to the current value).

I wonder if such a simple analysis can be used to put a reasonable ceiling and floor on energy costs. For example, based on this analysis, it's insane for oil to ever cost less than $42.50 per barrel, because at the EROEI's we currently have it's not enough to cover the costs. When oil was at $150/barrel, that was a profit margin of 3:1 for the producers, on average... I don't think I really quite believe this analysis because I suspect that the economy is working too far separated from reality to be this logical about it, but I do wonder if these analyses perhaps can predict economical results even if the economy doesn't take them into account when deciding where to invest. Perhaps energy efficiency is one of those hidden hands?

1) energy is not the only cost in procuring nat gas. EROI attempts to parse everything into energy, but can't account for water permits, labor, etc.

2)the costs are different than the commodity price that you quote - its 4 months old, now but in this post, I included graphics on marginal and average cost per MCF in North America (over $8 and $6 respectively)

3)Though we have to do it because we don't have direct energy data, I am wary of estimating EROI using dollars. Its like looking at a series of mirrors in a funhouse. Though how else to get people this information in chunks they understand I do not know.

In addition we have to look at the health consequences of using different energy technologies. For example an estimated 500,000 Chinese die every year from coal smoke related health problems. 4000 to 6000 Chinese coal miners die ever year in accidents. In the United States people who live near coal fired power plants are significantly more likely to have serious health problems, than people who don't live near them. Cooking and heating with natural gas potentially can expose home residents to radiation exposure from radon gas that is present in natural gas. Radon exposures through natural gas have been estimated to kill as many as 20,000 Americans every year. These are significant costs not captured by EROEI analysis.

Quantifying EROEI is highly problematic, For example empirical studies may be reflect a biase to older and less efficient technologies. If technological changes are underway in an energy segment that dramatically alter EROEI, then a data set reflecting the old technology may be obsolete. Take for example the switch in Uranium enrichment technologies from gaseous diffusion to centrifuges. The Centrifuges are 50 times more energy efficient, but many empirical studies of nuclear EROEI continue to use data sets from the gasious diffusion era. In terms of nuclear EROEI the use of empirical data sets may lead to highly misleading conclusions about present or future nuclear EROEI.

A further problem in determining nuclear EROEI is the failure to assess te effect of alternative technologies on nuclear EROEI. For example, CANDU reactors may use natural rather than enriched uranium, The absence of the energy input into the Uranium enrichment process makes a significant diference in CANDU EROEI.

Lastly, so called "deep burn" reactors extract much greater ammounts of energy from nuclear fuel. The typical Light Water Reactor only extracts 0.6% of the potential energy from Uranium. In contrast the Liquid Fluoride Thorium Reactor is capable of directly extracting 98% of the energy in Thorium, and wasted thorium found in mining tailings is so abundant that all of the worlds energy needs can be supplied from thorium extracted from mine tailings for several thousand years. The amount of energy required to build the LFTR is trivial compared to the energy input in Light Water Reactor construction. The EROEI of a LFTR could easily run to the four figures, but exactly how would we establish this?

Cooking and heating with natural gas potentially can expose home residents to radiation exposure from radon gas that is present in natural gas. Radon exposures through natural gas have been estimated to kill as many as 20,000 Americans every year.

BS !!

Radon has a half-life of 3.825 days. Massive quantities of natural gas are stored for winter use. Radon is totally depleted in this gas.

It takes over a week for NG to be piped from LA & TX to northeast, Midwest, CA and even longer to show up at the burner tip.

Even locally, any radon in the natural gas has gone through several half lives by the time it hits the burner tip. Except for cooking, combustion of NG goes directly outdoors.

ANY radon from cooking (very very little) quickly leaves the house. Exposure to radon is nil (New Orleans has among lowest naturally occurring radiation), we get much less than living on top of rock or using more rock (such as concrete aggregate) in construction or being farther above sea level (more cosmic rays).

I could see one or two "computed deaths"/year from radon in natural gas but I suspect << 1.

A made up "threat",

Best Hopes for Concentrating on Real Risks,


I could see one or two "computed deaths"/year from radon in natural gas but I suspect << 1.

A made up "threat",

Best Hopes for Concentrating on Real Risks

I suppose Alan thinks that on the frequent occasions when natural gas blows up houses, workplaces, and the vicinities of pipelines, these are not nuclear explosions of radon. True.

A week in transit does indeed allow ~75 percent of the radon the natgas emerges from the ground with to decay. What does it decay into, 'AlanfromBigEasy'?

(Threats from small amounts of radiation from natgas and LPG are no more made up than the threats from any small doses of radiation. They are, of course, much less small, much bigger, than doses of radiation from you-know-what.)

--- G.R.L. Cowan (How fire can be domesticated)

222Rn decays to 218Po (half-life 3.10 minutes).  The remaining elements in the decay chain are bismuth and thallium, ultimately ending in 206Pb.

222Rn decays to 218Po (half-life 3.10 minutes). The remaining elements in the decay chain are bismuth and thallium, ultimately ending in 206Pb.

Number 7 in the above-linked list, lead-210, is the interesting one. Its 22-year half-life means gas and LPG plumbing accumulate it. Each second about one in a billion of its atoms turns into 210-Bi, and that, within days, turns into 210-Po. 210-Po is also known as Litvinenko's bane.

--- G.R.L. Cowan (How fire can be domesticated)

And, once plated out on the plumbing (which it is likely to do as soon as it becomes 218Po), it is very unlikely to ever wind up at the burner tip and bother anyone.

I would agree that just as externalities should be included in the financial cost of a fuel source, they should be included in EROEI cost as well. Good luck figuring this out.

I hope a future EROI post deals with "legacy" or "sunk" EROEI. I'm not sure how you do this. I would guess that you do it by "depreciating" it over the useful life. You would also have to factor in using up local fuel sources and having to move farther away over time.

Dr. Bernard Cohen has written extensively on radon, the LNT hypothesis and radiation hormesis in The American Journal of Roentgenology and elsewhere.
R Wilson M.D. Radiology ret.

I scanned his list, but did not download his 17 Mb "Catalog of Risks". Nothing in the other titles suggested natural gas as a source of radon.

There is no doubt that radon is a public health risk, but the source is structure (sometimes well water) and not natural gas used for cooking.


That suggests that the the maximum price natural gas should ever be able to sustain is about $0.10 per dollar, $13.20 per million BTU, or $13.57 per mcf.

I think you have captured the essence of the issue. When an economy must give the energy producer back more energy than that energy producer can provide, then the economy contracts. Thus we have a mechanism that explains volatile pricing behavior.

Prices spike, energy flow reverses to negative, economy contracts, prices drop, energy flow becomes positive again, economy grows, prices spike, round and round.

Some essential predictions from this model that we can expect:

1. Prices will not rise forever, but instead will bounce between a high and low. The high price will be set by when energy flow turns negative and the bottom by cost of production. The trend will be slowly rising as less essential industries are eliminated (See Jeff Vail's excellent post on Elasticity of Demand) and as depletion raises producer costs.

2. The main damage of peak oil will be unemployment. Industries that are less efficient at turning energy into goods and services will be forced energy negative. Those industries will be forced to borrow funds or shut down during price spikes (eventually leading to permanent closure as long term prices rise).

Some positive and negative side effects:

1. Export land will shift from phase 1 (exporters earn more from selling less) to phase 2 (exporters earn less from selling less) sooner (or in an odd pattern like we are seeing now).

2. The market solution to peak oil is not so much efficiency improvements such as higher car MPG, but instead it will be pushing more and more people out of the economy.

3. Alternative energy sources are going to have a hard time gaining momentum until it is far to late to adapt because they are the marginal energy producers and the fossil sources must fall to similar low EROEI. Every price drop will tend to kick them back out of the market.

(Thanks EROI Guy and Dr. Hall. It is great to see more articles on this vital topic.)

"I think you have captured the essence of the issue. When an economy must give the energy producer back more energy than that energy producer can provide, then the economy contracts. Thus we have a mechanism that explains volatile pricing behavior."

Do you think we have to wait until net energy is negative? I think not. Instead, it seems to me that within an economy for which growth is a sina qua non just the shift of an increasing amount of economic output to the provision of energy is likely to wreak havoc on the financial system.

I disagree RE will not come in time. It has already beat every gov goal set for it and if not for the subsidies to oil, coal for their real costs, many AE/RE.

This will cause many jobs because RE costs are mostly labor, some material that stays locally.

Nor shipped off to some oil dictator, terrorist. Just more oil costs we bare in our income taxes instead of in the price of oil. So on the EROI you need to include oil wars, military costs as they use a lot of energy.

Energy costs will be capped at RE costs which is around $.15kwhr or less with wind, solar thermal engines/heat with back up pellet burners, tidal/river generators without dams, future cheaper PV like First Solar all coming in under the prevailing electric rates in most of the US.

Another EROI not included is how eff the fuel can be used. For instance in a car is only around 7% of the fuel's energy actually moves the car. Vs an EV which gets about 20-40% of a thermal powerplant's fuel to move it. If one considers RE 100% eff then it's more like 65% eff. Since electricity is a much higher level/eff fuel then it should be accounted so.

I can, have built EV's and the RE means to power them, homes for under $25k/set not including a very eff home and make good money at it. While costly you get lifetime energy for home, EV including the EV only maintaining costs caps ones cost equal to about $1000-1500/yr for 2 people. That's cost effective now. Many drive EV's every day and many are online or in EV clubs close to you.

Because of this even as oil supplies dwindle they won't have the pricing power to go above that.

While Jon may be right we won't do enough RE in time, it can be done in 5 yrs for the US to be energy independent.

And the time to start is now, actually it should have been done 15 yrs ago top avoid this mess. But thinking world growth will greatly slow because fossil fuels are depleted misunderstands Americans. While we rode the oil ride up, we'll jump to the next best energy thing which is RE faster than one would think. There is no lack of energy, just a lack of equipment needed.

And the money spent now for oil, coal will go to paychecks, consumers pockets instead of big oil, oil dictators, terrorists, increasing our economy while cutting theirs.

I believe oil production peaked in July and probably will never reach that level again. Especially if Obama, congress does a good energy policy which would be much less expensive in the short and long run by getting us quickly off oil, coal.

While Jon may be right we won't do enough RE in time, it can be done in 5 yrs for the US to be energy independent.

I'm rather skeptical. Can you cite any sources for this assertion?


Hi Pragma. I don't have references as I go by my own experience as few are doing it.

But I can easily build 1kw windgens for around
$.50/peak watt or about $2/cont watt in 11mph
average winds.

I've done the math on solar thermal engines which comes to about $2/peak watt. With a wood pellet backup burner
for heating/electric if needed when the sun
doesn't shine.

Tidal/river generators without dams come in at
$.02/.01/kwhr respectively.

Using the solar engine as a pellet, other fueled
CHP unit heating while selling/using the electric produced comes in under coal.

The facts are if the real cost was in coal, oil RE would already be our main energy source.

With just $1B I could have all these in mass production
in 1,000's of local factories within a yr. It's not that hard and needs no new tech, just someone to start doing them.

I build eff EV's that get 150-400mpg energy
equivalent using 1890's to 1970's tech, lead

The facts are just conserving we could cut our
energy use in 1/2 just with composite plug in hybrids that cost less than present cars along with putting new insulating/solar shells on homes, business, other energy eff appliances which in the future higher energy cost could pay for themselves in 5 yrs if a little learning, thought was taken.

Because of these facts oil could never get higher because in 5 yrs we would switch.

One want to look ahead and energy is only going to get more costly so we all need to secure our our energy by buying the equipment needed to catch it. They is no shortage of energy, only the equipment needed which is well known, easy engineering problem. Politics, big oil/business are what's in the way, nothing else

All these are on lists on the web detailing how to do it if one wants to.


Do please provide links.

"Alternative energy sources are going to have a hard time gaining momentum until it is far to late to adapt because they are the marginal energy producers and the fossil sources must fall to similar low EROEI. "

You seem to be thinking of bio-fuels. They are a misleading distraction. Instead, think wind and solar, which have an E-ROI which is higher than new oil, and as a practical matter as high as old oil (around 50 for wind, 20+ for solar).


I was looking at the Chesapeake latest investor presentation and they say that the recent cutbacks in capital spending for exploration will lower their production growth from 17% in 2008 to 5-10% in 2009. In all of their presentation I didn't see one mention of depletion so there is no way of figuring out how they can continue to grow at a 10% rate while cutting back on drilling. They say they are dropping the number of rigs from 130 to 110. They had 158 rigs in August. CapEx has been cut by 58% since August.

I am not a gas or oil insider but if you cut cap Ex by 58% and the number of rigs by >30% does a drop in production from +17% to +5-10% not seem light in a fast depletion environment? I have no idea what percentage of their production is in shale plays which have the higher depletion.

A longer post would be interesting as I don;t think your radio interview is available online yet.

A couple of additional thoughts Nate.

I think if you look at the rig count history the Canadian counts always take a big dive around Christmas, it looks like the Canadians stand down for 3 or so weeks at the end of the year.

Wrt the contractors not getting paid I just remembered that Dec 31st was last week. Many companies hold back on paying bills around their year-end to make their cash position look better. This is doubly so for companies where cash concerns have been raised. Even though paying bills is just an offset to another liability, accounts payable, it allows the CFO to say look we have $200 million in cash instead of saying we have $100 million.

I really enjoyed this post, but got a bit stuck on a minor error. 2008 minus 1891 is about 120 years, not 200 years.

Energy Return On Investment (EROI or EROEI) is simply the energy that one obtains from an activity compared to the energy it took to generate that energy. The procedures are generally straightforward; simply divide the Energy Gained (Out) by the Energy Used (In), resulting in a unitless ratio.

As I have explained at various times EROEI as defined above is not a good parameter for characterizing the economic quality of energy. I am not disputing the importance of net energy, I am just disputing the use of this particular parameter.

Consider the financial analogy from which EROEI is derived. Suppose you and I each have $1000 to invest. I find a banker who offers to give me a CD with a 10% annual return (don't I wish) and you find a banker who will give a 5% CD. I am better off than you by a factor of two, am I not? The answer is 'yes' under a specific set of assumptions to which I will return. However if I defined ROI in the same way that EROEI was defined above I would claim that my ROI is 1.1 compared to your ROI of 1.05 which is not a factor of two improvement. The correct way to define ROI is net income over investment or N/I in which case my return is 0.10 and your retur is 0.05.

The same consideration applies to energy investment. If N is the net energy produced, I is the energy invested, and O=I+N is total energy output, then we find:

N/I = [(N+I)-I]/I = (O/I)-1 = EROEI -1

The parameter N/I=EROEI-1 I call EROEI' for lack of a better term. Note that net energy = 0 corresponds to EROEI'=0. This parameter is the analog of financial ROI. Suppose, for example, than instead of each of us having $1000 dollars to invest we each have 1 unit of energy to invest. We each use our unit of energy to harvest more energy and at the end of the day I come back with four units of energy and at the end of the day you come back with two units of energy. Is my energy harvesting process twice as good as yours? It is only if we are harvesting fuel on a one shot basis for an energy splurge prior to descending into poverty. If we wish to run our private economies on an ongoing basis we each have to save back 1 unit of energy for tomorrow's harvest. If we continue this harvesting process for a period of years until our respective fuel sources run dry (I am assuming constant EROEI'), then after the last batch of energy is processed we get back out initial investment of energy which we can use for a final splurge, but in the meantime I had 3 units of useful energy per day while you had 1 unit of useful energy per day. That is to say my relative energy advantage is correctly described by EROEI' rather than by EROEI.

However, EROEI' acts as an economic figure of merit only under a special set of assumptions. To see what these assumptions are let us return to the example of investment in CDs. One key assumption is that the return rate is referred to the same period of time (1 year). In the case of financial investments this assumption goes without saying, but it should not go without saying in the case of energy investments. If, in the previous example, due to labor requirements or other resource limitations, I can only process one batch of energy per day while you can process three batches per day then you can, match my net energy production in spite of your lower EROEI'.

Other resources besides time or labor may also be important. To return to the ROI example suppose that the banker who offers me a 10% return on my $1000 requires me to spend 5 hours a week taking of his house and garden. In this case the $100 return on my total investment of labor and money is paltry. Again in the case of financial investment it goes without saying that money is the only important input, but in the case of energy production other inputs beside energy always exist. Returning to the original example suppose that each of us gets our fresh water from a spring. If I have to use 95% of my water supply to harvest energy and you only have to use 5% of your water supply for the same purpose, I may be much worse off than you in spite of my higher energy income.

Of course, in general, energy supplies with a low net energy balance will tend to require relatively high inputs of non-energy resources per unit of net energy produced. It is possible to use EROEI' as an economic figure of merit under the assumption that cost of the non-energy inputs scales with the energy input. However, this assumption has to be made even in a zero'th order analysis of energy quality. It is the return on the total investment which matters and not just the return on energy investment. This total return will go to zero well before EROEI' goes to zero. I could go on a great length about this subject, but I have done so previously here.

I have pointed out many times that EROEI is valid only when like and like are being compared. I.e. the output energy is of the same form as the input energy as is mostly true with oil. When the output energy is of a different form than the input energy, the EROEI numbers are false because the logic is false. This is true even if there are no mathematical errors in the calculation.

Energy is not like dollars in an investment calculation. Dollars at a given moment in time are a well defined concrete measure. Energy is a broad intellectual abstraction with a calculation of measure that is just as concrete as for grain or metal. But no one would be so silly as to propose that we should determine which grain should be produced based on the bushels of yield compared to the bushels of seed. Similarly, no one would be so obtuse as to suggest we should decide which metal to mine based on the the tons of metal used compared to the tons of metal produced. If they did, no gold would be produced for example.

Abstract concepts such as energy, grain and metal exist only in the abstract. They can be measured but the measurement is of an undefined abstraction that does not exist in the real world. Like grain and metal, energy only exists in it's forms. And each form is highly variable just as with grain and metal.

While it is clear what dollar return on dollar invested means, it is very unclear what energy return on energy invested means. Some forms of energy like geothermal are almost free and infinite. Other forms like oil are finite and expensive. Nuclear energy is defined by E=mass times the speed of light squared. The sun operating on this basis has been producing prodigious amounts of energy for billions of years and is predicted to continue for billions more.

It is the finite depletable forms of energy that are the real problem. A more correct formula for energy analysis would include the form of energy being used in the input and in the output calculations so that we know when energy forms that are different are being compared.

For example, oil energy return on oil energy invested would be valid. But natural gas energy return on oil energy invested would not be valid since the two forms are different with different prices, utility, characteristics as well as shipment problems.

Nor would ethanol energy return on oil energy invested be valid. It fails to take into account the corn energy and the natural gas energy used in ethanol production. All four energy forms have different prices, characteristics such as renewability, utility, transport methods and availability.

EROEI is a fallacious concept where both the input and output are abstractions that do not exist in the real world. It is analogous to grain return on grain invested and metal return on metal invested. None of them are valid concepts for determining the best form of each abstraction to produce, nor are they valid to analyze the situation regarding potential supply problems unless the input form of energy is the same as the output form of energy.

Optimal foraging theory is robust across species in biology, and EROI is an attempt at translating the concept into the human sphere.

You should focus more on fundamentalism and belief systems than EROI. Your comments here, when not related to corn ethanol (from which you derive your living) are often intelligent and insightful. Your mind is blind to anything that offers datapoints inconsistent with corn ethanol being an 'answer'. The fact that you claim energy and grains can't be measured other than in abstract ways should be proof of that. They can be measured in specifically physical ways: joules and calories. There are subjective 'quality' differences above that that can be argued. ALL money is an abstraction and defined by abstractions - the only physical aspect it has is linked to the trust people currently still have in it. EROI is just a step back towards physical principles - it has never been claimed to be other than that.

Corn: 16.2 MJ/Kg

Ethanol: 115 Octane

Dollars at a given moment in time are a well defined concrete measure.

Why does Zimbabwe come to mind when I read this?

Energy is a broad intellectual abstraction

I have this feeling it will be much less abstract when there is no diesel for the tractor.

Oddly, my world view is
Dollars are a broad intellectual abstraction and Energy is a well defined concrete measure.
Weird, huh?

More important, gold is not used (in any fundamental way) in extracting gold. Wheat GROGI is what, about 40 to 1; presumably it is high enough to be economical today, but I assume if one harvested 2 corn kernels for each one planted few farmers would do so.

'Any' form of energy can be used to extract petroleum, but on the planet I'm from that means petroleum is used today, to about 90% accuracy. Some NG is used to make oil, some oil is used to make NG, hydro pumps oil and diesel maintains dams: to some approximation it likely balances out. Therefore oil in : oil out seems like a reasonable ratio to use to me.

Certainly more believable than "little pieces of green US paper per barrel" which the rest of us have less faith in than the tooth fairy and magic pixie dust.

Your example does not apply. You are comparing interest rates. The EROI cannot be computed from an interest rate unless you give a time frame. The EROI from an investment which pays 10% per annum for 14 years is 2 (because 70/10=7) as is the EROI from an investment which pays 5% per annum for 28 years. The EROI from an investment which pays either 5% or 10% per annum forever is infinite. Such investments do not exist because of the first law of thermodynamics. A wind turbine might furnish a lower initial interest rate than for example a coal mine, but it might still be working long after the coal mine runs out of coal, and thus furnish a higher EROI.

Though King Hubbert never mentioned it, and likely never knew it, net energy/best first is the reason that Hubbert Linearization works at approximating recoverable resources with no/few substitutes.

At some point we cross an inflection point where the resources in the ground become unaffordable by society. The location/timing of this point is where the aggregate per capita energy surplus declines to a level where marginal benefits from growth are outweighed by marginal costs. Because of leverage in the system (which didn't really exist in Hubberts time), the shape of the second half of the curve is going to be far steeper than even Hubbert projected, because this inflection point was masked by 'abstract' energy surplus engendered by financial leverage.

It has never been about how much resource we had, but how much we could afford to extract at a profit. This theme is going to become widely known in next year or so, as $50 or $60 or even $70 oil is not going to get us much more production at the margin. Even worse (because it is subtle), is all the efforts, resources, manpower, and energy that is being spent worldwide right now on energy projects that have decreasing marginal returns. It's like calling on the turn and river in poker when you have most of your chips in the pot, even though you know you're beat...

The answers are on the consumption side, and have been for a long time.

At some point we cross an inflection point where the resources in the ground become unaffordable by society.

This is in my opinion the absolutely most important statement that can be made about non-renewable resources.

In my opinion this condition sets in at a simple EROEI of 20:1 not the lower simple EROEI such as 1:1. The reason is simple we need to excess energy to provide value to society if we don't have it then its not worth further investment simply because to much of society becomes devoted to actually extracting energy and not doing other things.

A perfect example of this is food production before the introduction of mechanical agriculture pre industrial societies generally devoted 30-50% of their time to food production. Thus hard limits are placed on non food activities these societies can accomplish.

For modern society its actually reversed we have developed immense complexity by only devoting a small fraction of our society to food and energy production.
This complexity is the reason we cannot handle real EROEI much less than 20:1 the complexity prevents diversion of resources since modification of the complex system threatens the system itself.

In general we recognize this condition as BAU or business as usual but underlying the inability to change are real concerns about stability of the system or status quo. Change in a complex system can readily transform the entire system to one unrecognizable before the change took place. Examples such as the rise of the Nazi's or Stalin can be used to show radical transformations that can happen if the status quo is upset.

As far as relationship to economics goes this complexity factor plays a huge role in the economics of extraction of resources and EROEI drops. Simple direct attempts to link EROEI to money are probably incomplete. However as a starting point I think that my approach of tying energy to the velocity of money is a correct starting point. My hypothesis is that since energy that is burned is generally paid for effectively immediately with cash energy usage is closely related to cash transactions i.e the velocity of M1. Even here the relation is complex. For example as transaction rates drop the energy cost per transaction itself rises.

A very simple example is a plumber desperate for work driving 20 miles to make 100 dollars vs driving to a new building site to make thousands. Thus as velocity slows the burden of energy per transaction increases. This actually increases the EROEI threshold that society can except. I.e as society slows because of energy barriers its sensitivity to these barriers actually increases.

In fact using my approach what actually happens is for example initially the society rejects spending money on resources with a EROEI of say 20:1 but as it gets poorer because of total energy declines it actually rejects higher quality resouces say 25:1 and upwards.

In any case the tangle of EROEI with complexity is important and overall generally does not look good. The one exception is technological development where the complex society increases energy extraction via increasing the complexity of the extraction process but overall this sort of investment is actually no different from the constraint of how much a society can devote to energy and indeed technological advances eventually fail in a big way as they follow exactly the same cliff as EROEI for complex systems. Thus technical advances only serve to delay the day or reckoning and often make it worse.

But trying to understand EROEI for complex systems is fascinating and we have a live example to follow.

I'm just dust and ashes, a mere lurker/nobody. Have been for years.

But memmel, please -- please! -- learn to write an English sentence. You make some of the most amazing comments here, but one needs a machete to get through them.

["nopeak" is sheer irony, btw.]

I wish I could. I hate not being able to communicate. If something is to butchered to make out send me a email.

Maybe the short version ?

Basically a complex system gets locked in by its own structure it literally can't adapt. Its actually impossible for us to fix our current civilization.
Not that we won't do it but we can't.

We can perform a controlled collapse like demolishing a building and rebuild but we cannot actually fix whats in place right now without destroying some of our current complexity to give us the flexibility we need to change.

In the case of peak oil this means something like a massive gasoline tax like 200-300% and a similar new car tax would be required to change. Similar taxes are needed for inefficient dwellings and all this money needs to go into alternatives. If you don't literally smash the car culture then you cannot change. If we had started earlier then we could have ramped slowly but its to late for half measures without destruction you simply cannot get the flexibility you need to change. The basic problem is the pie if you will has been chopped into pieces for a long time this division is set and now the pie is shrinking you have to smash the smaller pie pieces together if you will and redivide it to execute changes in complex systems.

I hope thats not to garbled ?

Basically a complex system gets locked in by its own structure it literally can't adapt. Its actually impossible for us to fix our current civilization.

Which reminds me of why I so dislike the meme - I think started by Friedman - that we need a "reboot". As if restarting a Windows box helps in the long term. No, we need a new kernel. A different system. Anyway, I just wanted to drive a few more nails into that "reboot" metaphor. :-)

Being locked in the by the system is obvious everywhere. Look how hard it is to operate without a car. The "solution" then becomes electric cars. Ooops.

cfm in Gray, ME

I hate not being able to communicate.

One hint from someone who learned the hard way:
Use short declarative sentences.

If I may try to paraphrase, it sounds like what you're talking about is the amount of initial investment necessary before a return is realized. There has to be sufficient energy surplus (including materials and labour, which were acquired through prior energy expenditure) to build the system which can exploit the energy resource. And if a society can never afford that initial investment, then the resource is simply unavailable. This is virtually a law of physics: to transition between one state of equilibrium and another requires a big expenditure. For example, fusing two hydrogen nuclei requires a minimum of energy; the result is a net gain, but if you can't achieve the initial expenditure, you can't realize the win.

It's another way of saying that growth requires ever greater surpluses as much as it requires ever greater raw inputs. If either declines, they both decline. It also means that if you only reduce your energy use (conserve) because you are forced to, then your surpluses will never grow. Practically speaking, it means that you will never invest enough in development of new technologies to access new energy sources to replace those you are losing, if you haven't already done so before your primary energy sources enter depletion stage. Oops.

Bored Astronaut you wrote "There has to be sufficient energy surplus (including materials and labour, which were acquired through prior energy expenditure) to build the system which can exploit the energy resource. And if a society can never afford that initial investment, then the resource is simply unavailable."
Well put. This applies to alternative energy sources as well as further exploitation of current energy sources. Even if solar and wind have enough positive ERoEI to sustain industrial civilization, there is not sufficient surplus of current sources to expand their infrastructure to a quantity that would sustain us in the manner to which we have become accustomed. Very low ERoEI's also mean that we need more total energy to hold steady, a problem seldom addressed by proponents of alternative energies. Further the ERoEI of the EI becomes more important the lower the ERoEI of all sources of energy. When the net is 100, using one barrel of oil to get 100 is actually equivalent to using 1.01 barrels to get 100. When the net is 5 it not 1 barrel to get 5 but actually 1.2 to get 5 because it takes 1/5 of a barrel to get the 1 barrel. Thus declining ERoEI's become magnified, and the low ERoEI's of alternatives is much worse once you start trying to use solar power to make more solar panels and wind power to make more wind mills. And that doesn't even touch the issue of the form of the energy and loss contingent in using electricity to do what oil now does.

In other words TEOWAKI is imminent

Exactly but whats worse is that the energy surplus that we used to have as been allocated in building our complex system there is no free source of energy. If we seriously have to change then we have to seriously change our energy allocation.

This includes both the surplus and the energy spent extracting oil. And both the total and the amount of surplus is declining. The longer you wait the harder and more brutal this transition. Wait long enough and its effectively a crash.

On the social side you need a clear majority that understands the situation and is willing to sacrifice to avert a crash in many cases the people that stand to benefit the least from change are the leaders and people who became wealthy via the status quo. Whats worse is it extends even deeper to everyone with expectations of becoming wealthy via the current status quo.

Good luck.

"At some point we cross an inflection point where the resources in the ground become unaffordable by society."

Surely, this is the point when renewable energy replaces FF energy. It's happening now, solar and wind energy are expanding at 25-50% per year, with no apparent limitations of labor, materials, suitable locations. Are you saying that society cannot function with renewable energy costs of 10-15cents per kwh??

Those costs are subsidized by the greater system of fossil fuels. If this subsidy declines too rapidly, the scale up in renewables will never be enough to matter. In aggregate the TOTAL energy surplus we get from renewables is still very low. In the last 13 years (since 1995), we have installed about 25% of the total grid capacity in US:

Our total U.S. electric grid has a peak capacity of just over 1,000 GW. (That's 1 billion kilowatts or, if you prefer, enough to power 10 billion hundred-watt light bulbs.)
Of that total, here's what we've installed just since 1995:
~200 MW of solar PV

~10,000 MW of wind

~45,000 MW of combined heat & power

~200,000 MW of natural gas (about half of which was combined cycle, which runs at almost 2x the fuel efficiency of the U.S. grid)

Even if these renewables have high stand alone EROIs, the dent they have made when investment was 'affordable', was small. Without plentiful and cheap oil and natural gas, renewables, with exception of nuclear (which is kind of a hybrid) can't (or won't)scale.

According to which, ultimately we are doomed.

Because if renewables can't scale up to match or exceed fossil fuels, then what happens when fossil fuels run short as they certainly will?

I choose to ignore the idea that we're doomed. If I assume that what you say is impossible is possible, if you're wrong then I get happy success, if you're right I get the same failure I would have got anyway. Thus nothing is lost by setting aside doomerism.

In any case, you're speaking of the history of investment in a country the government of which has been actively hostile to renewables, and desperately in love with fossil fuels, and has taxed, subsidised and invested accordingly.

Imagine that you run a company with two wings, A and B. Wing A gets large investments and the staff are regularly praised by you as competent and essential to the good running of your company. Wing B gets stingy investments and the staff are mocked as idiots and layabouts.

Which wing of the company would you expect to be more successful? Would you say that this was something innate to the work A and B did, or your treatment of them?

It may be that renewables can't scale, or can't scale without fossil fuels. But we have yet to try.

Yeah, I don't necessarily buy the "cheap fossil fuels" angle. If coal had the same hoops to jump through as renewable techs, it would be a different story.

Look at all the resistance that wind gets for killing birds, ruining views, etc. Compare that with Mountain Top Removal. Both have their critics, but the difference is that MTR goes on unabated while wind is stalled.

I choose to ignore the idea that we're doomed. If I assume that what you say is impossible is possible, if you're wrong then I get happy success, if you're right I get the same failure I would have got anyway. Thus nothing is lost by setting aside doomerism.

There was nothing at all doomerish in my comments. You equated 'renewables not scalable in time' 'doomerism'. That is focusing solely on supply, which I do indeed think has absolutely peaked and there is virtually no way we can avoid energy descent. But hardly a pronouncement of doom. The other angle is radically reducing the way we use energy - cutting it in half to 3/4, in which case there WILL be time to scale renewables up to the new, lower consumption ceiling.

Also, of course you, and most people prefer to think the way you do. This is your brain on Optimism. It has been genetically advantageous to us to be optimistic. Optimism generates more helper T-cells which boost our immune system. It reduces the secretion of cortisol, a stress hormone. Pessimistic people have a plethora of stress induced health problems, on average. I wrote about the many reasons that peak oil, climate change, and general resource depletion would never be acted on in time due to our belief systems two years ago. I am updating that post now after reading several books on the neural basis of Fundamentalism. (One I would recommend, The Fundamentalist Mind, can be previewed here. I really think this is the biggest block to sustainability - rigid beliefs. But I am trying to be flexible in my viewpoint..;-)

Funny. I tend to be somewhat of a doomer but I don't think I am secreting much cortisol and I am in excellent health. While I am pessimistic, I am not particularly sad or stressed about the prospects of the earth. I guess it depends more on the nature of one's stress and how one actually responds to what might be considered negative events or forecasts. Of course you stated up front that you are talking about the average which does not preclude a pessimistic person from being healthy.

It is not that I don't care about the fate of the earth; it is just that I find it stressful to be constantly agitated by the fact that people do not seem to have any interest in doing something about the fate of the earth. I am still annoyed when I see displays of excessive energy use, but am generally no longer capable of the visceral and cortisol inducing responses that I used to engage in.

On the other hand, I get it that a certain degree of optimism is necessary for any progress to be made. If one is constantly in a pessimistic funk, it is not likely that one is going to take any action to prevent what otherwise might be a disaster. I also get it that there are good reasons to think that all actions are pointless and hopeless unless one is capable of changing the mindset of literally hundreds of millions of people and those who govern them.

Today, I find myself in the doomer camp. But my feelings on this vacillate.

The optimism is destructive, which you are probably getting at is the optimism of the fundamentalist who thinks that God could not possibly let this beautiful earth go down the tubes. Well, God better get busy because thus far the evidence seems to be that he is going to let this deal go down.

Nate, a few thoughts.

1) your arguments are interesting, but why didn't the original authors make them?

2) I really don't understand what you mean by "Those costs are subsidized by the greater system of fossil fuels." Could you expand on that?

3) When you say "In the last 13 years (since 1995), we have installed...~10,000 MW of wind", isn't that misleading? Half of that was installed in the last year or so. Wind is about 1/3 of all new generation, and doubling every 2 years, which gets you to 100% of all new generation in only 3 years - that's a very different picture.

4) "Even if these renewables have high stand alone EROIs, "

If? Is there any question?

5) "Without plentiful and cheap oil and natural gas, renewables,...can't (or won't)scale."

Why not? They'd only need a tiny fraction of our existing oil & gas production to scale - why won't their high E-ROI and $-ROI attract all of the resources they need, while other things go begging instead (like passenger transport going to car-pooling, as just one possibility)?

And, again, why isn't this addressed in the Original Post?

your arguments are interesting, but why didn't the original authors make them?

Ummm -it was their article, not mine? They didn't mention addiction or belief systems either..;-)

Regarding EROI of renewables, the timing of the flows is also important - we need maximum flow NOW and wind EROI is spread over 30 years, etc. Plus all the wind studies do not account for storage and transmission. If we had to start from SCRATCH right now, wind would have higher EROI than oil and gas, but its that cheap bootstrap of found oil that is keeping us going right now..
I will try and address your other questions in subsequent posts..

"Ummm -it was their article, not mine?"

I don't expect you to answer for them - I was hoping they might reply, directly or through you.

"They didn't mention addiction or belief systems either..;-)"

Those aren't energy sources. This article suggests that oil & gas equal energy ("the important question is how much oil and gas (i.e. energy) is left in the world?"). Leaving wind, solar & coal out seems like an enormous omission. Wouldn't you agree?

"we need maximum flow NOW"

Well, electrical generation isn't the bottleneck in dealing with peak oil & gas. We have plenty of electricity, even with NG problems (loss of 50% of NG is a loss of only 9% of our electricity, something that can be dealt with by conservation and ramping up of wind and coal, though some localities will indeed have a difficult transition). What we really need to do is replace coal, to deal with AGW, but that's a different problem.

" and wind EROI is spread over 30 years, "

The latest wind turbines pay back their energy investment in roughly 6 months. That's fast enough.

"the wind studies do not account for storage and transmission"

Trnansmission adds about 10-15% to the cost of wind projects, and very little to solar. That's not a significant overhead.

Storage isn't needed up to 10%-20% of market share, and PHEV's are likely to provide all of the buffering of supply variance needed after that point. Consider: just 25M PHEV's, with a charge rate of 6KW, give a "on-demand" charging demand of 150GW (1/3 of average US demand), that's available in milliseconds.


I don't expect you to answer for them - I was hoping they might reply, directly or through you.

I think you are asking why we didn't include Nate's ideas in our article to which I would reply - because we didn't think of them?

Those aren't energy sources. This article suggests that oil & gas equal energy ("the important question is how much oil and gas (i.e. energy) is left in the world?"). Leaving wind, solar & coal out seems like an enormous omission. Wouldn't you agree?

This concept of "best-first" and EROI discussed in this article applies to all energy resources, but in this article we focused on those we know best - oil and gas.

"I think you are asking why we didn't include Nate's ideas"

I was really asking why you didn't include wind, solar & coal (regardless of how you might explain any problems they might have). Doesn't that seem essential?

"History has shown that removing the energy supply from the economy will cause it to contract immensely or even stop...So if energy is required for economic growth and maintenance, then the important question is how much oil and gas (i.e. energy) is left in the world? "

That's a very large statement. I can understand why you'd want to focus in on those things you know best - oil & gas - but can you make such a sweeping statement, if your focus is really much narrower? I would urge you to re-write that, to clarify your focus. Otherwise, you'll be discouraging a lot of people - they'll get the impression that things are hopeless, and as far as I can tell, that's not what you're saying.

" Our estimates for EROI of solar energy are much more shaky, and we are working on upgrading them, but we welcome any literature (hopefully peer-reviewed but others are acceptable) on the subject."

That's understandable. First, there's a wide variety of forms of solar energy, so it's a lot to research. 2nd, solar is changing very fast. 3rd, much info is proprietary. and 4th, as best I can tell, peer reviewed research on solar stopped around 10 years ago when it was clear that solar E-ROI was "good enough". It has, of course, improved greatly since then. For instance, First Solar is producing PV panels for about $1/W. That has to have a very high E-ROI.

That's a very large statement. I can understand why you'd want to focus in on those things you know best - oil & gas - but can you make such a sweeping statement, if your focus is really much narrower? I would urge you to re-write that, to clarify your focus. Otherwise, you'll be discouraging a lot of people - they'll get the impression that things are hopeless, and as far as I can tell, that's not what you're saying.

Economies today do not run on wind and solar - they run on oil, gas, and to a smaller extent (except for China), coal, and because of that I feel as though our statement is not narrowly focused, but broadly. Our discussion would be focused narrowly if there were numerous examples of economies around the world that produce goods and services from wind and solar energy sources only, but that is not the case. We are not employing a message of hopelessness either, as you point out. However, we are saying simply (at least part of the message) that the best oil and gas is gone or already found, finding new sources will be very expensive (in energy and dollar terms), and that these facts will have an impact on economic production around the world.

"Economies today do not run on wind and solar - they run on oil, gas, and to a smaller extent (except for China), coal,"

That overemphasizes oil and gas. Oil & gas are certainly deeply embedded in our economies (such that a sudden shortage could cripple us temporarily) and provide almost 2/3 of our primary BTU's, but they aren't quite as dominant as that suggests. 80% of electricity in the US, for instance, comes from coal, nuclear, hydro, wind & biomass. Further, 1/3 of new generation is coming from wind; there's little question that renewables (wind, solar, wave, biomass) and nuclear can in the longrun provide all we need; and little question that oil can be replaced in the longrun: transportation (except for some aviation) and space heating can be electrified or eliminated. This is a short term problem, and that's important.

"we are saying simply (at least part of the message) that the best oil and gas is gone or already found, finding new sources will be very expensive (in energy and dollar terms), and that these facts will have an impact on economic production around the world."

That's a nuanced statement, which appears to reflect an understanding of what I said above. I urge you to edit your writing to reflect that perspective. The original writing doesn't reflect that, and (I believe) clearly encourages the kind of misplaced pessimism reflected in the article posted by "DavebyGolly" on TOD 1/3/09 and Jason Bradford 1/5/09, which assume that civilization will decline sharply due to a long-term lack of energy. That kind of assumption is, as I often argue, deeply unrealistic, without any kind of real evidence. And, yet, it persists among many people, and seems to be leading some to terrible life decisions, like subsistence farming.

You forgot coal.

Basically, in the West most of our transport comes from oil, our heating and industry from gas, and our electricity from coal.

That's "most". Some transport comes from coal - electricity driving trains, etc. And some comes from nuclear, ditto.

So if you just look at oil and gas you're missing a lot of the picture - even if you don't get the figures wrong, like saying that Cuba lost half its oil in 1991.

For example, Cuba and North Korea are both examples of what can happen when you run short of oil. One did fairly well, the other atrociously. Neither learned the lesson, and still use heaps of fossil fuels today. But that doesn't mean everyone else will do it.

I mean, if you're going to refuse to talk about things because they're not widespread yet then I don't know how anyone would ever plan anything. "Well," says Britain in 1840, we only have 200 miles of railways and a couple of steamships, so when talking about our future economy let's ignore railways and steamships. That would have been a bit of a "woops".

Without disputing the general thrust of the argument I would like to take issue with:

it does not make sense to extract oil, at least for a fuel, when it requires more energy for the extraction than is found in the oil extracted

It is often pointed out that oil has very superior quality as an energy source. At the other end of the scale are energy sources which only produce electricity and do that in an inflexible way (e.g. only when the sun shines in summer). Now if we had a very cheap energy source of this type then we could use it, when available, to extract oil from difficult sources like tar sands. This is likely to be better than trying to store the energy from our imagined cheap source directly, since it leverages the energy in the tar sands and the quality of the resulting energy. The reason we don't think this way is that all the renewable energy sources, which are supposedly going to power the green new deal, are not just poor quality, but also actually have poor EROI.


And that is the rub. In the US, we will do a lot to continue our use of "high quality" fuels. Can you build an automobile that runs on wood or coal? -- sure (check the Stanley Steamer (not the rug cleaner)). Was it convenient to warm up the car for 20+ minutes (on an advanced model) before driving someplace? -- Heck no. I just drove to the store for some food. I could have walked (~1 hour round trip) but chose not to since I could leverage my high quality energy.

I figure we will do a lot of the leveraging you mention in the not-so-distant future. I boil it down to "Use what you have to get what you want (or need)" -- the barter system.

Well, it would be better, I think, given this cheap, low-quality source, not to destroy ecosystems processing such awful raw materials. Instead, invent a process to concentrate energy into more useful forms, like synthetic oil made directly out of, say, air and water (and some catalyst material). Assuming we had a technology which could do that on a scale which we would need it, without requiring too many millions of square km that we can't spare. Sorry, having a science fiction moment. (I'm kind of stuck on the idea that if society is to continue to develop without enduring a horrific die-off, then inventing a process of turning sunlight, air and water into petroleum or a suitable replacement is our only hope. I think it's time that more physical and mental energy be invested finding it: orders of magnitude more. That is, if it isn't already too late.)


invent a process to concentrate energy into more useful forms

Sunlight is a diffuse energy source. Extant systems for concentrating sunlight are wind, hydro, and biomass.

inventing a process of turning sunlight, air and water into petroleum

If you are willing to replace the word petroleum with the phrase 'complex hydrocarbons', then biomass accomplishes this, albeit at low overall efficiencies. Perhaps what is needed is to optimize the process and increase the efficiency. Many folk are working on this by genetic modification of algae, microbes, and plants.

Given that photo-voltaics are more efficient that chlorophyll, I agree that is a opportunity for a novel technology that uses the generated electrical energy to drive a catalytic synthesis process for combining water and carbon dioxide into complex hydrocarbons. Although many other folk are working that problem, I have not seen any research results indicating anything nearly as efficient as the known biochemical processes.

So, for the science fiction part, does any one know of an organism that can use electricity as a source of energy for biochemical synthesis?

Currently net energy per head of population must be in decline. The observed reduction in per capita grain production could be just one facet of this process but is better documented. That suggests if total net energy shrinks by 10% then population should reduce by 10% to hold the line on a desirable per-head amount. That must level out to a low figure, I'd guess under one kilowatt per person continuous averaged. Whoops there goes plane travel, air conditioning and eating steak. If lifestyle, comfort and prosperity are all somewhat proportional to average energy use that says the future will be less pleasant than the past.

Why doesn't this deal with wind and solar? They have high E-ROI, and are abundant.

Isn't that a critical missing part?

In a complex society like we have expansion of wind and solar will depend on how much we are willing to divert resources to expanding wind and solar power.

Resource diverted to wind and solar are competitive with devoting more resources to development of fossil fuels. Next in general most alternative energy sources either supply electricity or low EROEI liquid fuels. Electricity is readily available from ample coal reserves in most regions and also nuclear so its not clear that clean electricity is all that useful we have plenty of dirty sources for electricity.

I'm not getting into the environmental costs just the short term financial costs.
We don't charge if you will for the environmental costs of fossil fuels if we did then they would only be marginally usable in small amounts.

And we would not be in the mess we are in. So first and foremost before we ever really see wind/solar become usable we need to correctly tax the real costs of fossil fuels. Without a level playing field we will probably continue to rob our children of a clean world citing expediency esp as EROEI declines.

In my opinion the chance to move to clean energy sources was lost when we refused to really account for the environmental costs of fossil fuels.
Now not only do we have to account for on going damage but we have a huge arrears of back taxes if you will that need to be paid.

This happened a long time ago back in the 1800's.

This is not to say that a fragment of our current society won't eventually develop a new society based around renewable energy but for our overall civilization the chance was lost a long time ago.

I more or less agree with all of that (except for the idea that it's too late).

But, I'm still wondering: why didn't the article deal with wind & solar?

They didn't mention coal, either. If they felt that coal was so abundant that wind/solar wouldn't be needed any time soon, why didn't they say so? Why didn't they address the abundance of coal, instead of limiting "energy" to including just oil & gas?

Why do they talk about an energy shortage, when, as you point out, we primarily have a liquid fuel shortage?

Well all energy sources are entangled at several levels. For liquid fuels the only real viable alternative is NG and NG is tightly coupled with oil and electricity. Coal is not evenly distributed world wide and the LNG market is not fully developed so given all the current relationships between oil production and electricity and also potential substitution such as direct use of NG or NGL/CTL technologies its not clear that it makes sense to talk about liquid fuels.

On the other hand most alternatives provide electrical energy which is not in short supply except for the potential future case of NG/Electric becoming problematic but this would be related both to NG production and potential substitution of NG for oil in transportation.

Not that you can't look at this in fact I'm more concerned about North American NG production then oil. Nate Hagens is from what I can tell scared shitless. I'm a bit passed that point and am now out of underwear.

The reason I'm even more concerned than Nate is that complex refining of heavy sour oil requires a substantial input of NG. If North American NG production plumments then then the complex refineries we have built here to process heavy sour oil become much less useful. A lot of the reason that oil prices have remained relatively low is the the expansion of complex refining in the US has takes a lot of pressure of the price of light sweet crude. If NG becomes priced close to crude oil then complex refining of heavy sour crudes in the US may not make a lot of sense.

See some of my other posts. The time scale for the NG problem is 3-6 months.
OPEC cuts are on the same scale. Talking about non-liquid energy and the relationship with oil given both the complexity of the issue and the potential for serious short term problems is probably not a huge issue.

I think at least for North America that we could reasonably extract ourselves from a NG supply problem with a crash course building of coal fired plants.
But this gets into political issues.

Lets see where we are in six months then we can worry about windmills.

I'm not trying to be rude but I'm serious for the next six months at least very short term issues are going to have long term implications its going to be difficult to talk about total energy until we get a good handle on both NG and OPEC. My opinion is that we will be forced into crisis mode and armchair discussions are of little value. We are going to have to do something.

"For liquid fuels the only real viable alternative is NG "

I think the only real viable alternative is PHEV's. NG is a bit of a distraction.

"most alternatives provide electrical energy which is not in short supply"

Yes, exactly. We don't have an energy problem, we have an oil problem.

"I'm more concerned about North American NG production then oil."

Why? Sure, currently low prices will slow down production, but there's no real sign of a NA NG production crash - certainly not a permanent one.

"complex refining of heavy sour oil requires a substantial input of NG"

I believe it's not NG that's essential, it's hydrogen. That can be electrolyzed, no?

"See some of my other posts. The time scale for the NG problem is 3-6 months."

Could you provide some links, instead? I am sorry to say, I also find your writing very hard to follow.

And, finally, I'm still wondering: why didn't the article deal with wind & solar, or coal?

"Yes, exactly. We don't have an energy problem, we have an oil problem".

Hence, EROEI should be liquid fuel return on liquid fuel investment. The solution is to use electricity to drill and pump oil and to replace liquid fuels with electric transportation. I think the "doomer" argument is that this cannot or will not occur fast enough. Few would claim it is not technically possible.

Responses of economies to WWII showed what is possible when real survival is at stake. I just don't think keeping those SUV's on the road for many non-essential trips is considered survival threatening (yet). Did people stop buying SUv's because of high gasoline prices or because of the banking/credit crisis?

"I think the only real viable alternative is PHEV's. NG is a bit of a distraction."

I should have said: "I think the only real viable alternative is electrification (PHEV's, rail, heat pumps, etc). NG is a bit of a distraction."

I believe it's not NG that's essential, it's hydrogen. That can be electrolyzed, no?

Not on that scale, or at a competitive cost.  Where would you get the electricity?

Hydrogen is usually produced by steam-reforming of natural gas or other syngas.  Syngas can be made from just about anything that contains carbon, but the systems to make it from e.g. coal or petcoke are expensive and take a while to build.  The time frame of the NG problem is much too short to be addressed that way.

"Not on that scale, or at a competitive cost. Where would you get the electricity?"

According to an industry website, about 4% of commercial hydrogen consumption, worldwide, is produced with electrolysis. Obviously steam-reformation from NG would be cheaper, but given the added value that hydrogen provides the refining process, I thought the electricity cost might become less important in the face of NG shortages or cost spikes. It would be interesting to run the numbers.

Given the pathetically low efficiency of the electrolytic conversion path (perhaps 30% coal to electric, 70% electric to hydrogen, total 21%) versus the cold-gas efficiency of gasifiers which can easily exceed 70%, it makes no sense whatsoever to use electrolytic hydrogen when starting with a carbonaceous fuel.

The most likely option IMO would be a tweak of the syngas production systems to allow use of heavier hydrocarbon gases as feedstocks, though the person to ask about this would be Robert Rapier.  The recent announcement of a liquid-copper reactor to capture hydrogen from H2S (a waste product of desulfurization) would allow recycling of H2 and reduce the required inputs.

hmmm. Sounds like you feel that a possible NG production decline poses no threat to heavy sour oil refining.

No, I just don't see electrolysis as a viable response.

BP is looking to make hydrogen from petcoke (which in turn comes from coking of heavy fractions), so it's not hard to see where the experts think the money is.

I'm delighted to hear about the practical solutions that will be employed. Let me just note that there's a big difference between cost-competitiveness, and viability. Electrolysis could be substantially higher in cost than several available substitutes, and yet still viable as a backup solution.

Let me go back to the original question: what do you think is the likely impact of a possible NG production decline to heavy sour oil refining?

In the shortest term?  If the refineries can re-tune their reforming systems to start with ethane or propane instead of methane, I'll bet they'll do that (and sacrifice some product as feedstock).  That's just a guess based on a knowledge of chemistry, not on what refineries are capable of doing - that's Robert's bailiwick, not mine.  This would have the side-effect of creating substantial elasticity in the natural gas market.

In the longer term, recapture of hydrogen from H2S and gasification of petcoke seem more likely.  This will take time; some of the gasification processes, like chemical looping combustion, have not even been done at the commercial scale yet.

Industrial use of NG will decline with the recession (GM was an energy hog to an extreme sometimes). Dark, unheated malls use less.

Price elasticity of demand for home heating is greater than for transportation (NG at $25 and many thermostats will go down, $35 and further still and a run for more insulation, better windows, electric blankets, etc.)

Wind can come on-line quickly to help whittle away at the 21% of electricity generated by NG. Conservation can do even more, faster.

Best Hopes,



Our best estimates for the EROI of wind are around 20 - 30 : 1. Which is quite good, but the focus of this article was on the concepts of Best First and EROI, and we used mainly oil and natural gas to explain them. Our estimates for EROI of solar energy are much more shaky, and we are working on upgrading them, but we welcome any literature (hopefully peer-reviewed but others are acceptable) on the subject.

Presumably wind will follow best-first principles as well, though there is a heck of alot of 'best' still available...

Well, sure.

First, wind's non-depleting.

2nd, the resource is much larger than the need: the last estimate I saw was 72TW vs current electrical consumption of about 1.7TW.

3rd, the tech is still improving fast: larger turbines, better surfaces (like the one adapted from whales) and better generators.

[...] wind's [...] much larger than the need: the last estimate I saw was 72TW vs current electrical consumption of about 1.7TW

It's more useful to talk about our total energy use, which is 15.5TW. After all, we're not just talking about replacing fossil fuels in electricity generation, but fossil fuels generally. And they get used in all sorts of stuff. So we replace all those other uses... with what? Well, electricity. Electric trains instead of petrol cars, that sort of thing.

As I discuss in ecotechnic style energy use, that 15.5TW we should be able to by various efficiencies (eg it's less energy per person on a train than in a car) get it to about half that, 7.6TW - or 1,150W per person in the world today.

But then if we want to do that for everyone in the world, not just the developed West, it works out to more like 2,000W per person. So as I discuss in let's make like China and build!, that's 13.3TW today, and rising to about 18-20TW when world population tops out around 9-10 billion around 2050 as expected by the World Health Organization.

Now, 18-20TW of wind, solar, geothermal and so on, that's all well within the available resources the Earth has. But it's a big build-out. Not easy financially, technically, politically, or in any way. Not impossible, but not easy.

Essentially we must build ten times more power generation than already exists in the world today. This not as crazy as it sounds, since already from 1980 to 2005 the world doubled its electricity generation capacity with an annual increase of 2.79% (while population increased by 1.14% over the same period).

The current growth rates of wind at 25% or so and solar PV at 50%, we have to be honest and admit these are only because they're coming from such a low base. It's like if some little African country builds a hydro plant one year, voila it's doubled its capacity - but it can't do that every year. It's more useful to look at the actual growth rates of generation countries, regions and the world have managed over years or decades. And that's 2.79% for the world over a quarter century.

If we simply said that all new generation had to be renewable, then the same 2.79% applied to the 1.7TW of generation today would give us 5.4TW by 2050, less than halfway there.

There were a few years in the 1980-2005 period where electricity generation went up by more than 6% in a year. Most of this is due to big hydro projects in places like China and India. But it does show what's possible with a sustained and concentrated effort from a country with lots of industry and manpower. The world as a whole certainly has plenty of industry and manpower, so 6% for 42 years is possible. Again, not easy, but possible. That'd push us up to close on 20TW by 2050.

So turning the world into purely renewable energy while maintaining a decent quality of life for all, this is a very possible task, but it's not easy.

That's a beauty of a last sentence.
Could you describe how it's possible.

I generally agree with you, but I do have a few thoughts:

1) I think you're underestimating the efficiency of electricity a little. For instance, in the US EV's would be about 6x as efficient as ICE's. We could power all 220M light vehicles by just expanding electrical generation by 17%.

2) other energy sources, like oil, coal and nuclear won't disappear, so renewables won't have to do the whole job.

3) consumption efficiency (passivhaus design is just one important example), can make an enormous (and much more cost-effective)contribution.

4) the enormous investments required for fossil fuels can be redirected to generation - I'm not sure ramping up renewable generation would be more expensive, counting all costs.

Let's redirect all fossil fuel investment to renewable investments and then learn to live within whatever is produced by said investment. Think of it as an interesting and entertaining challenge. Conservation is so much fun because the savings are tax free, whereas the money to buy the otherwise purchased energy is not. We would have to nationalize the oil,natural gas, and coal companies first, of course.

"Our best estimates for the EROI of wind are around 20 - 30 : 1. Which is quite good"

Yes, that seems good enough to satisfy almost anyone. That gives you an energy payback of roughly 12 months. Windfarms can be built in 1 to 2 years less time than a coal plant, so by the time the coal plant has been finished the windfarm has already paid off its energy debt.

OTOH, if you look at the article by Cutler Cleveland a year or two ago on TOD, you'll see a chart of wind E-ROI, with E-ROI of 15-25. It includes only turbines which are much smaller than those used today. You can see a strong correlation with size - if you project it out you'll get a result consistent with Vestas' estimate of a 5 month payback.

If Jimmy Carter was pilloried and ridiculed almost 30 years ago for merely suggesting we put on a sweater and turn the thermostat down, extraordinarily mild measures in leu of the situation, what makes anyone think things are different today in public leadership?

Obama will not go near that with a ten foot pole. The great financial meltdown is priority One, not energy conservation. Throwing burrowed 'money' at the fossil fuel infrastructure (highways) for the sake of make-work jobs is not even conservation. It's a Total Waste of Money.

We are now in what I think of as 'the door bell" mode. Crank up the economy = $150 barrel oil returns in a NY minute and cuts off a recovery which = $25 barrel oil which fuels supply destruction.

Rinse and Repeat.

Each cycle's high and low being amplified in scale and shorten in time thus doing increasingly violent damage to the financial structure each turn until the whole mess shakes apart in a Perfect Harmonic Moment.

So how can there be any 'conservation' of energy with no public political consensus? Energy is now a distant second to defibrillating the Credit Economy with the Big Giant Electric Shock Paddles of even more borrowed 'investment' capital we don't have.

News flash:

even 'Conservation Measures' cost tons of money in the form of Massive Public Relations Campaign Expenditures.

Think changing people's attitudes is Free?

Yes, even getting a slim majority of Americans to 'put on a sweater and turn the thermostat down" would cost millions, nay, billions in 'persuasion' costs, even assuming the Republicans didn't crank up another smear campaign against it.

Any thoughts?

I do think things have changed. I have no idea if they've changed enough, or in the right ways, but I think we live in a different world than we did with Carter, Kennedy, Roosevelt, Lincoln.

Human Nature won't have changed much, really, if at all.. but we will act differently since we are responding to changing circumstances. What is changing is the EROEI of the energy available to us.. which is already markedly worse than it was in 1979.

Funny, I'm wearing headphones with 'Monk's Blues' Blaring, and yet I distinctly heard the unnerving clatter of Madame LaFarge's knitting needles. She must be making me a sweater.

Change is coming, probably pretty fast now.. and I don't think Obama is going to be less surprised than anyone else.


Okay, I've thought it over. It just doesn't make any sense. Not today.

There just isn't much labor involved in building a thin-film solar panel - or a wind turbine, or producing a barrel of ethanol, or biodiesel.

Wind, sunshine, current, wave, rain are free. The infrastructure lasts a long time.

It wasn't $4.00 gasoline that killed us. It was getting caught with our pants down around our SUVs that did us in.

EROEI "This." One acre of ground (no fertilizer) = 300 gallons of ethanol. Use the distillers grains for process energy. 1 lb = 8400 btus. 17 lbs/bu = approx 50,000 btus per gallon of ethanol. The one pound of corn oil/bu will more than handle the farm tractor plus transportation.

Result - No fossil fuels in; 300 gallons of ethanol out. What's the "EROEI?"

If you keep taking crops from the land and return nothing to the soil, then in a few short years your yields will decline to zilch.

So you have to return part of the crop to the soil, grow soil-improving plants half the time, or add artificial fertilisers.

I wish all these people who talked up biofuels would spend a few years at least growing a patch of vegies in their backyard, it'd teach them a lot.

Oops, forgot the corn cobs. Okay, burn the corn cobs for process energy, and return the ddgs to the soil, along with the stover, and the ash from the fluidized bed gassification.

Kiashu, I was disking with a ford tractor when I was 7, or 8. I was cranking a 39' John Deere when I was strong enough to turn the flywheel. I "skinned" a mule in the sweet corn field the summer of my second grade year. I was picking cotton, and gathering cantaloupes before I went to grade school. My job after school was scooping out the milking barn. I've probably thrown more watermelons than you have square feet in your "garden" multiplied by 1,000.

I've carried a burlap-wrapped jug of water out to my father as he was plowing behind a team of horses. I've reached into a chicken coop and come out with a handful of black snake. I've helped raise onions, potatoes, sweet corn, cotton, field corn, rye, wheat, beans, hogs, chickens, feeder cattle, and melons. I even helped a semi-driver top off his load with citroens, once. He said if they could fool him, they could fool someone in Chicago. Oh, and I helped my momma pick collared greens, and berries on the side of the road.

And, I'm gonna tell you something, Bubba. We've been farming these United States for about 400+ years, now; and the land is probably more fertile Now than it was when we got here. We really do know how to do cover crops, rotations, and low-till when the situation warrants.

Basically, all this "EROEI" stuff is is a ploy to try to discredit biofuels while giving the "doomers" a "sitting around the campfire, scary story thrill."

I agree Homeland Security will have plenty of biofuels to run their crowd suppression helicopters and transport trucks to citizen training camps.

Why be worried ?

Kiashu, I was disking with a ford tractor when I was 7, or 8. [snip]


So you'll show us pictures of your farm where you grow these biofuels, the distillery where you distil them using only the biofuels you've grown yourself, the end product, and a nice bit of book-keeping showing us all the fertiliser you used, the diesel for your tractor and the rest?

Then we can discover how you manage to get 300 gallons of biofuel from an acre of land with almost zero input of energy. We'll be most interested to discover this.

Of course biofuels are extremely easy to grow with very little energy inputs. That's why they need all those government subsidies.

I've posted all of that stuff before. If you ignored it then, you'll ignore it now.

We subsidize All fuels. We spent $160 Billion in the Middle East last year keeping the fuel flowing. Oh, wait, I forgot; that was so the Iraqis could have "representative" government. I forgot.

Oh well, moving on; We subsidize the purchase of a Hybrid car to the tune of about $4,500.00, don't we? I haven't heard you griping about that.

We gave the oil companies something like $13 Billion for "Offshore" drilling, right? Oil Depletion Allowance? We subsidize AMTRAC, and we pumped a lot of money into Nuclear in it's early years.

In the meantime, a few hundred thousand people ride amtrac, and drive hybrid cars, and Ethanol transports approx 20 Million.

Oh, absolutely we subsidise fossil fuels. And I agree that those subsidies should be removed.

Along with the subsidies for biofuels.

Genuinely good ideas don't need billions of public money.

Oh, absolutely we subsidise fossil fuels. And I agree that those subsidies should be removed.

But not the much larger special taxes?

Along with the subsidies for biofuels.

Genuinely good ideas don't need billions of public money.

But if those paid public servants who allocate public money choose to allocate billions of it to ideas that are, in their badness, nonthreatening to the hundreds of billions in annual fossil fuel revenue -- ideas such as biofuels -- isn't that lack of threat obviously the point of the exercise?

Returning those very large existing fossil fuel revenues to the public on an equally divided basis, as J.E. Hansen proposes to do with new fossil fuel revenues gained by new taxes on all fossil fuel carbon, not just petroleum and natural gas carbon, will eliminate this conflict of interest on the public's hired help's part.

--- G.R.L. Cowan (How fire can be domesticated)

I can appreciate your knowledge of farming and growing crops. My grandfather was raised on a farm, homesteaded in Montana around WWI and later became a policeman in Chicago when things went to hell during the deprssion. He knew a lot about raisng a crop for profit, as do you.

But, I think your judgement of EROEI is without merit. If we do not have a way to measure, even roughly, the net benefit of various kinds of energy, then we will never solve the oil decline problem. I am a mechanical engineer that has made a living as a consultant to transportation and energy companies for 25 years. I don't have any experience to say that tillage at a certain time will cause soil erosion or prevent weed growth, or make any other judgement on producing crops. But I can say from my professional experience that EROEI does matter.


And, I appreciate Your life's Professional Experience. My quibble with "EROEI" is the fixation on BTUs without regard to other factors. For instance, it makes no sense to ignore Ethanol's superior Octane numbers when discussing eroei.

A Nebraska farmer, this summer, propelled a 69' Mustang to a speed of 252 Miles per Hour one a mix of 85% ethanol, and 15% gas. This cannot be done using straight gasoline. The Ethanol has fewer btus, but Can Do More Work.

It would be like comparing biomass to coal without factoring in the environmental considerations (and, expenses.)

Anyway, it's all kind of moot, now, anyway. We have plenty of alternatives that can be priced such that they're All very affordable.

And he burned more gallons of ethanol to do the job.  Methanol has higher octane and produces more power, but you'd burn still more of it than ethanol to do the same job.  The power and octane rating are simply irrelevant.

Power and energy are two different things.  Several people have explained this to you in detail, yet you persist in making the same error.  If this is an obsession, seek counseling; if this is a mental deficiency, please have the good grace to be quiet.

"The power and octane rating are simply irrelevant."

FWIW, Robert Rapier reported that an Audi model reduced the ethanol btu penalty from roughly 30% to about 12%, by using the higher octane to allow higher compression (like diesel) and therefore efficiency.

If the soil is exhausted by agriculture why do yields keep increasing?

The phrase 'exhausted' means when soil is incapable of producing certain crops.

Virgin soil has very low amounts of nitrogen in it compared to crops, so you can't really exhaust it per se.

In 1960, the US used 2.7 million tons of nitrogen, 2.6 million tons of phosphate and 2.1 million tons of potash

In 2004, the US used 13 million tons of nitrogen, 4.8 million tons of phosphate and 5.5 million tons of potash.

Meanwhile US agricutural output(2004) is 2.6 times more than in 1960. For the mineral phosphates and potash, there is NO evidence of soil exhaustion because we are using almost the identical proportion of those elements as in 1960. IOW, we are not ruining the soil but adding the amount we are taking out with crops.

Nitrogen is not fixed in the soil but is added to the soil by nitrogen fixing bacteria, rotting plants and legumes with the excess nitrogen being drained away. However it is true that some farmers overdue their application probably as a safety factor, with a risk of plant damage and water pollution.

So I don't see 'exhaustion' of the soil below its virgin state by agriculture, instead I see people adding fertilizer to grow the crops they want.

I'm looking at the roughly quadruple increase in N2 addition for a 2.6x increase
in productivity. How has this increase affected overall pH of US soils and the
presence of Ca and Mg cations?How much liming with CaCO3 has been necessary to
stabilize acidity? I remember reading about EU soils 10 years ago and the problems
they were having with acidification.

A good part of the nitrogen doesn't stay in the soil or end up in the plants. It becomes nitrous oxide and contributes to global warming (about 7% of human-caused greenhouse gas effect is from nitrous oxide from artificial fertiliser and animal manure), or runs off into the water system. Thus the "dead zone" in the Gulf of Texas. The nitrogen causes algal blooms which suck up the oxygen and kill the fish.

A lot of trouble is caused by farmers applying fertiliser, water, herbicides and so on according to a calendar, rather than by actually looking at the soil.

I think that would be the Gulf of Louisiana, or maybe Mexico. Not everything is Texas' fault - it ain't that big, and I have to admit that you cannot see Russia from Texas.

K, has it come to your attention that Nitrous Oxide is measured in the atmosphere in parts per Billion? Or, that in the last 100 years of very intensive farming, driving, and industrialization, we've managed to raise Nitrous Oxide levels by about 17%? In other words, at this rate in another 100 years we will still be in the parts per Billion, and for the 100 years after that.

ALL major rivers have Hypoxia Zones at their mouth. Always have.

Nitrous oxide has a very strong warming effect compared to its absolute amounts.

17% extra is a lot in natural systems in balance. For example your body's different kinds of cholesterol or the sodium-potassium balance. Change one by 17% and heart disease is coming, change the other by 17% and death can follow shortly.

Chemical processes have what's called a dynamic equilibrium, which is like a seesaw going up and down. Add 17% weight to one side of the seesaw - say, a little kid jumping on with two adults - and the people on each side have to change their positions to get the thing balanced again, or else it comes down on one side with a thump.

Biological or ecological processes are a whole pile of chemical cycles interlocking and balancing and reinforcing and damping each-other. It's like that game of pick-up sticks - pull out one, maybe nothing happens, or maybe the whole pile comes crashing down. Complex stuff.

But hey, if you want to deny the science, feel free. I will welcome your sailship journey demonstrating that the Earth is flat, too.

What Science, K? All I saw in your post was a handful of severely strained metaphors, and an opinion.

If you're unhappy with analogies, it's no wonder you're not fond of mainstream science. Science is all about making models for things, models which don't describe things perfectly but are good for a particular purpose. Google up "wave-particle duality" to really blow your mind with OH MY GOD JUST AN ANALOGY THAT'S NOT SCIENCE.

It's not a "matter of opinion" that nitrous oxide has 298 times the warming effect of carbon dioxide over a period of a century.

Before fossil fuels started getting burned like crazy, CO2 was about 260-270ppm. We've added about 100ppm.

We've added 46ppb of N2O, which is equivalent in warming terms to 46 x 298 = 13,708ppb = 13.7ppm of CO2. So it's significant.

If you want to dispute that, just wander down to your nearest university and knock on the door of a few professors. Or perhaps write a paper and send it to Nature. I'm sure they'll be most interested to hear your evidence.

I actually find this interesting. Amongst all the climate change denialists, I've seen a lot of talk of CO2, natural cycles and all the rest, but none about CH4 and N2O. Which is a bit surprising, really, since about 45% of greenhouse gases in warming terms don't come from burning fossil fuels. So if you want to deny human-caused climate change, you should really deal with the other half of the causes.

Did you perhaps check out arguments from sceptics and their refutation? Perhaps you did, since this "but nitrous oxide is measured in parts per BILLION so it can't possibly be harmful" nonsense is a new one.

I congratulate you on your attempts to obscure the science in this area so often neglected by denialists. Forge new ground!

Again, your opinion is that 13 ppm (Jeez, man, that's 1.3 parts per 100,000) of CO2 is Significant.

K, even if you gave CO2 credit for 0.3 degrees centigrade in the run-up from 280 to 380 an increase of 13 ppm (remember, the effects are logarithmic) would be incredibly small. Maybe between .01 and .02 C.

And, what's with the Denialist, nonsense. Reasonable people try to work through the numbers and come up with a sensible conclusion. Heck, I don't care if the "Global Warmeners" win the debate. They, largely, espouse what I'm in favor of anyway.

Oh, btw, that little Scandinavian team (Norwegian?) that caused such a stir for a couple of days came up with different numbers than all of the studies that had ever been done by the UN FAO, the USDA, and every European, and American University that had ever studied N2O. In other words, there's a really good chance their numbers were wrong. The whole thing did kind of go away awfully fast.

Anyway, G'Nite. It's been a pleasure. The Cot is calling. :)

ALL major rivers have Hypoxia Zones at their mouth. Always have.

BS !!!

Corn Kills Oceans !


More Science.

The amount of lime required to neutralize the acidity of various fertilizers can be found in the folowing publication:

Nutrient Content of Fertilizer Materials

Note that some not so commonly used fertilizers are not acid forming, and actually increase soil pH: Calcium nitrate, potassium nitrate, magnesium nitrate, potassium carbonate, bone meal, phosphate rock.

So what you're saying is that the US is adding,

4.8 times as much nitrogen
1.8 times as much phosphorus
2.6 times as much potash

or overall, 3.15 times as much fertiliser...

to get 2.6 times as much yield?

So as we expend more effort, we get less return? When that happens with an oilfield, we say we're depleting the oilfield, we're exhausting it. Yet you tell us we're not exhausting the soil?

What happens, pray tell, when that nitrogen, phosphorus or potash are less available? I know this website is TheOilDrum, but in general we recognise even if we do not much discuss that natural gas and phosphorus at least are limited, the gas peaking in the coming decades and the phosphorus having already peaked.

The various natural cycles are essentially very simple, like a bank account or glass of water. If you take out more than you put in, it gets less. And what you put in must come from somewhere else. Which is a problem if that somewhere else does not renew itself, or cannot renew itself as quickly as you take from it.

I used 300 gal/acre for a reason. It represents a reasonable yield for a decent farm when NOT using I-NPK. We're assuming crop rotation (beans putting nitrogen back into the soil, corn stover adding P & K.)

BTW, Yields WOULD increase significantly with the addition of ddgs back into the soil - which you could do burning the cobs as some are starting to do.

As with all statistics you have to be careful with your starting and ending points. Fertilizer use is Actually Down 10% since 1980; while yields are up something like 60%. And, farmers have really cut back this fall, as referenced by an approx. 50% Drop in Wholesale Fertilizer Prices (the exception being Potash which is only down about 15%.

I will post my paper on Water and Energy here in January (or at least a summary). If you include water constraints, BIOFUELS are a non-starter, except for specific local uses.

Heres a paper showing the much higher water intensity of electric vehicles (granted there is not a large % of electricity coming from wind and solar currently, but that is also kind of the point...?)

Energy vs Water - Solving Both Crises Together

My paper expands on these ideas and develops concept of Energy Return on Water Invested. It is between 1 and THREE orders of magnitude less for biofuels than for conventional FF. In the end (and I wish the end of this discussion was years ago), the Energy Return on Energy Invested, the Energy Return on Water Invested, the Energy Return on Pollution Created, the Energy Return on Land Invested, etc. biofuels, and corn ethanol in particular will be known to have been dead ends with large externalities.

I believe EROI Guy has a post in the queue on corn ethanol btw.

Nate, water's not going to be a problem.

The "average" 55 Million gpy ethanol plant uses about as much water as an 18 hole golf course. We have about 5,000 of those IIRC.

The Newer plants average about 2.7 gal water/gal ethanol. One is 1.1 I believe. Many use No groundwater. They use grey-water from municipalities, or water from creeks, or rivers, clean it up and put it back.

If need be, they can be made virtually water neutral (ie recycling the same water over, and over.) Only One State irrigates field corn to any great extent (Nebraska.) This is not Necessary; it just increases yields.

Water is just another Big Oil "Talking Point." It will be the Non-Starter.

National Academy of Scientists , and many in my field, disagree.

Nate, from your link:

but as biorefineries increasingly incorporate water recycling, the difference between consumptive and total water use is decreasing.

True. I guess it's ok then.

For virgin soils to support high yield agriculture we must
add fertilizer. In the case of potash and phosphate, for every extra quantity of ag product we need to linearly add a certain amount of those minerals. There is no exhaustion , just pay as you go. If we increase production
2.6 times, we increase minerals by ~2.6 as the site shows.

Nitrogen is different. The rate of nitrogen fixation in virgin soil is low, but high yield crops need much more nitrogen than the natural rate of nitrogen fixation allows,
so farmers have to raise the nitrogen levels in the soil
as high as the soil physically allows.
For many crops the available soil will never provide enough nitrogen so a large excess is applied only to be removed overtime as NOx gas or runoff.

For every extra bushel of food on the same amount of land, a given amount of fertilizer is required. Lime is also required for acidity.

Take sugar cane--a ton of sugar cane will produce 80 gallons of ethanol(100#) from 1# of phosphorous, 3# of potassium and 90# of nitrogen in average soil.
30 tons of sugar cane is grows on an acre.

For corn---a ton of corn will produce 100 gallons of ethanol from 50# of phosphate, 50# of nitrogen and 50# of potash in average soil. 4 tons of corn kernals grows on an acre.

For switchgrass---a ton of switch grass will produce 100 gallons of cellulosic ethanol from 12.5# of phosphate, 12.5# of potash and 12.5 # of nitrogen. 4 tons of switchgrass grows on an acre.

Obviously different crops require different fertilizer inputs for the same bio-fuel output.
To repeat, the secret for higher yields is to use fertilizer. The natural level of fertilizer in virgin soil is very low so the idea of soil exhaustion is a misnomer.

Potassium and phosphorous can be reclaimed from ash from the ethanol process; as a matter of fact that is how potassium was discovered.

I even helped a semi-driver top off his load with citroens, once. He said if they could fool him, they could fool someone in Chicago.

The story of ethanol supporters, their honesty and Obama (to date).


Jeez, Allen, I wuz 8 years old. I just helped load the truck.

I am a fervent supporter of charging for energy based on the usage. Not sure if it is at all feasible, and it's probably not politically viable. But it seems to me that energy should at least be charged to users on a sliding scale. But this is an artificial manipulation of the market, which many (most Americans?--I'm Canadian, btw) would accept over their dead bodies. Europeans may be more amenable.

It should not cost the same to use a litre of gasoline to race NASCAR as to drive an ambulance. We have to acknowledge that it is no longer acceptable to simply let wealthy people use up all the energy that they can afford to waste on luxuries which do not contribute to re-structuring society. And amongst those wealthy we must include all middle class consumers who feel that it is perfectly acceptable to commute two hours per day, maintain gigantic manicured lawns which are not put to any productive use, fleets of oversized, mostly empty automobiles, office complexes draining electricity 24/7, passenger air travel, etc., etc. We have wasted mind-numbing amounts of surplus and/or low-cost energy, air, water, land, and human effort on short-term, zero-return luxuries. Some of those resources may be reclaimable in one form or another, but they may never again be available in sufficiently large pools to give us the base investment necessary to transition to a new energy economy based on something other than fossil fuels. I suppose I am paraphrasing Kunstler and others.

But the costs of such wastes must be borne by the individual, not society. It is a kind of tragedy of the commons. Until a majority agree that our resources have more than short-term value, we can never hope to achieve long-term goals.

"I am a fervent supporter of charging for energy based on the usage. Not sure if it is at all feasible, and it's probably not politically viable."

It's certainly doable, politically: it's what California does.

Cuba subsequently learned to live, in some ways well, on about half the oil as previously, but the impacts were enormous.

I'll correct and expand on this a bit.

I talk about it in detail here, but fell from 224,800bbl/day in 1989 (its year of highest consumption) to 180,000bbl/day in 1992, that is a drop of about 20%. It's now about 203,000bbl/day, thus a drop of only about 5%. But natural gas consumption went from just 1.1 billion cubic feet in 1989 to 26.4 in 1997 and is now 14.126 billion cubic feet annually. And coal consumption went from 254,000t in 1989 to 41,000t today.

Overall, total Cuban fossil fuel energy use went from in 1989 a high of 0.51 to 0.458 quadrillion BTU today, a drop of 10%.

The significant thing about Cuba is that in 1989 about 2/3 its oil went to electricity generation, and 1/3 to transport. So when they had that 20% decline, it was easier to take it from transport than from electricity generation. Thus electricity generation was unchanged, but transport fuel availability dropped by about 2/3.

Cuba's experience of a drop in oil supply is that it's not cut evenly across the economy, but private transport misses out first.

Note that Cuba does not appear to be planning to abandon fossil fuels; the country has an electricity generation capacity of 3,500MW, 1,600MW of which were added in the last three years alone - all dependent on diesel and fuel oil, and they are building two new natural gas-burning plants of 35MW each. And 3.45 billion cubic metres of natural gas a day are produced and consumed, about 10% for domestic cooking, and 90% for electricity generation.

Doubling fossil fuel-derived electricity generation in three years is not really consistent with a plan to avoid future fossil fuel shortages; they obviously think peak oil is over for them and not coming back soon.

Still, what the Cuban experience shows is that fossil fuelled transport is very flexible, in that a decent standard of living can be had with a lot or with very little. Electricity generation was less flexible for them. While the Cubans were able to set aside many of their cars and put people on "camels" - trucks turned into informal buses - it was much harder for them to change the way they generated electricity, lots more infrastructure to change.

Had the Cubans had coal-fired, hydro, wind or other forms of generation, they would have used only 1/3 the oil they did, and so the collapse of the SU and its oil exports to them would not have hurt very much at all.

So if energy is required for economic growth and maintenance, then the important question is how much oil and gas (i.e. energy) is left in the world?

Yes and no.

Two other questions are important:

"Is it possible to use oil and gas in more efficient ways?"

The answer is "yes." Cubans swapped their cars for improvised buses.

While we'd hope for less crude adaptations, it shows that you can get the same result (taking people from A to B) with less energy. So if oil takes twice as much effort to get out of the ground, if we use half as much we come out the same EROEI.

"How much is left?" must be considered in tandem with "how much do we use, and could we use less or more?"

"Is it possible to use things other than fossil fuels to get what we want?"

The answer is "yes." Electrified transport, for example, can get its electricity from many different sources which themselves require much less or even no fossil fuels.

In the end, what we humans need and want is,

- food & water
- shelter & clothing
- heating & cooling
- transport
- entertainment & communications

Some of those are currently provided in whole or part, directly or indirectly, by fossil fuels. But it need not be so.

I guess the US is also going to follow the example of Cuba in Real Estate ?

Not that I don't agree but Cuba actually effectively devalued its Real Estate to zero to pull off its transition. I'm proposing that the same thing will happen here but you have to look at the entire story in Cuba transportation was just one part of their transition.

And of course this was done under a totalitarian regime that effectively stripped a lot of property owners of their rights. Can we do it sure.

Can we do it without effectively following the same path as Cuba and will our dictator be as nice as Castro ?


more likely the reverse, instead of rents being converted to mortgage payments, in US, mortgage payments of defaulting homes will probably be converted to lower rental payments.

I've got to take issue with this:

So if oil takes twice as much effort to get out of the ground, if we use half as much we come out the same EROEI.

If your EROEI is 2.0:1 and it suddenly takes twice as much energy to get oil out of the ground, your EROEI becomes 1.0:1 and you no longer have a surplus to drive anything, no matter how little it uses1.  The way around this is to switch to higher EROEI sources and use them directly.

[1] This is arguably not true if the input energy can be supplied by another source, e.g. wind power; Kansas wind power driving pumpjacks for stripper wells may be economically and energetically viable well below 1.0:1 EROEI, because the wind is otherwise "stranded".  The same may be true for off-shore wind power supplying the juice for drilling and production rigs.  However, it's still going to cost.

so how much would it cost to mass produce these in Detroit ?

The web site doesn't even say if it has a defroster.  Nothing about range, acceleration....  After adding all the safety features they don't bother to mention, who can tell?

I am intrigued by EROEI calculations, but in the real world, money is what drives the decision making process. One of the factors in making that decision, of course, is taxes. The energy sector is highly influenced by taxes. Getting away from the fairness of our (US that is) system where companies get to deduct drilling costs just like cereal companies get to deduct research and development as well as advertising costs (and, yes that comparison is analagous), when a company decides to drill a well, they will reduce their tax burden. If they drill a dry hole, it is expensed in one lump sum. If they are successful, it is generally expensed over the life of the well. Tax implications when marginal tax rates are less significant today with max rates under 40%, ignoring minimum tax implications, than what they were under Nixon when a surtax bumped the max marginal rate to 77%. A $100,000 dry hole today costs a high income taxpayer $60,000 versus a tax cost in, IIRC, a 1973/74 cost of $33,000 for a then-high income taxpayer. The Federal Government paid the rest, or the rest of us paid the rest - have it as you may.

In any case, tax policy does influence energy investment decisions, whether it is with a direct per gallon subsidy for ethanol or with a tax deduction.

Likewise, discrimination between different types of energy distort EROEI. If I could drill a well and my prime equipment was tied to the grid, I might well be able to drill the well with a cheaper energy than the fossil fuels I hope to recover. And, don't laugh. Many components on many rigs are driven by electric, it is just generated on location using generators on site. Thus, I would be converting one source of energy into another source of energy, if I am successful. EROEI does not discriminate. One million BTU's are one million BTU's - period. Thus, our energy P&L gets distorted if we account for our operations in BTU's. Businesses, however, will continue to keep their books in whatever their particular currency is.

What the world's goal should be is to arrive at a sustainable way to produce our energy. If we switch to wind turbines, we will drive up the cost of components and make somebody's back yard less inviting. If we switch to solar, we will run short of some of the materials which read like blahblahblah to me. If we go to entirely nukkes, we run the risk of environmental disaster in more places than we have places, plus we have peak nuke fuel blahblahblah. Liquid petroleum products are just simply the easiest way to carry your fuel with you, and frequently the most efficient way to transport it.

Different fuels are useful in different ways. Cave dwellers could not depend on passive solar as their heat source. At the point where our development is today, we have to have batteries or some kind of supercapacitor that is light enough to be hauled around if we are to have electric vehicles, at least until we get 20 layer solar panels versus what seems to be a max of 3 layers today. I can heat and cool my home with a geothermal heat pump, but can I use the constant temperature water without the compressor? How about for my motor home (and no, I don't have one) ?

I will opine that if gas shales will return even 11 to 1 and will produce 80% or ultimately recoverable in the first year (I have seen 67% touted prior to this time), this is a real winner, which I thought it was not. In EROEI, as in finance, the time value of money (energy ?) should come into play, and in finance the present value of a dollar today is a dollar and tomorrow it is not. After all, it was money which was used to buy the energy which is being invested, although they are pre-tax dollars.

In November of 2004, The New York Times reported that for the previous three years oil exploration companies worldwide had spent more money in exploration than they had recovered in the dollar value of reserves found. Therefore it is possible that the energy “break-even” point has been approached or even reached for finding new oil.

What? Money break even implies energy break even? I've never heard of that!

Did you mean something more like "It is also possible that the energy..." instead of "Therefore it is possible..."?

Since energy is only one of the inputs into a process, it stands to reason that energy break even will be reached well before money break even. Doesn't have to, but could. Also, I believe, based on $140+ prices earlier in the year (well last year now), that pulled every new project that was remotely profitable out into the open, now will be a stark indicator on what has an energy (or money) profit or not. If we were flush with huge energy/money windfalls on wind, ethanol, US/Canadian oil that all cost $5-$10 boe, then the economy would reload as all that energy gain could again rifle through the system as profits. We don't and it won't.

"Since energy is only one of the inputs into a process, it stands to reason that energy break even will be reached well before money break even. "

Wouldn't it be the other way round?

In an energy project, energy is one of many inputs, but is the main output. If, say, energy was 1/3 of the input (measured in dollars), you could have a 3:1 E-ROI, but make no money at all. IOW, you have $1 of energy input and $2 of labor/supplies, and produce $3 of energy: no financial profit.

Heck, given that this is just gross profit, not net, you'd probably need a 6:1 E-ROI just to break even financially.

Therefore, energy companies are very likely to be achieving a positive E-ROI on exploration, yet losing money.

Wouldn't it be the other way round?

doh! multitasking, yes it would be other way around - thanks for catching that.

But I would add that as a core biophysical indicator, Energy Return on Energy Invested tells us how much natural capital we have to use. Similar ratios can be estimated for other limiting inputs – Energy Return on Water Invested, Energy Return on Land invested, etc. As net energy declines, it stands to reason that the Energy return on NON-ENERGY inputs will decline faster. (examples are going from concentrated light sweet oil fields to tar sands, needing both more land, and water inputs – ditto with biofuels.)

Well, as a general rule outside of specific instances it doesn't at least. It could, but that's still no basis for a *something* therefore *something else* statement. It's like saying... Ice cream tastes good, therefore oil production will likely plateau or decline over the next few years.

Energy break even can happen before or after economic break even. For instance during the Iran/Iraq war we were no where near energy break even but we saw money break even in exploration after the price drop. Economics and money break even is dictated by relative scarcity and alternatives, while energy break even is dictated by the energetic inputs compared to the outputs.

In terms of $145 pulling every project that was remotely profitable in, I doubt that too. According to ROCKMAN even at $145/bbl most were still using about half that as a yard stick. Plenty remember being burned by the last price run-up. What we would need to see for a accurate determination of the available reserves at a given price would be for some kind of assurance that the price would have staying power. While I am sure there are way more projects at $145/bbl than there were at $30/bbl, I don't think that most oil producers are dumb enough to go out on a limb for every project that was even remotely profitable at $145/bbl. At some lower average price? Maybe, but not $145/bbl unless the entire oil industry has amnesia.

In terms of money windfalls from energy, the people do not see the windfalls from $145/bbl oil for the most part. It's exported to the rest of the world and they see that capital in their economies, w/ a small part coming back to the U.S. economy. They also see a bit in the small amount of wind power and ethanol as you mentioned, but since it's dwarfed by the amount of capital leaving the country for the most part we don't see the huge money windfalls. In terms of energy, since oil in this case was inelastic over the short run, we also don't see a windfall energy supply, just the same amount as before. Possibly less given oil's long run elasticity and the desire to keep prices up that leads to producers cutting production.

Furthermore, it isn't as if excessive energy production could somehow turbocharge the economy. Most recent increases in energy consumption seems to be the result of economic growth as opposed to vice versa. If there's no demand for the energy due to an economic downturn, greater supply will just drive prices farther down, and the drop in economic activity can still persist. What's needed is confidence in necessary work. A recession as a result of bubblicious credit fueled growth rates may not be something we want to replace w/ an energy bubble. Not to say that wealth building projects aren't worthwhile, just that going overboard isn't.

Ice cream tastes good, therefore oil production will likely plateau or decline over the next few years.

You're one of us now.

--- G.R.L. Cowan (How fire can be domesticated)

Hello EROI drummers, new member here. I've been struggling with the relationship between economic payback, EROI, and environmental full-cost accounted payback. I have a specific context and that is solar air heat, non-storage. My friends (and clients) have been working for some years on supplemental solar air heat for low-income families. In parallel with installations they've been working on a straight up cost-benefit analysis, trying to estimate simple payback and ROI. The 2008 IEA WEO has a handy table of projected fuel prices out to 2030. Using those projections the payback and ROI frankly doesn't look that good. Is there a way to take the idea of investing currently available high-EROI fossil fuel energy into solar heating equipment and incorporate it into a payback calculation? I'm envisioning three versions of the calculation: standard accounting, accounting under carbon tax, and accounting under carbon tax and EROI. I've been reading here on TOD and at the Energy Bulletin, and it seems to me now that the IEA might actually be right about energy prices being not much higher decades from now, but because of declining EROI, my income will probably be much lower. How might one put numbers to that? Can I learn that in Odum's books? One thing that struck me funny in this thread was the idea of a upper limit on fossil fuel prices set by the cost of renewables. This seems to create a circular argument for not investing in renewables - because of renewables, the price of fossil fuel will not rise much, therefore the payback on renewables is too long and they should not be invested in. That can't be right? (Personally I think the upper bound on energy price is something like the cost of human manual labor at minimum wage, about $40 per kWh.) If payback only shortens by rising fuel prices and not by falling renewables prices, by the time the payback is short it doesn't matter because we're broke, and have analyzed our way into a poverty trap. How do I make this come out right - peg the dollar to oil, negative discount rate, what?

"This seems to create a circular argument for not investing in renewables - because of renewables, the price of fossil fuel will not rise much, therefore the payback on renewables is too long and they should not be invested in. That can't be right?"

Unfortunately, this is a real paradox. Expectations of high fossil fuel prices causes higher investments in alternatives, thus lowering FF prices. And vice versa.

This failure of the free market is familiar to anyone who knows the boom and bust history of commodity markets.

The solution? A reasonable level of government regulation and planning. I'm waiting for January 20th...

gswright and Nick

I find the ideas of a negative discount rate and a price-FLOOR for energy exciting and promising. The idea that oil in the future will be less valuable than oil today is silly (hence negative discount). But i guess i am valuing oil in a different way than is standard - i.e. not prices - rather by our ability to replace the depleting resource.

"The idea that oil in the future will be less valuable than oil today is silly (hence negative discount)."

This is extraordinarily difficult to forecast. On the one hand, it seems highly likely that 20 years from now oil production will be substantially lower. OTOH, renewably (and, sadly, coal) powered electric transportation and space heating will be cheaper than oil & gas when oil rises above roughly $80/barrel. In the longterm, this will put a ceiling on the price (and value) of oil.

Which will move faster, depletion or electrification? Hard to say. If depletion gets the upper hand, then oil prices will exceed the substitution point of roughly $80/bbbl temporarily, and will then crash when exponentially growing substitutes catch up.

As we've seen recently, prices could be enormously volatile - the only thing that's clear is that 75 years from now we'll look back on oil's dominance as a quaint historical relic, as we do now for the kerosene lighting that was dominant in the late 1800's.


I guess what I'm throwing down on you is can you use your biophysical econ powers to calculate a price, or a probable range? Are you smarter than a Fatih Birol? (Or equivalently, what does your new way of valuing oil & other fossil fuels tell about the value of everything else?) Somebody upthread there made a calculation like: We're making a GDP of $Y on X barrels of oil, but the price of oil is only 1/20th of $Y/X so our EROI must be 20. Lot being glossed over there, coal for example, but if I follow that logic I might say, then if EROI declines to 10, the price of oil should double in real, inflation-adjusted terms? Please tell me there is something better than this kindergarten logic!

I think people keep forgetting that the decline in fossil fuels is inexorable and one day we will have none. Therefore to be a useful alternative that alternative energy source's infrastructure has to be able to be created without use of fossil fuels. One can take the whole set of alternatives as a whole to look at this but I think the result is the same. The infrastructure is not just biofuel plants, or solar panel factories, it is roads, road making machines, 18 wheelers to transport supplies. It is refineries for metals and other raw materials. It is shipping of those materials from overseas in many cases. It is the maintenance of the electric grid. It is the imperial control of the countries that have the raw materials we don't have.

First the alternatives just have to be able to do this (I haven't seen any plans for electric dump trucks, or 18 wheelers yet) and then they have to produce enough extra energy to power all these functions that are necessary but not counted in ERoEI.

We are blinded by oil. What we need to do is stop taking baby steps back to a sustainable energy future and just go back to where we will inevitably go. In fact how far back we go is probably dependent on how long we try to maintain industrial civilization. The longer we deceive ourselves that we can run industrial civilization on alternatives to more likely we will end up a small band of hunter-gatherers or extinct.

The fact that very few can see this reality is what makes me convinced that we are doomed. Its funny, but we in the first world have come to believe that our privileged life style is the only one that could possibly be worth living. In other words they believe all the ages before this one were not worth living in. To have to ride a horse for transport instead of a car was a life not worth living. To have to plow a field and put up your own food was a life not worth living. To have to use and outhouse and light your way by candle was a life not worth living. Demanding a lifestyle that is no longer sustainable is in effect saying I would rather die than reduce my lifestyle. That seems pretty doomist to me.

" the alternatives just have to be able to do this (I haven't seen any plans for electric dump trucks, or 18 wheelers yet) "

That kind of thing exists, and is developing quickly. Here's some info:

Hello Nate,

I see that comments are closed on the six-part series on EROI, but Charlie and I have been discussing an important point that needs to be entered in the TOD record. I am waiting for Charlie to answer my last letter; but, in the meantime, I would like to post my important results.

The revised version of my original post can be found at . Charlie thought that if the EROI was 2.0 one could support the rest of the community on the excess, therefore it was not necessary to report the energy costs of living for the participants in the production process, especially those who participated indirectly. Here is my answer assuming that you have read the above link, which is very short:

Charlie et al.,

First of all please remember that, in the autonomous alternative energy district, there are precisely as many doctors as are needed to service the energy workers and the people who service them. Of course, the energy people and those whose services they employ can live without healthcare; but, if they do get health care, the cost of providing it will be passed on to the users of energy. Think, for a moment only, of the cash flow. The power company must charge enough for power that the cost of the workers health care can be paid from the cash distributions to the energy workers. It is no different for the energy flow, except that energy costs are not subject to the whims of central banks and other inflationary and deflationary pressures. Why should you expect that ancillary costs like profit taking, health care, etc. not to be passed on to the consumer? Every cash transaction in an economy has energy consequences. That is why the E/GDP ratios for every country and every year are tabulated by the DOE. Will someone please read the exposition on this in "Energy in a Mark II Economy" at and ?


Tom Wayburn, Houston, Texas

P.S. Lately I wrote to pull together most of the above and clarify a couple of points.

This is a good article, but it does not include the agricultural economic value of incremental additions of CO2 to our atmosphere from the use of fossil fuels. Commercial greenhouses pay substatial sums in CO2 enhancement equipment to increase plant growth from their fixed production facilities.

Studies show plant growth is increased by 33 percent with each doubling of CO2 concentrations, up to 1000 PPM, where the benefits plateau. There is clearly substantial economic value from CO2 enhancement, which is not addressed here.

The same plant growth enhancement provided by increased CO2 levels benefits farmers, ranchers, foresters, and in fact all living creatures on earth. That economic value needs to be included in any and all EROI analysis.

That's only true if carbon is the limiting nutrient; greenhouses are well-fertilized, forests are not.  Also, plants benefit differently from CO2; woody vines (like kudzu and poison ivy) increase their growth more than trees.