The True Value of Energy is the Net Energy

"The true value of energy to society is the net energy, which is that after the energy costs of getting and concentrating that energy are subtracted.” - H.T. Odum (1973)

To reduce Odum’s assertion to a pithy phrase—it takes energy to get energy – and for the past 150 years society has accessed enormous quantities of energy in the form of fossil fuels at a very low cost. Early U.S. oil production provided 100 barrels of oil for every barrel spent in getting that oil (Cleveland 2005), while traditional fuel sources (e.g. biomass) returned much less. This huge increase in net energy enabled society to build cities, increase crop yields, build cars, etc…

Today, the circumstances are different, as nearly all of the easy-to-find and easy-to-produce oil wells have been found and produced. For example, Ghawar, the world’s biggest oil field, was discovered in 1948, and even with all of the advances in seismic technology over the past 60 years, nary an oil well of nearly the same magnitude has been found.

What has become very clear over the past decade and especially the past month is that the energy cost of getting oil has increased. We need only to compare the wooden oil derricks used to produce the fields of the early 20th century to that used currently in the Gulf of Mexico – two billion dollar ultra-deep water platforms.

Figure 1. East Texas Oil Field (google images).

Figure 2. Deepwater oil rig (google images).

As the energy cost of getting energy increases, the amount of net energy provided to society from an oil field decreases. Take, for example, the following two hypothetical societies (Figures 3 and 4). Society A has an energy source that can be extracted at an EROI of 18. Society B has an energy source that can be extracted at an EROI of 1.2. In this example both societies extract 100 units of energy, but due to the different EROIs with which that energy is extracted, the amount of net energy provided to society is much different. Society A must invest six units of energy to maintain the energy infrastructure needed to extract 100 units of energy, while Society B must invest 80 units of energy. The end result is that society A has 96 units of net energy to allocate to whichever means it desires, while society B has only 20 units of net energy.

Figure 3. Net energy flows with a high extraction EROI. Numbers calculated using the following equation: Net Energy = Gross Energy * (EROI-1/EROI).

Figure 4. Net energy flows with a low extraction EROI.

As oil becomes harder and harder to find and produce, the energy cost of getting energy will continue to increase, transitioning the world from the situation in Society A toward that of Society B. Take, for example, the current debacle in the Gulf of Mexico. Even if we are able to fix the well expediently and extract any remaining oil, the energy costs of this well will likely be greater than the energy gains.

As long as the amount of energy needed to get energy continues to increase, the supply of net energy to society will decrease, despite that fact that the gross supply of oil may stay constant or even slightly increase in the short term. This means that in the future the amount of energy available for discretionary purposes, i.e. building houses, roads, and schools, will decrease, as more and more energy must be dedicated to, for example, the construction of oil pipelines, ultra-deepwater rigs, the energy to mitigate oil spills, etc... As Joseph Tainter noted in his book, the Collapse of Complex Societies, "Eventually the point is reached when all the energy and resources available to a society are required just to maintain its existing level of complexity.”

So when press releases are made about new discoveries, ask yourself: “how much energy will be used to get that energy, or what will be the energy profit?”

The one thing that occurs to me is that a type of energy with a low energy return needs to sell at a high price to be profitable to investors. A type of energy with high energy return can sell at a low price, and still be profitable to investors.

When people say that oil price will be very high, say $400 a barrel, that is to me equivalent (in some way) to saying that society will be able to accommodate very low EROEI oil. People's incomes won't rise, just because oil is $400 a barrel. If they are to keep up oil purchases, they will have to cut back on something else--either discretionary items (causing recession) or defaulting on debt (causing financial problems).

What I expect instead is that there will be recession and financial problems, because the economy cannot really accommodate very high cost /low EROEi oil.

At the moment we are idling about 10% of the workforce, officially, and many more are employed in rather non productive areas or in making things shoddily to ensure repeat profits. Until fossil energy really runs down, the limitation will not be one of 'affording' the oil because at the moment we are affording huge subsidies to the unemployed who could be extracting energy and building energy extraction equipment.

Money is an excuse; the real constraint is human labor. Thus, as energy costs rise the percentage of labor devoted to extraction will increase; this is already happening. Granted, prices may go up, but they will have a long way to go before the labor proportion eats into the labor available for other things. That high 'cost' has to go somewhere. It reflects the labor spent on machinery and exploration and so on which results in wages and employment - hardly things that are conducive to recession.

I find your economic analyses valid if one accepts the premises that are currently fashionable but according to that wisdom we never could have fought WW2 and should be now wallowing in penury from its resulting debt load, according to Congressional wailing at the time. Money is a construct; resources are a constraint.

The binding constraint is not limited labor. The binding constraint in regard to Peak Oil are geological limits to oil; financial limitations are another severe constraint.

Currently the 'financial industry' is occupying a considerable percentage of the workforce - if you can call that section of it work. When we have taken the money we spend and the efforts we put into that and NASCAR and football and other diversions and spent it on a last gasp run at fossil fuels of low EROEI - then and only then will I be behooved to take 'financial constraints' as related to said EROEI seriously. Hey, the US spends more on the military than it does on imported oil. Financial limitations exist only inasmuch as we've been propagandized to believe in them. Thou shalt not devalue the winnings of those who have heretofore plundered the system.

Not having enough bodies and minds and hours in the day; that's a real constraint. No viable holes to drill, another. Insufficient functional organizational capacity - social, political, or financial; these are self inflicted wounds of human stupidity. Of course, if we weren't so stupid we'd be doing sustainables and reducing our population voluntarily.

Until we can agree upon what is given and what is arbitrary, further discussion is rather pointless. There may well be financial limitations of our own making but that need not be a given and inevitable constraint.

By the way, shalt comes up as a misspell on my computer; I knew they were secular devices!

See many articles and comments by Gail the Actuary for the financial constraints on exploration for and development of oil.

We've got plenty of labor in the U.S. About twenty percent of it is unemployed or underemployed. We can import all the foreign engineers we may need at relatively low cost.

Once again, labor is not a binding constraint in the oil industry, though a lot of the engineers and geologists are getting pretty close to retirement.

The australian oilfields also need skilled workers.
I am begining to feel loved.

And about time!

Speaking of Being Loved...

Welcome Back, Sailorman. ^_^

Thanks. It is good to be back and to be appreciated.

Don't forget the cost of supporting all the people on welfare who are put out of work by all that cheap imported labor.

Nobody really gives a damn about the working poor in this country-they are taken for granted at every turn.

If all the illegals were magically deported,and we weren't so dead set on making sure we get everything at the lowest possible cost from China,there would be plenty of livable wage jobs available for people willing to work but not blessed with an education.

Sure the conservative fat cats who own businesses are glad to get cheap help,so long as they have plenty of customers;and the average liberal is in no danger of losing his job to an illegal as he has some sort of lock on it-such as union membership, professional liscense,specialized education, etc.

But niether the fat cat conservatives or the comfortably employed liberal ever stop to think about the real price of that cheap labor-the creation of a new native underclass.

They got to you.

They've made you turn to blaming the poorest of the poor in this country for its problems.

The amount of money illigal aliens take out of the system is very small. They still buy groceries, gas, cars, rent apartments, etc. They are primarily employed in low skill jobs, and many are employed by smaller companies that haven't transitioned to automation yet.

Shipping a job overseas hurts much more. Those wages are not being spent in our economy. It's a huge difference, but TPTB want you blaming the wretched poor.

Don't let them fool you.



In the words of a famous southern officer during the Civil War , when he woke an opposing Yankee officer in the night, paraphrased,No you haven't got him;but he's got YOU.

But you need not feel bad-they had me once too.

I was the first college graduate in my family, voted Democrat many times, including recently, marched, joined the AClU, helped organize a teachers union, married a Jewish artist,lived in a university district and hung out with the academics for years- I read a good book every week-a serious book.

I am not your average ditto head-I do listen to talk radio occasionally in my truck but not half as many hours as I listen to NPR and the BBC over the net in the house.

My sister runs the largest employment agency in this generally very depressed area, and we have lots of long talks.

Now you can believe what you like, but I have my feet on the ground in the mud and manure in respect to this issue.


When the local factories do hire, and there are a hundred applicants for every dozen openings,the personell people know the immigrants will keep thier mouths shut and work like coolies.When times are better and there are fifty openings and a hundred applicants, the effect is more to just depress wages.

The overall problem is quite complicated of course. A couple of key facts are that the poorly educated displaced locals are NOT GOING TO BE RETRAINED in any significant numbers;and they ARE GOING TO BE SUPPORTED by an ever growing welfare state.

When I was a filthy money grubbing capitalist piglet, and rented a couple of houses to undocumented Mexican immigrants, they were my best tenants,always paid up ahead of time in cash, never had to fix anything, never had a skip, and no arguments about a rent increase.

The main guys only had one little request, that I be understanding about all thier budddies getting together a lot to visit, they were along way from home and lonesome you see-in actual fact they were doubling up, unoffocially, even hot bunking.But the money to me was ample and I kept my mouth shut.

I employed some of these guys occasionally-a good Mexican carpenter for eight bucks cash , no reciept, was a much better deal than a local guy taking my checks for fifteen so I could deduct his pay from my income.(this was a long time ago).

I like to see both sides of stories told-most people don't, for one reason or another.

Incidentally I can remember , when I was a youngster, talking to my great grandparents, who knew people-kin to me- who left Ireland to avoid starvation.One of my great grandfathers arrived in this nieghbor hood so poor that
when he moved to get a job, his only moving chore was to pee on his campfire.Family legend but I have no reason to doubt it.The grandfather who told it to me was his son, and he himself spent somed years as a sharecropper- a step down from slavery in some respects, as a slave owner had some incentive to look after his property no matter how bad the crops might be any given year.

I like my new Mexican nieghbors a lot better than I like all the well to do retirees moving into my community;the Mexicans are invariably friendly and will help you chase a cow back into a pasture or change a flat tire but the retirees are mostly the sort who treat locals without money like servants.

I have a beer and a smoke with the Mexicans from time to time, and we trade a little work -I plow thier gardens and they help me an hour here and there in a pinch.In a few years thier daughters and sons will be married to my nieces and nephews, and a lot of them are already moving up in the world.If I were younger I would seriously go looking for another wife with a Spanish name and olive skin.Mexican women appreciate farm life.

I'm not personally invested in this issue either way-I have more to gain personally , and have gained more personally, than I have lost due to the immigrant influx, at least over the short term.But every time a new house is built within twenty miles, the tax assessor starts drooling again.

I already have lots of skills, and a farm , and all the usual things that go with it.But if I were a young uneducated guy my chances of moving up in the world, as my forebearers did, would be nearly zero due to low wages, high taxes and high property prices-all problems directly linked to population growth,which is directly influenced by....

I agree about the jobs being shipped overseas being very bad-but not necessarily worse than low wage local jobs being taken by immigrants.The numbers are on your side, but I'm the one pointing out the cost to not only the unemployed individual but to our whole society.

If you'd leave Kentucky and go to California, you'd see it's more along the lines of colonization and not a few token individuals. California is now the least educated state. Based on their educational attainment they are not moving up and merely constituting a new, permanent underclass. Based upon present trends the workforce of Texas is supposed to have 30.1% of it without a high school diploma in 2040. Of course that assumes some form of BAU.

In regards to the welfare state, watch what happens over in Europe. If something can't be sustained it won't.

oldfarmermac wrote:
> If all the illegals were magically deported,and we weren't so dead set on making sure we get everything at the lowest possible cost from China,there would be plenty of livable wage jobs available for people willing to work but not blessed with an education.

So, it works like this: the government takes out the money it's currently using to fund unemployment benefits and uses it to subsidize low pay jobs by letting factories pay immigrant-coolie wages to Americans and subsidizing those paychecks to legal minimum wage level or higher. Right? Because those immigrant-coolie wages won't satisfy anybody but illegal immigrant coolies and you should know that.

Sounds like a workable plan, you may even get Detroit companies to start making cars in Detroit again. But it'll never go through Congress, would it? Not sure if it's even legal according to international trade laws.

It works a little more like this:when I need to hire a laborer on my farm , I pay only as much as I have to to get good help.

When there are less people in need of a job, employers have to compete for thier services,and wages rise.

The spread between uneducated and unskilled workers and everybody else gets worse in large part because these folks are desperate and MUST work for peanuts.

If there were fewer of them,everybody else would have to pay more for thier services, but we would be relieved of the problems associated with supporting them through various welfare programs to the extent that thier incomes rise due to competition for thier services.

The best single way to PARTIALLY accomplish this is probably to limit the number unskilled of people allowed into the country.But the argument holds for skilled and professional workers too;if a million new information tech workers are allowed in, salaries in the it professions will nosedive.

We couldn't get any help in from the late nineties on at the usual rates;we had to pay fifty to one hundred percent more locally for farm help than just a few years previously BECAUSE there was no excess of unemployed job seekers willing to work cheap.I begged THEM to come to work, they no longer came looking hat in hand as they did previously.

This is hard, I realize that, but I have stoop shouldered,bent backed, weathered, calloused, middle aged out of work relatives who worked like coolies for decades, making furniture, logging, sewing ,you name it.

I am not wealthy and cannot do any more than provide them with an occasional days work;I may wind up taking one of them in to live with me if things get much worse.These are proud people who take great pride in being hard workers and they would rather go hungry than sign up for food stamps.

It the short term-the only term that matters to them-every illegal employee is one less job they might possibly get.

Illegals also increase the competition for cheap housing which adds further to thier miseries.

It's a Darwinian world.I don't like it but I can't change it .

I've seen them, Don, and I still don't agree with them. And with labor not being, as I've stated, not a binding constraint it comes down to what we decide to spend our efforts upon. I often don't agree with Gail on economic matters and sometimes feel obliged to say so.

I agree that MANY of our priorities will be redrawn, either by us or for us, but I have to say that it's offbase conflating everybody who works in finance with NASCAR and other such 'diversions' - and I don't say that to trash Sports or Sports fans.. but 'discretionary activities' must be called for what they are...

There is clearly an exaggerated emphasis today on the abilities and importance of the 'Market', but that doesn't mean that it is all purely a fantasy, either. Coordinating the exchanges of goods and services through this elaborate worldwide system of currencies and values makes a lot of good things possible, even if it's also prone to the abuses of power that we see in so many things that get as big as the Financial sector has gotten.

.. The computer probably thought you were just talking about 'Shaft'! (He's a complicated man, and noone understands him but his woman!)


the real constraint is human labor. Thus, as energy costs rise the percentage of labor devoted to extraction will increase;

You are ignoring the fact that human labor can only be used in certain conditions. While humans can hack out holes in the ground and work underground to extract coal, they cannot work at 1 mile under the ocean. Highly complicated machines run by highly trained humans are required for such work. Same for nuclear. Many of the ways we capture energy now require machines. Eating corn to power a human to work in the fields can be done and can replace plows and other machinery, but getting gas from that corn requires machines (or else contraptions at the rear end of such humans and mules to capture the by product gas).

This would tie into Tainter's theory of societies becoming more and more complex IMO. We have made our world so complex that there are some activities we do to power our societies that no longer can be done by humans.

He's not talking about direct substitution - that would be crazy. He's talking about the fact that as drilling becomes more difficult we'll need to expand the extraction industry. For instance, deep-water drilling is more expensive, primarily because of higher labor inputs.

Highly complicated machines run by highly trained humans are required for such work.

Highly complicated machines are made by humans. More materials are needed for extraction means, more labor goes into making those materials.

Ofcourse, we now substitute fossil energy for human energy to achieve several of these abjectives. But in the end - a lot of "expensive" machines is because of a lot of labor & fossil energy inputs that go into making those machines. A lot of finance charges too ...

Aren't highly complicated machines made by other highly complicated machines, operated by one or two highly specialized humans? Factory lines of humans doing one specific job for hours on end are a thing of the past, to the best of my knowledge.

The one thing that occurs to me is that a type of energy with a low energy return needs to sell at a high price to be profitable to investors. A type of energy with high energy return can sell at a low price, and still be profitable to investors.

Obviously continuing with a system that subsidizes fossil fuel investor's profits in the first place isn't going to help with getting us out of our current predicament.

BAU is dead, long live BAU!

At what point does the cost of keeping a corpse on very expensive life support outweigh the benefits of telling the relatives that their dearly beloved has passed on? And that they really should be preparing for the funeral...

At what point does the cost of keeping a corpse on very expensive life support outweigh the benefits of telling the relatives that their dearly beloved has passed on? And that they really should be preparing for the funeral...

Not even just corpses - there are quite a few humans who are fully conscious but on life support who wish to stop living this way but are not allowed to choose death. Many live in quite a lot of pain. Having spent years visiting nursing homes I find this perhaps the most scary end of life scenario - being kept alive in pain and often immobility and sentenced to life because our society is rich and in denial about death.

An excellent movie on this subject is "The Sea Within"
Also good is "Whose life is it Anyway?"

At least after the crash the "living dead" will no longer live.

As I'm sure you know, I wasn't referring to actual human death I was just using what I thought was an apt analogy to prolonging BAU but I can totally relate and also agree with what you say...

There are four MDs in my extended family and my ex wife's mother is right now in intensive care after having had open heart surgery just a few weeks ago.

I will check out out the movies you have linked.

At least after the crash the "living dead" will no longer live.

I think we had better make sure that the fungus now destroying the poppy fields in Afghanistan doesn't spread. We all may still need some of those opiates at the end of our lives.
Maybe in a post peak world I'll have to try hydroponically growing them.

Best hopes for coming to terms with our individual mortalities.

I have heard that if you look in back yards in old southern nieghborhoods you can occasionally find white and black poppies, which are supposed to be the good ones.

Supposedly the older women still grow some just because thier great grandmothers did and they save flower seeds.

I haven't had the time to go looking myself.

Apparently there is no law against growing these beautiful flowers, but you better not get caught collecting poppy juice-the sao that oozes out if you cut the plantat the flower heads..

In the USA perhaps (if you can't find a doctor who is willing to do the right thing).
There are countries where euthanasia is openly practiced, and often welcomed by both patient as well as inner circle.
Not fun but the right thing to do.


When people say that oil price will be very high, say $400 a barrel, that is to me equivalent (in some way) to saying that society will be able to accommodate very low EROEI oil.

We will be able to afford low EROEI oil. If we manage to significantly lower the oil consumption per capita by means of efficiency gains and substituting other high EROEI energy sources such as wind, hydro and CSP.

We actually use a lot of negative EROEI energy currently. Most of our electricity is negative EROEI in a way. That's because we use more energy in the form of coal or gas than it produces in electricity. We can do this, because electricity is a more valuable form of energy than coal. We could do the same upgrade of cheap energy to oil in the future.

It's technically possible, but it's to expensive at the moment. But if use a lot less oil in favor of other energy sources where we don't really need to use oil, then we could use the low or even negative EROEI oil in places where it can't be replaced, such as fast long distance travel or maybe in plastics, etc. At the moment we use oil in a lot of processes where it's not the only option, such as heating[1], electricity generation[2], oil & gas platforms[3], commuting, shipping[4], etc.

1 (2005: 8M households in the US)
2 (for example: 2010/06/08 with 700MW between 10am and 9pm)
4 an alternative to using oil for shipping.

I generally agree with you, but I have a couple of quibbles:

1st, isn't almost all electrical generation on oil platforms from gas, not oil?

2nd, I think the 2005 RECS data on home heating oil is out of date - I think it's dropped another 25% since them.

5.13a - residential fuel oil contributed another 30% of the decline.

"In 1973, U.S. residential household heating oil use averaged 942,000 barrels per day, primarily in the giant Northeast heating oil market.

By 2008, demand had come down to average 309,000 bpd, according to Energy Administration Information data, cut by conversions to natural gas, technological equipment advances, and homeowners winterizing their homes with insulation and new windows."


I'd say the "big kahuna" is replacement of fuel for personal transportation with electricity, though replacement of liquid-fueled long-haul trucking by rail may have a bigger impact in the short-term (heavy vehicles use 27% of overall road vehicle consumption - that would sugggest that long-haul trucking is about 2M bpd).

Some asphalt is being replaced by cheaper concrete: *"asphalt and road oil" consumption fell from 200 million barrels per year in 2005 to 130 million barrels per year in 2009. You have to add the preliminary data from 2009 monthly reports to the annual chart which hasn't been updated yet with the 2009 figure. the stats

Oil-fired generation has fallen from 20% of US oil consumption to less than 1%.

Oil is simply not essential. We need to "think outside the box", and see a world without it.

The actual numbers don't matter that much, because they were meant merely as an illustration that there are many possibilities to reduce oil dependency. And on that front, I think we both agree that there’s a lot to be improved.

If there’s 309,000 bpd in heating oil consumption, it makes me wonder how much of those buildings are connected to the grid and could thus use a Heat-pump instead?

Long haul trucking should definitely be replaced by rail as much as possible and the railroads should be further electrified. “In twenty years, over 2 million barrels/day of refined diesel could be saved in a Peak Oil environment.”

In my opinion 1% of electric generation is still way too much. I see no reason why that couldn’t be gas?

Another option is CNG and LPG for transport. Practically all petrol cars can be converted to run on gas and there are also trucks that run on gas.

Yes, we generally agree.

The remaining heating oil and oil-fired generation is harder to replace. The remaining oil-fired generation tends to be in remote places like Hawaii. Some heating oil is for vacation homes, for which a premature heating plant replacement would be too costly, and much of it is used in remote places with no NG connections. OTOH, eventually both will get replaced - oil is just too expensive compared to substitutes.

People's incomes won't rise, just because oil is $400 a barrel. If they are to keep up oil purchases, they will have to cut back on something else

Or they can keep up oil purchases by purchasing and using less oil. But if by "keep up oil purchases" you mean at the same level, just at higher prices, then no, but the whole point of higher prices is demand destruction, so that should go without saying.

I have never seen much discussion of the time factor in the EROEI analysis. Sometimes it is profitable to extract energy even when the EROEI is less than 1 because some of the energy has already been invested. For example if you already happen to have a deep water drilling platform your economic analysis will tell you to drill even if the energy return on the new well wouldn't have paid for the energy invested in the manufacture of the drilling platform. The entire oil industry from drill rigs, tankers and pipelines to refineries, engineers and aircraft carriers have a lot of long lived expensive assets. How long will we go on producing oil after the EROEI is less than 1 just because we still have the fixed assets available?

A good way to view EROEI is by looking at the available technologies on a graph that shows Energy Output divided by Energy Input;

I like this graph very much as it rather vividly sums up the various energy sources.

I would like to see it include, however, the number of ways that work gets performed through energy applied by physical forces directly--such as drying clothes on a clothesline, passive solar house heating, solar hot water, evaporative coolers, solar ovens, etc. Even though the energy involved can't be captured and used for any other purpose, my guess is that the EROEI of all these technologies is quite high. The more of these we can come up with and the more that people can be encouraged to use them, the better.

(In some ways it reminds me of how sickness positively contributes to GDP while good health--because it generates no purchase of goods or services--is ignored by that measure.)

All of the technologies that you mention (outdoor clothes drying, passive solar, solar ovens) tend to have extremely high EROEI returns, especially when contrasted to the energy that would have been used otherwise. Solar hot water depends on the environmental conditions (how far from the equator, amount of cloudiness, how much piping losses required to overcome with pumping power, etc). Passive solar hot water incurs no pumping energy costs, though retrofits can be constrained by potential panel and tank location limitations.

You are correct but probably not for the reasons most would imagine.

The reason is that the density of source/generation is within an order of magnitude of the density of consumption. This is akin to (only a bit different from) an impedance match in electrical circuits: it is the point of maximal efficiency.

In many ways, cheap oil has allowed an inefficient "impedance match" to exist between centrally generated electricity and other channels and the ultra-distributed society the US and other 1st world nations have. The cheapness and availability enabled it to be ignored. We only start to see the inefficiency as costs rises and ready sources of oil go away.

So long as we want or need industrial manufactured items to sustain our population levels, we will still need centralized energy generation but we probably will need to think twice about wasting centralized energy on distributed activities like home HVAC, clothes drying and cars - these can not and will never have improving EROEI again. Having declining EROEI puts these uses in the same Pareto scaling as projects with lower ROI - you dump the low ROI activities if you have limited resources.

This is very much a last-mile problem with an exponential increase in inefficiency as oil prices go up. We are seeing this as real estate prices at the extreme edges societal last-miles such as California's Central Valley and Inland Empire which without cheap oil would be the last places anyone would rationally want to put cities and suburbs based on classical geographic advantage - the former is an arid, semi-desert and the latter is a desert.

"last mile problem"
takes me back to the good ol' days
and a good one on ya Allen D. A calm mind on other posts is grounding

This graph was also shown at the ASPO conference last year. I had written a summary of that:

Diminishing Returns of Fossil Fuel Energy Invested

[References needed]

In particular, I have seen wildly different numbers for wind, solar, nuclear, and biofuels. Biofuels and nuclear seem to be the most hairy to estimate. With biofuel you have dozens and dozens of different fuel crops and refinement processes, and many of those have hidden inputs. With nuclear you have all kinds of hidden costs around maintenance, safety precautions, materials transport, and waste disposal and/or recycling that are very complex and hard to estimate.

On a related note, this seems to be an argument for not letting politicians pick winners in the post-fossil-fuel energy market. Markets are very good at integrating huge numbers of inputs and pricing things accordingly. (Corn ethanol and the hydrogen car boondoggle are probably the best examples of this.)

The problem with just relying on the market is that the returns from solar occur over time, and in many cases beyond the lifetime of the person making the investment. Even if it makes sense over time to invest in solar PV, it is not rational to do if one is only going to live another 5 or ten years.

The consumer does not have to make an upfront investment to use the grid and so is comparing short terms costs versus short term high investment costs and returns over time.

There is also enertia. One might even have convinced oneself that it makes sense to put in PV, but may not do so just because of the perceived time and hassle involved. Besides, one is never sure whether the investment can be passed on to the next owner.

This is born out by the experince in Boulder, Colorado where people supposedly committed to the environment still not get around to making simple and not very expensive changes even when subsidized. The city found they actually had to go into homes and do the work for the homeowner to get things done.

California's rates are as high as 49 cents per kwh at the margin. For many people, putting in solar PV to lower their tier rate would be a "no brainer". And yet, people just continue to pay the high electric bills.

So, I think Government has a role in looking at what makes sense over the long term, say at least 30 years. Government has a role in saying where do we want to be in 30 years vis a vis things like global warming and oil depletion. Can the market get us there. I would say the answer is no and, therefore, people need to be incentivized to do what is in their best interest anyway.

I think it is imperative that we move to a low carbon society. Some may disagree, but if one takes that position, it is not going to happen soon enough by simply relying on the market.

It may very well be that no combination of alternative energy, including nuclear, that is sufficient to maintain a reasonable standard of living. However, I think there is sufficient uncertainty that we should try anyway. Part of the uncertainty is how much more efficient we can make solar and wind. Thus far, we are still experiencing increased efficiency and thus higher energy returns.

I think you should give people's decisions in this regard more respect.

You have to include the "cost" of time and attention when deciding when people are being sensible. Home energy projects take a lot of time and energy in addition to the money, and most people are livving pretty time-pressure lives.

I agree that we need better regulations, especially municipal codes: it's much easier for developers and tradesmen to incorporate best practices than it is for homeowners (and, of course, they fight new ideas too, due to the value of experience with existing methods).

@ Nick - the reason people live time pressured live, is because the have to work a lot to earn money to pay for a lot of stuff, they don't really need, and on top on that hight energy bills.

So put in PV - and you don't have to buy electricity. Get a car that doses 40 mpg, and you can cut bills even further. Isolate your home, and reduce the need for earning money to pay for heating /cooling etc.

So what you say, is selvcontradicting. If people didn't need to pay for all the stuff, they wouldn't live time pressured lives because they could work less, and still live a comfortable life, for ½ the money.

Since the 60'es we have worked more and more, but what we have ended up with is more and more debt. We want bigger homes, which cost extra, so mum must also work, so she neds a car. The bigger home cost extra to heat/cool, the extra car cost extra also in fuel etc.

In the end, you end up using more money that you earn form mum's extra income, thus getting into debt.

This is the very big trap most of vestern countries has fallen in to the past 50 years.

I agree - it's sensible to simplify one's life. Still, that doesn't really change my point - until people understand that, they're going to be pressured, and not ready to do "optional" things. And....they mostly don't have the time and mental energy to absorb this new idea.

A quibble: PV doesn't really pay for itself yet, on pure dollar terms, for most people. If you want to reduce your financial burdens, there are a lot of better options.

But Nick this is what I'm saying. If you take the time to consider alternative lifestyles then it becomes clear that they are already viable esp if you get into quality of life arguments. At the moment as I wrote in another post inflated land values are probably the only real issue and these really only a problem regionally.

If you have and open mind then you can drop out of todays society right now. I moved to Oregon and absolutely love it its a good fit for me on a number of levels. Right now land in the region is still priced over what I can afford so I'm willing to wait a bit to see if it falls in price. Thats a choice I'm making but I have my parents farm as a backup so I can afford to wait it out for a year perhaps two see how things shake out if you will.

A decent renewable lifestyle seems to require two basic approaches. Either farm or live where you work and buy local veggies and more importantly do a real wealth producing job. Also you probably need to be a small businessman with excellent savings although thats hard. You don't have to farm just try and make sure the money you make and spend begins to recycle locally as it does the system becomes more sustainable. Nothing wrong with long distance trade but it should be in stuff thats impossible to make locally and any reasonable price. Start living this way then you can start working on secondary energy usage issues like insulation of your house etc but localizing and going to renewable life styles is a start. Heck simply adjusting your life so your wake and sleep as much as possible with free light from the sun is a good start. Regardless its really a fundamental decision in my opinion if your serious about sustainable living then you need to really take stock about how you live and what you really need. No reason not to live comfortably but perhaps you need to redefine what this means. Is it thick blankets on the bed or heating the whole house ?

At the end of the day its really pretty simple food, clothing, shelter, comfort, knowledge and entertainment and love.

You might come up with slightly different variants but this is the basic set of needs, wants and desires that you need to fulfill to be happy. Nothing beyond this makes you really any happier. If you think you need more then you probably have a problem.

These needs can be met sustainable and more importantly they can readily be met leveraging little of our current infrastructure and lifestyle. The biggest issue is reasonably curable diseases or illness. Medical needs are something you can't meet living alternative lifestyles and accepting that is in my opinion the biggest risk you have to take.
One day perhaps this won't be and issue however if you can give up on that at least in the US then from that point on everything else works and you can "unwind" they complexity.

The reason most people lead time pressured lives is that they have to work a lot to earn money to pay for what little they really do need, like food, shelter, and transportation to work.

It doesn't help that wages have failed to keep up with increasing productivity for decades. I understand there has been no increase in the US median wage for 30 years now. Among my working class friends the joke is that it takes three jobs to make a living. In the US you also need a full time job to get health care. So you can't work less even if you want to.

There's been some great work being done on fusion energy. Checkout for a list of current projects.

Check out - A presentation given by the late Dr Robert Bussard.

And - Presentation by Eric Lerner of the Focus Fusion project.

There is indeed some great work being done on fusion energy, and not all of it done by "government big science" either. For now, though, in the absence of a true breakthrough, practical fusion energy is a couple decades off -- and always has been. For a lot of reasons (I am a physicist) I have better hope that an amateur will make this breakthrough than hidebound, tenure-seeking, gov funded projects which seem to simply repeat the phrase "well it didn't work this time, but if you give us more billions and tens of years the next one will" which has repeated a few cycles now -- lucky for those guys they don't work for me! I and others constantly point out serious flaws in the only two approaches getting any funding, but the machine is in motion and harder to steer than a supertanker.

Links of interest: -- discusses some alternate approaches, including one of mine. -- my site with further approaches I am backing with my own money. Eric Lerners site -- and he didn't invent this approach but is the main guy getting close to success. Some flaws there too, but it's a decent try.

Bussard's thing has a fundamental flaw, sadly, but it's worth looking into for other reasons. He is in effect trying to contain plasma via a magnetic monopole -- when you get one of those, or make one, please let me know. Till then it leaks out the realistic fields that CAN be made.

Tokomaks have so many fundamental flaws I won't go into them all here as it would make this overlong just to list them in the simplest understandable form. Laser fusion isn't and never was intended as a power source by any but the PR dept of the guys involved. It's for testing nukes without breaking treaties, end of story.

I've been off the grid on solar PV power since 1980. So all this balderdash about how one should wait for some fractional increase in power per sq foot or per buck is bogus unless you live in a city or highrise. The amount that doesn't quite cover the roof of my house is enough to run both a machine shop (including welders) and a large computer network, even air conditioning once in awhile, and I don't live where most of the photons fall on this planet. Although I drive two gas guzzlers (a 2010 Camaro SS and a Honda Ridgeline) I use more gasoline in lawnmowers/tractors and chain saws than in them as I don't commute -- I do my business over the web primarily.
I consider that latter the best use of hydrocarbon fuels -- places where the great weight advantage (you only carry the fuel, not the oxidizer) really means something special. For automobiles, hey guys, just don't drive so doggone much! It's possible to live close to where you work and all that. And guess which of the above named vehicles gets 5 mpg better than the other -- you're in for a surprise on that one. The Camaro is the winner in the MPG contest by quite a lot. And things only get better on the highway, vs the mountain roads I mostly drive on.

The oft repeated discussion that solar PV uses more power than it produces is ridiculous. I can weld all day long (TIG, MIG, arc, you name it) on the power these produce on a sunny day -- and keep the computers (about 20) running too, with occasional use of the big mill and lathe. No way that is less power than it takes to make the glass and silicon and mate them.

If anyone should want to hear about what it takes to live off the grid, and what works and what doesn't, just ask. I've probably got more real world experience than just about anyone else on that. Oh, and by the way, in the boonies it's the power company in charge of enforcing things like building codes -- they are aptly named for more than one reason. So if you start out off the grid, guess what happens to your tax bill -- you pay on "barns" vs "dwellings" and that pays for the solar in about one year. Talk about ROI! No doubt that loophole will go shut at some point, but for now if you start with blank land and homestead it, it's wide open.

Oops, forgot to add -- guess who made my solar panels. Solarex, owned by BP of all people (originally by Amoco).
They're about the best, but in an astonishing instance of really bad timing, they shut down the plant in Md that made them about 2 months ago, citing lack of profitability. I believe that, because they are (were) the best for the money as well as being the best.

It's not like these guys ignore the idea of peak oil -- they know better than we that the music is going to stop, and in fact several of the oil majors are also major investors in alternate energy schemes -- they want to be sure of a chair when the music ends. Just follow the money, it generally leads to truth in some form or other. This is especially true in the global warming debate -- vast sums are at stake, and some guys who know how to make money in the current system can afford to pay a lot to see it not change -- cheaper for them than learning how to stay rich and powerful under a new system, and more certain (for them).

And no, I didn't do fusion or solar to be "green" -- it was more a matter of two things -- power over my own life (eg if no bills, I don't have to work so much, kinda cool), and I'm a pretty serious scientist/engineer -- so if not me, then who?

Love to hear/see more about your setup. Got a website?
Else, mind dropping in a rough outline of your Array, Storage, etc..

Bob in Maine

Another interesting indy fusion project: General Fusion. This is not a crackpot outfit, and the approach has a good "smell" to it.

People really say that PV uses more power than it produces? Are they serious? I've seen the same claim by the way for nuclear, which is equally ridiculous.

I have long noticed that greens tend to say ridiculous things about nuclear power and right wingers (at least in America) tend to say ridiculous things about solar and wind.

I was denied permission to the website, General Fusion.. That makes it more interesting.

Heh. That's new. Either the site is down, or they ran out of funding. :(

They recently landed some funding, so I assume the site is just down.

Well DC,

I'm not a physicist, but I am a welder and I must say that all my top of the line Miller machines draw in excess of ten thousand watts if I turn them up into the normal everyday working ranges -but they will run on less amps , at low settings a couple of thousand watts is enough for me to work light metal.

I 'm guessing you have five thousand watts or more worth of panels, and some good sized batteries,etc.

Now if this stuff cost any less than twenty five or thirty grand you must have stolen it;and if you have enough money to pay that kind of annual property taxes out in the boonies (where services are nonexistent or limited) you are extremely well off.

I do believe your just trashed your own argument in terms of speaking to the general public about what is possible and practical in terms of going off grid.Not many people , relatively speaking , are multimillioniares.To put it mildly , you seem to be out of touch with day to day reality, financially, unless you just forgot to put a smiley face after that remark about a property tax bill and breakeven in a year.

And while I know nothing about physics on a professional level, I read a lot;and a lot of very credible physicists put the time scale for working fusion power at fifty years if ever-essentially meaning "never", in human terms.

Best wishes for your long shot!

I know a guy who was in the Stanford physics grad program studying physics in the early 70s who wanted to do make the pursuit of fusion energy his career goal. But he decided to switch fields because the profs told him he wouldn't live to see fusion energy become commercially viable (he told me this story 30 years ago). He didn't see the point of pursuing something with such a long time horizon. The long range nature of the pursuit of fusion is not new news.

You may also want to add the MIT Alcator.

New project aims for fusion ignition

The Alcator is a new kid on the block.
They claim to benefit from discoveries about Plasma containment, in order to make a smaller fusion reactor than ITER.
Let us hope they succeed.

I'm curious about the wind and solar - does this include the energy required to source, extract, and process the raw resources to build the systems, as well as the manufacturing process of all parts, transportation up and down the supply chain, installation, maintenance, etc?

I can't comment on the wind thing as even in the mountains I live in, it's not real viable economically and just plain too flakey to count on.

Solar cells, the good old silicon kind (mono or poly crystalline) are made of the most common and inexpensive materials on earth (silicon, oxygen, nitrogen, and traces of other things). There is no honest question they have net energy gain, and that it is big. I have over 30 years experience on that one, living off the power they produce. And for the mainstream technology (forget those thin film and amorphous types, they stink and die young) -- they last effectively forever. I have 30 year old panels that sill perform like new. They've lived through hurricanes and hail, good and bad weather, hot and cold, no big deal to them. The only real issue with them is that they will never be able to power a highrise apartment building with the roof area per person available. A detached dwelling, no problem (in most climates).

Maintenance is low to nil -- scrape off the pollen once in awhile, or push off snow if you don't want to wait for it to melt. Batteries have improved in efficiency and lifetime since I started this, if not in size and weight all that much (for ones that are affordable and have a long cycle count lifetime anyway). Newer charging and discharging controllers, along with just plain better understanding of the mechanisms have breathed new life into the old lead acid cell -- the ones in my system have a 25 year guarantee, no pro rata. They are what amounts to the batteries used in submarines, money no object in construction, but in the nature of things (and increased volume of production) they've become quite affordable. To run my machine shop and computer consultancy I have about $6k in batteries, total system cost of course is well above that, but not ridiculous either. I probably have on the order of $30k in *two* systems to run my four building campus.

A real good solar panel doesn't cost too much more than a real good window at the hardware store (this latter has given me sticker shock on the price of a large window with good R factor). And when you get up close to them, you see why -- same stuff! Much of the cost is in the rugged packaging needed to get that big lifetime in real world weather situations.

Much of the "wait wait, we're going to have x% more efficient panels soon, and y% cheaper" talk is funded by people who have a vested interest in no one getting to solar and finding out how well it works. Follow the money. Kind of like the hydrogen car baloney pushed by people with large interests in the oil business....for the same reasons, just a different group of astroturfers on this one. Frankly, considering what you get, the costs and efficiency are pretty good, and are reaching a minimum anyway -- glass is glass, and costs X to produce, Aluminum frames, the backing material that has to match the tempcos of everything, all those are most of the net cost of a panel and will be needed no matter the tech of the solar cell itself.

PV and Wind advocates are regularly defending this.

Bigger Utility wind turbines are often said to recoup their 'embedded energy' (what you listed, essentially) in well under a year.

PV ranges from 1 to 5 years, depending on the chemistry of the panels and how much of the Balance-of-System (Racks, Framing, Wiring, Inverters, Batteries) that are included in the equation.

If only such demands were so intently placed on ANY fuel-burning generation source, and the results compared, then our direction would have turned towards renewables long ago. (Resource Depletion and Effluents/Pollution would have to be counted into the ROI somehow, to be brutally fair about it all)

My wife works for a windfarm operation so I get a fair bit of first hand info on the operational aspects as well as on the financial side of it.
The focus of windfarms ( I am extrapolating, I know from my wife’s firm first hand and from some other people who are on the financing side second hand) is to pay the bills and survive.

Jerome a Paris has written a lot of insightful postings about that and I recommend reading some of them.
His observations dovetail with what I see, hear and have experienced.
Windfarms may be pointing the entropy arrow the right direction but that doesn’t mean that in an environment where that arrow and all the financials going along with it are pointing the other way that is financially viable.


If you use the net present value method to decide whether or not to invest in windmills you must assume an unrealistically low discount or interest rate for the windmill to be financially viable. The present value method emphasizes costs and cash flows during the first few years and discounts returns fifteen or twenty years out to practically nothing.

Most business firms use the present value method to decide on investment in real capital such as buildings, windmills, solar panels, equipment, machines, and trucks. Others use a variant of the present value method known as the internal rate of return method (what John Maynard Keynes called the marginal efficiency of capital), but it amounts to the same thing--distant cash inflows count for almost nothing, while the earlier the year the more it counts.

Another criterion used by business is the payback period. To be considered for investment a project must earn all its cost back in five years or seven years, or whatever. Again, if you use this criterion you'll never invest in windmills.

Clearly, we need other criteria for investment when it comes to energy sources such as windmills and solar panels, both of which are good ideas.

It seems that you’re assuming that financial returns are the main driver. From what I can see a fair part of the investment equation is not fundamentally economically driven – it is about how to structure a deal so you can get subsidies which are transferable to relevant counterparties and those sort of things. Yes, there is a pure dollar for dollar part but the NPV of subsidies, credits and simply meeting regulatory requirements like “you have to have xx% of renewables in your energy mix” (for the entity building the windpark as well as their investors) are overwhelming that.


It's hard for anything to compete with cheap natural gas, especially with no carbon taxes (or well priced Renewable Energy Certificatess, which accomplish the same thing).

Looking at your graph- it would suggest that nuclear energy doesn't have a sufficient ERoEI to sustain current industrial civilization - am I reading it correctly?

My only complaint is that wind's E-ROI is pretty clearly much higher than 20:1.

Many analyses of wind E-ROI rely on Cutler Cleveland's calculation of about 18:1. This is based on old data from smaller wind turbines - the trend of increasing E-ROI with increasing size is quite clear in his charts.

Vestas says the payback time for the turbines is 7 months.

Here's an article (edited by Cutler J. Cleveland) that gives a payback of less than 12 months:,_e...

Looks like Matt Simmons' new magical 50 MW turbines will have a payback period of 6 days.

Wind above 1? This can not be right with wind generators having a 20 yr. pay back and a 20 yr. life of generator. With out boron nitride in any real quantities wind power is a mute point.

wind generators having a 20 yr. pay back

Where did you get that number?

boron nitride

What do you mean?

Great post! Thanks for the info.

I first stumbled on this terrific site looking for information on Net Energy and EROEI, and have been hooked since.

Can anyone recommend some good books on this subject? I have not been able to find any.

Read TWILIGHT IN THE DESERT by Matt Simmons and THE LONG DESCENT by John Michael Greer. Those are my two favorite Peak Oil books.

"Environmental Accounting - Emergy & environmental decision making" by Howard T. Odum.

Slightly unrelated, but understanding growth is good background. Albert Barletts film does that well.

Saw this in the NYT today & thought it might be appreciated here!

The Purse-seine, by Robinson Jeffers, 1937

.......I cannot tell you
How beautiful the scene is, and a little terrible,
then, when the crowded fish
Know they are caught, and wildly beat from one wall
to the other of their closing destiny the
Water to a pool of flame, each beautiful slender body
sheeted with flame, like a live rocket
A comet's tail wake of clear yellow flame; while outside
the narrowing
Floats and cordage of the net great sea-lions come up
to watch, sighing in the dark; the vast walls
of night
Stand erect to the stars.

Lately I was looking from a night mountain-top
On a wide city, the colored splendor, galaxies of light:
how could I help but recall the seine-net
Gathering the luminous fish? I cannot tell you how
beautiful the city appeared, and a little terrible.
I thought, We have geared the machines and locked all together
into inter-dependence; we have built the great cities; now
There is no escape. We have gathered vast populations incapable
of free survival, insulated
From the strong earth, each person in himself helpless, on all
dependent. The circle is closed, and the net
Is being hauled in.......

EROI is poorly defined above as it doesn't take into account the actual btu losses of producing fuels.

For example, the actual losses on a Btu basis from making grid electricity at thermal plants are 70%, while the losses in turning oil into gasoline are 15% and the losses of producing corn ethanol(including biomass) are 50% and the losses for turning tar sands into gasoline are about 40%.
These are losses are important if you're talking about depletion.

EROI only talks about refined energy expended plus a lot of extraneous ideas like infrastructure. Much of the analysis is incomprehensible flim-flam.

And it's an urban legend here at TOD.

Yep, I guess I'm making assumptions. I've always assumed that net EROI is where the rubber meets the road. So potentially there would be different net energy for apparently exactly the same activity. For example, if your cooking food on an electric hob, the appliance can make an enormous difference in efficiency. An old solid electric hob is perhaps 50% efficient at cooking while an induction hob is 90% efficient. Same energy source, same meal cooked (need to be careful what pan you use though =:< otherwise it will be so energy efficient it won't even cook your food!).

You also have to consider the final useful work the energy is put to.

The thermodynamic efficiency of the internal combustion engine is of the order of 30%, but an electric powered car can convert a much higher percentage of electrical energy into motive force.

If the useful work is hauling logs or driving an excavator, that's about it. However, if it is hauling a 70Kg human on his daily commute, the useful work (getting to the office) could be done much more efficiently with a change of technology. (A smaller car, or power assist bicycle, or mass transit or telecommuting...)

EROI is tricky to pin down, but it is very useful as a starting point to selecting future technologies and defining what useful work really is.

Consider that a 20% efficient car runs on gasoline which 85% of the energy of basic oil. 20% x 85% = 17% overall.
Versus a 75% efficient electric car(per Ulf Bossel)running on 30% efficient grid electricity. 75% x 30% = 22.5% overall.
Really no difference if you think about the embodied energy/infrastructure required to make an electric car that has a range of 40 miles a day, necessitating additional mass transit for longer trips.

However EROI, ignores the above comparison in favor of an absolute scale based on their own notions.
The very idea is wrong.

However EROI, ignores the above comparison in favor of an absolute scale based on their own notions.
The very idea is wrong.

The idea around net-EROI in the context of the article is not wrong. If the overarching principle was wrong, oil companies would be using less and less energy to extract oil over the last 200 years. Are you seriously saying that?

Your out of context example only points to the importance of creating efficiency gains in processes and understanding the importance of measuring EROI on a like for like basis.

The idea around net-EROI in the context of the article is not wrong. If the overarching principle was wrong, oil companies would be using less and less energy to extract oil over the last 200 years. Are you seriously saying that?


Obviously technology has made great improvements that has reduced costs considerably. The cost trend what sharply down until the year 2000 when 'costs' rose along with the price of oil. The finding cost have really gone up since 2000, production/lifting cost not as much.

EIA produvtion costs

Jevon believed that costs of British coal would rise as they had to dig deeper and deeper.
Since the cost of a ton of coal in 1900 Britain was 6 shillings which is roughly $30 a ton in today's prices.
6 shillings/20 s per pound x $100 in todays USD ~$30.

Today UK deep mined coal is less than $50 per ton--a very slight increase given the catastrophic exhaustion that Jevons feared.

Since 1950 US coal prices on average have fell except for a spike in the 1970 and 1980s when electricity production rose and there was a switch from petroleum based generation to coal and nuclear.
Overall coal prices have trended down since 1950s.

It is obvious if the energy required for something increases greatly due to falling (ugh) EROI, prices must rise. In the short run prices go up and down for different reasons but the long term trend up to now shows that technology has offset the costs of going deeper or farther away.

If Jeavons was wrong about limited British coal resources, then why is so little coal being mined in Britain today? I think in all essentials Jeavons was right, though of course he could not know about oil and natural gas becoming major sources of energy.

why is so little coal being mined in Britain today?

Because the competition is slightly cheaper, and more useful. Remember, it's not a question of whether coal is feasible, it's whether it's competitive with the alternatives.

why is so little coal being mined in Britain today?

Yes, the UK has large coal reserves, but a large chuck of UK coal is under the north sea, and cant be mined using traditional methods. I think the main technology being considered is coal gasification, which changes the economics.

Again, when they say "uneconomical", they mean the competition is slightly cheaper, and more useful. Again, it's not a question of whether coal is feasible, it's whether it's competitive with the alternatives.

Again, when they say "uneconomical", they mean the competition is slightly cheaper, and more useful. Again, it's not a question of whether coal is feasible, it's whether it's competitive with the alternatives.

the cost of a ton of coal in 1900 Britain was 6 shillings

Would you happen to have a source/link for that?

It is obvious if the energy required for something increases greatly due to falling (ugh) EROI, prices must rise.

Only if E-ROI gets so low that it starts to dominate costs. The difference between E-ROI of 100 and 20 is very small, in terms of production costs: it means that the energy cost of production has risen from 1% to only 5%.

The 6s for 1900 was from a site I googled and lost it.
Originally I
had this for price of UK coal but I couldn't find a convert for UK coinage to 2006 US dollars below 1900.

So I offer this paper of leveled to 1860s prices of 5.6s(in 1860 prices) for pithead average(Table 4). If you have a converter of 1860 s to 2006 USD, I think this will show current prices of deep UK mined coal is not vastly greater that it was in the distant past.

Your comment that 'EROI is only dominate if it gets very low' begs the question, how low is low.

Ethanol at $80 oil is cheaper per BTU than gasoline. Maybe low is a lot lower than you think.

Thanks for the coal info.

Maybe low is a lot lower than you think.

Well, that raises some of the other problems with E-ROI, like comparing cheap and plentiful coal and gas energy inputs with expensive and scarce gasoline energy outputs.

Actually, the application of EROEI is very helpful there, revealing the losses in the system, and the strongpoints in it. It's open for dynamic redesign, and what better factors would you apply than this?

So take that EV and Charge it DIRECTLY with PV that you lease the space over your parking lot at work for, or with a microhydro or wind setup at home at night, and tell me what happens to your previously .3 Grid multiple in that formula.

PV should usually be net-metered vs. associated with one particular use, so it's utilization rate can be 100%. Granted there is a penalty for conversion to AC and back to DC (about 5% each way), but I think the higher utilization and increased flexibility would usually outweigh that. And, it would be easy to set up a system that charges an EV directly if an EV is available but switches to selling AC when not. It is interesting to speculate on why energy storage tech does not receive more attention. If you wanted to keep solar and wind limited to a small fraction of supply, limiting research on storage would be an effective way to do that.

Sure, good point.
Another possible way to avert the losses would be to have an EV with interchangable batts, where there's simply always a pack (or two) at the array, taking in juice. It would then also be possible to have a grid-tie inverter that you program to draw from the batteries or the Array into the Grid solely for Peak Times, if that's available with your utility, and the batteries have reached a level you've preset as adequate.. having perhaps three packs that work in the car would also conceivably double as power for the house as well, so it's not merely a surplus investment applied to the vehicle expense, but to Home Power and to the Utility Payback scheme.

But essentially, I was including this 'last mile' hypothetical of EROEI for a more or less idealized situation to show that there are clearly other ways to establish the benefits of EVs than to insist on comparing them to Gas cars under a single setup, and as unfavorably as was done above.

Where are the losses coming from?
If they are coming from the energy inputs used to generate new energy, then it seems consistent.

Its not like the energy is being directly transferred. The energy input runs machinery, etc, that performs some process to generate the energy but that input eventually shows up in the loss column. What other column would it go into? Productive work perhaps? Yes its all "productive" work but it is not net productive work with respect to the output energy.

This ambiguity in terms really irks me.


We have been down this road too many times, and I will pass this opportunity to rebut.


You are referring to entropic losses within the system I diagrammed, right? If so, you are correct - there should be energy sinks on the diagram indicating that some of the energy is lost at each stage. I excluded them for simplicity sake only.

I was just responding to the other comment that you passed on the chance to rebut.

I think that, in theory at least, energetic losses (30% electric efficiency of thermal power plants, losses in refining fuels, grid line losses, etc.) are, or at least should be, included in calculating EROEI. One reason infrastructure - pipelines, highways, transmission grid, etc. - get so much attention in discussing the concept may be that calculating EROEI for infrastructure - e.g. translating the monetary cost of a nuclear plant, for instance, into energy terms - is extraordinarily difficult, which may explain why estimates for the EROEI of nuclear plants vary so widely, from those who insist that the technology is a net energy sink to those who insist that the EROI is higher than virtually any other energy source, in the hundreds. It is almost impossible to get objective information in this area, although the estimate of around 4:1 or so for nuclear I have seen on TOD a number of times seems to make sense.

I think it is interesting to look at losses all the way down the line from extraction to the final "useful work" output of a given energy source and see just how little of that final energy available to society does "work" (exergy). Majorian, you identify a distinction between EROEI losses due to extracting and refining fuels versus EROEI losses due to thermodynamic laws. I think this is a valid distinction, for instance the 15% lost in refining oil into gasoline is still *exergy* - i.e. "useful work" - since it is "useful" in the sense that the energy is doing the work of extracting more energy, while the 70% loss in a coal-fired electric generating plant is *entropy* i.e. wasted energy that is an inevitable product of any heat engine (other than in CHP plants). These concepts, as I understand them, are distinct but related, and the total losses in net energy are the result of multiplying entropic losses (or "exergetic" efficiency) with losses determined by the energy/fuel costs of *obtaining* energy/fuel. While entropic losses tend to decline over time through use of better and more efficient technologies, the fuel cost of obtaining fuel continually increases for nonrenewable resources, and seems to more than cancel out gains in efficiency (which are limited by immutable thermodynamic laws in ways that net energy of extraction is not).

To return to the example using nuclear-generated electricity to power a machine, say a refrigerator: there are multiple losses of both types along the way, from constructing the plant itself (which falls into the extraction/refining category since it is needed to process fuel rods), fuel costs of extracting and processing nuclear fuel (E/R), thermal efficiency of the nuclear plant (thermodynamic), efficiency of the steam turbine (TD), line losses in the grid (TD) as well as the cost of constructing the grid itself (E/R), and finally the efficiency of the refrigerator itself (TD). Since there are multiple losses/inefficiencies of both types along the way (and I have probably skipped a few steps as well) it is understandable that the issues get conflated; it is important to understand both types of inefficiencies in their various incarnations if one wishes to do a "full cost accounting" of the energy system. In the end, both the energy needed to extract/produce/transmit more energy and the inefficiencies in our transformations and uses of that energy make less net energy available to society.

Of course I know these concepts have been extensively theorized and discussed here - so feel free to correct me if my description of the concepts and their relationship is off. But hopefully the distinction here serves to clarify the point and demonstrate that, if there is confusion or conflation between entropic losses and energy costs of energy, it is because these variables, though largely independent, can in effect create a sort of "double whammy" and understanding the effects in combination helps us understand part of why we need such vast quantities of energy, in great excess of what actually gets consumed in your fridge, laptop monitor, automobile driveshaft, etc.

People make a mistake analogous to this when they talk about electric cars.

If you calculate the total thermal energy in all the gasoline that cars burn, you get some enormous numbers. BUT, you don't have to replace all the thermal energy in the gasoline that cars burn in order to replace them with electrics. You only have to replace something like 30% of that with electricity, since internal combustion engines are so terribly inefficient. The vast majority of the thermal energy in gasoline is lost as heat.

It's still a big number, but not quite as scary.

According to Wikipedia, considering all losses from power plant to vehicle, the average efficiency of an EV would be from 20 to 25%. The average efficiency for a gas fueled vehicle would be 20%. Further, diesel has a higher efficiency than gasoline, so the total fuel required to power a diesel may be less than an EV. This does not even consider gasoline hybrids.

Maybe Wikipedia is wrong, but it is erroneous to just focus on the efficiency of the EV without considering the efficiency of the total power system.

You have made the same mistake you accuse others of doing because you don't consider the thermal efficiency of power plants, the line losses, and the losses from charging the battery from the grid.

Now, of course, efficiency is not really the primary reason why many people favor EVs. It is not the efficiency that is the issue; it is the oil.

Also, of course, the comparison depends upon the type of power plant.

Ultimately, though, it is not really efficiency that matters, it is the amount of energy consumed by the vehicle. If we build big, powerful EVs, they may be efficient, but they will still consume more fossil fuels assuming the power plants are powered by fossil fuels. Maybe the will get part of their power from solar, but that just means that for grid connected uses, less clean power will be fed back to the grid to reduce the amount of fossil fuels required for the grid.

Vehicles, whether they be gas,diesel,ethanol, or electric powered will continue to use up a lot of energy and other resources. They will continue to have impacts from the constant maintenance of all the roads, parking lots, and other infrastructure required to maintain the transportation system. EVs are not a panacea and may be negative in the sense that they encourage us to just continue the auto dependent status quo without any thought to the structural and behavioral changes that are necessary.

EVs are very seductive, especially considering the subsidies. But I am tired of hearing about how low their running costs are when people don't mention the very high cost of the battery.

Nothing will save us.

Wind power is synergistic with EVs: EVs provide night time demand, and soak up intermitency.

Batteries are cheap enough that EV/EREV life cycle cost is competitive with ICE costs.

constant maintenance of all the roads, parking lots, and other infrastructure required to maintain the transportation system.

These don't require oil. They may use some now, but they don't require it.

I've been an account holder for two years at the TOD. I began posting only recently as concerns the BP spill, but have been an 'active' passive participant in the many and varied aspects presented here. The tutelage given me by TOD has prompted this layperson's interest in Ecological Economics. I've found work by H.T. Odum particularly fascinating.

When I saw this article this morning, I thought to myself, "Oh good. The webmasters are interspersing introductory material for the benefit of new readers".

Now upon reading Majorian's comment and follow-on so far, I am further reminded of what I have automatically assumed to be the case in the development of a serious subject: That after 40 or so years, there exists rigorous models that explain in testable ways the workings of the science. I've not worried about such things (not being a scholar), because I've thought it implicit that if I wanted, I could go to a good university library and see for myself. Of course I'm not assuming that a "Grand unified theory" exists, but important or not so important do exist. So specifically: Are there no models that relate EROEI to money?

In making money decisions the tools used are the present value method or the internal rate of return method. Neither method needs or can use EROI.


I agree with you that net present value methods dominate decision making at the micro-level. But EROI has a place in economic forecasting at the macroeconomic level. See Hall, Powers and Schoenberg (2008) for more detail.

I suspect that the source you cite is academic. What I have failed to see is anybody in government or business or nonprofits that use eMdollars routinely, as they use cost-benefit analysis (mainly governments and nonprofits) or the present value and internal rate of return methods that are used by business firms. Business firms also use other rules of thumb, such as a payback period within a certain number of years as a hurdle to jump before they decide to invest in plant and equipment.

The payback criterion rules out a lot of things that would benefit the environment.

So, Don, how's that economic model of cost-benefit, externalities, and payback in a permanent growth economy working out for you? Is your mental model explanatory and predictive for what's going on now, and the economic models for coastal GOM towns and cities? How's the Cost-Benefit spreadsheet on DeepWaterHorizon working for BP? Thank you, Don, this conversation has been very gratifying.

Cost benefit analysis is still workable in a no-growth economy that protects the environment. The internal rate of return, present value method, or payback techniques emphasize the short-run and greatly discount or ignore the long-run. Thus they are inimical to a sustainable society.

The problem is not with C/B analysis or IRR or PV methods per se. The problem is with the number used for the discount rate in any of those methods. There's a whole academic literature on implicit discount rates and how they range from absurdly large in some situations to negative in others. The example given above of people who "know" rooftop PV makes sense but can't get around to foing it - high discount rate. Parents who sacrifice their own current consumption to save for their children's college education - low to negative discount rate.

So from an economist's POV the problem is not the tools, it's the inputs to them. How do you get people to use lower discount rates so they can see the beenfits of actions with long-term payoffs.

As Gail the Actuary has pointed out many, many times, it is questionable whether loans with interest will be viable in a declining or steady-state economy. For the same reasons she has pointed out with respect to interest rates, I think net present value is not an appropriate technique for a declining economy. A cost-benefit analysis that attaches costs to negative externalities would, however, be appropriate to a declining economy, which we may well have for the next two hundred years.

I am (or was until recently) familiar with the finance and economic journals and have read about implicit interest rates ad nauseum.

I would not make any 50-200 year prognosis since that is plenty of time for advanced biotechnology, nanotechnlogy and humanities understanding of itself to mature and change everything.

If we have a global descent of the industrialized world for two hundred years, as described in John Michael Greer's book, THE LONG DESCENT, then I think there will be no advances in biotech or nanotech after perhaps 2020 or 2030.

Magnus, do you see any evidence for an increase over the past two hundred years of "humanity's understanding of itself to mature and change everything?" I do not see any such advance in past history. In other words, I reject the idea of progress in regard to morality, beliefs, and behavior.

For the longer term, five hundred or a thousand years in the future, who can say? I do like science fiction and its generally optimistic view of science and technology, but only a few science fiction stories took seriously the decline in fossil fuels that is in our future. Maybe 98% of science fiction stories assumed that we would solve the problem of developing cheap and abundant and clean energy.

Nuclear energy is a good idea, and I'm glad you have some in Sweden, but due to limitations on capital investment resulting from financial collapse and economic decline, I do not see much increase in nuclear energy in our future.

There has been massive advances in our understanding of ourselves during the last 200 years, how we function biologically, evolution, more efficient propaganda, etc. But large parts of this knowledge is not used in a long term beneifical way or not used at all, its more or less the same kind of problem as we would not have there problems now if peak oil adaption had started in earnets in the 1970:s and continued, we already got technological solutions for most problems taht could be used although it is to late to get the full benefit from manny of them.

I find it possible that even more knowledge of ourselves would be usable and actually could be used.

I would guess that it would be enough if a few hundred million people stays industrialized to keep advancing biotechnology and nanotechnology.

But hey I am an optimist compared with ToD and sadly an extreme pessimist compared with my RL peers.

With declining supplies of all fossil fuels, I think it will be impossible for a few hundred million--or even ten million--people to remain industrialized and to continue scientific research.

Today scientific research requires much more complicated and expensive equipment to do its experiments than was the case only seventy years years ago, when I was born. We might be able to continue for two hundred years to do the kind of research that Isaac Newton did in the seventeenth century, or Lavoisier did in the eighteenth century but all of that kind of research has been done and replicated many times.

My guess is that Sweden will decline more slowly than will most other countries, due to your renewable and nuclear sources of energy. I do not know how much your country depends on coal, but if westexas is right (and I think he is correct) Sweden will be importing little or no oil just fifteen or twenty years from now. Well, people traveled with horse and buggy in 1910 and managed; perhaps they will be able to manage in 2110 with horse and buggy. Also, Sweden used to make very fine sailing ships out of wood; I do think we will return to wooden sailing ships, but probably multimasted barques and schooners rather than the square riggers.

Do you have any idea how many people Sweden could feed without food imports and using little or no imported fertilizer and without tractors and other oil-powered farm machinery? I think, very roughly, that populations will decline at about the same pace as they grew during the twentieth century. Probably you could support with home-grown food plus fish caught from sailboats about the same population that Sweden had in 1900.

I know that you favor immigration into Sweden. I disagree with that. In a future of energy and economic decline, the very last thing you want or need is immigrants. When Sweden was poor a hundred and fifty years ago you exported many of your poor to Minnesota, where now their descendants prosper. Sweden had scarce, poor, and expensive land, while land in Minnesota was cheap, fertile and abundant. (Did you know that Minneapolis has more people of Swedish ancestry than does Stockholm?}
We have had industrialization and industrial societies for the past two hundred years; the next two hundred will be increasingly agrarian as industry declines and infrastructure decays.

We got enough electricity and biomass to run an equivalent to our present internal logistics indefinately with todays technology. But it would not be enough for the current volume of air travel and freight, the serious near time suggestions is to build pilot plants to make 5-10% of the aviation kerosene from biomass. And it would be very good to change the ocean bulk shippig to nuclear power.

I expect that we can import expensive heavy crude for manny decades and pay it with machine goods, metals and wood based products and other tangible products. I am also spreding the idea that we should concider investing in off peak hour hydrogen production to get more use out of our electricity infrastructure and the increasing electricty production. This could be uses as an additive to crude oil and gasified biomass and as chemical industry feedstock. The local nitrogen fertilizer industry retooled to higer value explosive manufacturing, a decade for expanding and retooling again is plenty of time. Phosphorous can be shipped via rail from Finland and we have at least started with the work of closing the circulation.

Sweden is a large manufacturer of medium heavy machines for forestry and logistics but farm tractors has not been produceds for about 15 years, that part of Volvo were outcompeted and
sold to Finnish Valmet. Local production could be started in a few years if it would be needed, that is profitable, and they can be run on RME, biogas and fuel syntethisized form gasified biomass. The two world class local truck manufacturers already have state of the art engines for almost all kinds of fuels. A crash in truck sales would leave us with massive overcapacity for manufacturing stuff. One abandoned plant for making automotive gearboxes has btw been converted to concentrated solar stirling engine manufacturing for the export market.

I find it more likely that we would series produce steam tractors then try to farm with horses.
We can feed all of our population and then some more with local resources plus regional imports.
The habits are however going global with more imports of exotic fruits and stapels and also an increasing food export, this is a trend that probably wont last for long.

Almost all the coal we import is used for reducing iron ore, all the coal fired CHP plants are being converted or replaced with biomass CHP plants, some might remain as a peaking plants for extreme winter cold. As for oil to run refineries that prodice lubricants etc we only have to overbid less efficient economies to get additional decades for the local adaptations.

I would expect a resource driven global depression to lead to a slowly shrinking Swedish economy that still can handle the retooling and thus have some growth sectors thru the whole crisis. It should give us an oportunity to attract electricty intensive industries.

Its more or less like the migration, it can either be a disaser or a boom depending on the people you attract. A shrinking global economy will leave lots of people unneeded and it will get ugly when the less vell managed parts start to starve. I know what kind of poeple I would like to lure over here and others can come too but too manny illiterate that cant handle the local culture and it breaks down.

If 'we' forgo both loans with interest, and complicated subterfuges called something else (as in some Muslim regions) but which look like, walk like, and quack like loans with interest, then how do we ever build anything again that carries a front-loaded cost, such as the much-ballyhooed wind turbines? Just as free lunches are rarely left on the table, there's rarely expensive stuff left lying around for anyone to come along and borrow indefinitely for free. After all, if there's no reward for forgoing consumption temporarily in order to put up capital, why not just spend everything the instant it's earned?

It still seems to me that some use of interest, or some complicated subterfuge, is possible as payment for time-shifting: you get, say, a smaller house later in life in exchange for having the use of any house at all now. Perhaps leaders of some historical [nearly] non-growing fundamentalist societies felt the need to condemn interest precisely because it does work. If it didn't work, hardly anyone would bother to try it, so no need to fuss about it. But to the extent it does work, it creates alternatives to begging the leader, i.e the government, for a loan or a handout, and thus threatens the leader's zealously guarded power-monopoly.

Capital accumulation may be impossible in stagnating or declining economies. Indeed, it will be impossible for us to maintain all our our capital--especially infrastructure--in the future. Our capital stock (real, not financial capital) will decline along with the decline in energy from fossil fuels.

Investment, building new buildings, acquiring new machinery, installing new equipment, buying new computers all are based on the assumption of economic growth.

We won't be able to maintain our roads indefinitely. I hope we can keep our rail system intact, and if funds are available (questionable) to improve and expand it.

As Gail the Actuary has written many times, we face financial constraints in the future, constraints that will make it impossible to maintain existing real capital. Thus borrowing to invest, and paying interest on loans is difficult or impossible in a stable or declining economy.

Nevertheless, cost-benefit analysis will remain a valid tool for governments and nonprofits, and it can also be applied to business firms.

Thanks, David, for reorienting new readers of TOD to the key issue in understanding the viability of alternatives. It is also key to understanding comparative competitive ability of systems. The system with 1.2 net energy will lose in most situations, which is why the US was able to get out front in the 1950s and 1960s and create such a dominant regime. Couple the idea of net energy with the maximum power principle, and you get one possible explanation for how systems adapt to changing energetic bases.

The maximum power principle can be stated: During self organization, system designs develop and prevail that maximize power intake, energy transformation, and those uses that reinforce production and efficiency. (H.T.Odum 1995, p.311) ”

“ ...the maximum power principle ... states that systems which maximize their flow of energy survive in competition. In other words, rather than merely accepting the fact that more energy per unit of time is transformed in a process which operates at maximum power, this principle says that systems organize and structure themselves naturally to maximize power. Systems regulate themselves according to the maximum power principle. Over time, the systems which maximize power are selected for whereas those that do not are selected against and eventually eliminated. ... Odum argues ... that the free market mechanisms of the economy effectively do the same thing for human systems and that our economic evolution to date is a product of that selection process. (Gilliland 1978, pp.101-102)

Odum et al. viewed the maximum power theorem as a principle of power-efficiency reciprocity selection with wider application than just electronics. For example Odum saw it in open systems operating on solar energy, like both photovoltaics and photosynthesis (1963, p. 438). Like the maximum power theorem, Odum's statement of the maximum power principle relies on the notion of 'matching', such that high-quality energy maximizes power by matching and amplifying energy (1994, pp. 262, 541): "in surviving designs a matching of high-quality energy with larger amounts of low-quality energy is likely to occur" (1994, p. 260). As with electronic circuits, the resultant rate of energy transformation will be at a maximum at an intermediate power efficiency. In 2006, T.T. Cai, C.L. Montague and J.S. Davis said that, "The maximum power principle is a potential guide to understanding the patterns and processes of ecosystem development and sustainability. The principle predicts the selective persistence of ecosystem designs that capture a previously untapped energy source." (2006, p. 317). In several texts H.T.Odum gave the Atwood machine as a practical example of the 'principle' of maximum power.

I think that the reason the maximum power principle is much more comprehensive is that it allows for a discussion of the relationship between power and efficiency in systems with different energetic inputs. In a descending economy with contracting energetic inputs, the evolutionary selection towards greater efficiency rather than more power may be adaptive? Jevon's principle is nowhere near explanatory regarding these issues. At some point, those of us pounding shoe leather and growing front yard gardens become adaptive and sexy, and we get selected for. That's my take. Yes, we're burning up the biosphere and we may take everything out along the way, but I've got to try and stand up for what's right. If enough of us do it, and make it sexy, the sheep will [eventually] follow. I'd like to see the lights flicker on and off a bit, to get people alert and moving, though.

Nwaelder, money is a measure of exchange, or a form of information that flows opposite goods and services. It is a very changeable man-made construct, and as such, it is not useful when trying to describe the basis of real bio-physical economies over the long term and the large scale. One can make snapshot comparisons of a point in time, but especially these days, those comparisons become worthless rather quickly. Better to use some sort of energetic basis as an unchanging comparison.

We've got fusion; where are the hydrogen folks? They're late.

Thanks Iaato,
What you say about the embodied energy v.s. money issue may well be intractable except at a point in time. So how about second best? Is there a standard method that computes the relationship, that at least in theory could be represented as the sum of as many partial money/energy relations as one wishes?

It really does not seem unreasonable to imagine where human civilization would be if humankind had not discovered coal, oil etc. This easily validates a depletion argument by marking the initial condition. It's the depletion journey and end point that needs work, and if urgent, a case for systematic policy change argument must be developed that convinces. (I'm afraid this is another intractable problem, no different than Economics. See, the doomer in me has come forth!)

As a technologist, I have no reason to take on faith that science will find a miracle solution that allows BAU. The 2nd Law is'nt going anywhere, but FWIW Solar and Wind are two techs that at least in theory defer a depletion model for 5 billion years.

Nwaelder, from the Wiki Emergy link I gave you:

Emergy per unit money - the emergy supporting the generation of one unit of economic product (expressed as currency). It is used to convert money payments into emergy units. Since money is paid to people for their services and not to the environment, the contribution to a process represented by monetary payments is the emergy that people purchase with the money. The amount of resources that money buys depends on the amount of emergy supporting the economy and the amount of money circulating. An average emergy/money ratio in solar emjoules/$ can be calculated by dividing the total emergy use of a state or nation by its gross economic product. It varies by country and has been shown to decrease each year, which is one index of inflation. This emergy/money ratio is useful for evaluating service inputs given in money units where an average wage rate is appropriate.

This becomes especially useful, along with some of the other measures at the site, in evaluating imbalances in international trade, which are rampant now, and have helped to create the international inequities of rich and poor nations, where the rich nations mobilize the geophysical resources of the poor countries at a cheap monetary cost.

Solar and wind are not scalable nor consistent or dense enough to put off our fate. That net energy cliff figure published above illustrates the problem.

Solar and wind are not scalable.

Sure they are.

nor consistent.

We don't need no stinkin' consistency - Demand Side Management (aka Demand Response) combined with source balancing and geographic dispersion handle the problem quite nicely.

or dense enough

How does one measure the density of wind? Turbines per square mile? Heck, use 1,000 sq meters per turbine, and use the rest of the space for farming. How does one evalute the density of the 500,000 oil wells in the US, or the 70,000 abandoned coal mines?

Gee, when I look at the chart I see solar thermal, wind, solar PV all currently viable, at least while not discounting for the penalty associated with a creation of new infrastructure, way of life etc. Am I missing something?

There is 'fate' in that something will happen.. but sadly we mere mortals are not privy to the details, and even the trends will surprise us.

"Solar and wind are not scalable nor consistent or dense enough to put off our fate. "

Our Rooftops are about as diffuse as Sunlight is, our Plains and Hilltops as spread out as the wind. Those can match up (and scale up) pretty well. The missing component is what we think we need.

I do want to understand again why people say this thing about scalability. Do you say that from a technical or economic point of view?


(standard disclaimer - I'm not saying Solar or Wind will guarantee BAU or continuation of "Happy Motoring")

I agree with Don, money and energy are two different systems - thermodynamics and human concept.

As long as the parameters are well defined and a like for like basis is used, theromodynamically EROEI is quantifiable, but agree it can get wooly around edges.

Money is a notional value. For example, in F1 racing, one could clearly get a lot more energy efficiency with different cars, but the monetary value people are paying is to watch some guy do X nos of circuts as fast as he can and beat everyone else :-\ Economics can produce theoretical models Cost Benefit Analysis, but for all its equations, economics is still a moral philosophy. Maybe there is one?

Adam Smith was a professor of moral philosophy. Thus it is not stretching a point to say that economics arose out of moral philosophy. In the writings of nineteenth-century British economists, you will find a lot of moral philosophy. In the U.S. we used to have "political economy" out of which sprang two disciplines, twentieth century economics and political science. In my opinion we'd be better off going back to a discipline of political economy than staying with the two different disciplines. In an ideal world, economics would be part of moral philosophy, as it was for Aristotle, Adam Smith and others. Aristotle considered what we now call political science and economics and moral philosophy all as one big ball of wax, in which he also included environmental studies.

So specifically: Are there no models that relate EROEI to money?

Well, if you are familiar with the work of Odum then the answer is clearly yes. He explicitly models the relationship of money to eMergy and arrives at what he termed eMdollars, a measure of how much eMergy is actually represented by a given number of circulating dollars.

After 40 years it is a crying shame that more people are not familiar with these concepts, after all the idea of EROI is not that complicated, and yet look at the wide disparity of opinion on the subject even on a site as literate as TOD.

Not surprising then that the concept of eMergy is especially difficult for people to grasp, despite it being relatively straightforward. For those who are interested I highly recommend the book "Enviornment, Power, and Society for the twenty-first century" by H. T. Odum


Is there any business firm or government that uses eMdollars in its decision making?

There is no evidence in the website you posted that the EPA actually uses eMdollars in their decision making. So far as I know, the EPA uses almost exclusively the cost-benefit method, which assigns ordinary dollar costs to the costs and benefits of actions.

Well, obviously you didn't bother to read the presentations or you would have seen that at least one court case has been decided on the basis of an eMergy analysis.

No worries, if you don't like the idea then the solution is actually quite simple:

  1. Squeeze your eyes shut
  2. Clap your hands firmly over your ears
  3. Loudly howl the word "NO!"
  4. Repeat until all evidence of a universal energy hierarchy disappears

Might take a while...



In which applications do you think that an eMergy analysis would be most useful?

Me personally? Well, I am hardly the person to be asked such a generalized question, but if I had to answer then I would say that if eMergy is a measure of the universal energy hierarchy then I would think it has universal application.

Again, I would encourage people to read Odum and find out for themselves, but in the context of the current discussion it seems to me that the concept of eMergy would be most immediately useful in evaluating various energy sources on a common basis.

Most energy analysis, including EROEI, fails to account for the fact that all energy is not equal, a calorie of sunlight is not equal to a calorie of electricity from a coal fired power plant. Odum attempts to correct that by measuring what he called the "transformity" of energy, how many steps did it take to get from sunlight to coal, and how efficient was the transformation at each step?


Odum attempts to correct that by measuring what he called the "transformity" of energy, how many steps did it take to get from sunlight to coal, and how efficient was the transformation at each step?

That sounds a bit awkward. I would think that would greatly overestimate the value of coal, given the enormous inefficiency of the conversion in question. I would think substitution would be more important. IOW, how much coal will generate a kWh, versus the light that would generate the same kWh via the most efficient conversion? And, if the efficiency of the best alternative changes, then so does the comparison.

That does not answer my question: I asked whether the EPA (or any other organization) actually uses eMdollars in making decisions.

The concept has been around for a long time. It has not been adopted by any business that I know of, and furthermore, few if any government agencies use the concept. In other words, it is a failed concept.

Except your premise is fallacious at best. It's like saying if the laws of thermodynamics are not used by business or government in decision making then it is a failed concept.

I see in another thread that you are an economist, which would explain why you are closed minded on the matter. Personally I prefer to keep an open mind which is why I would suggest that people are free to read Odum and make up their own minds and, like I said before, if you don't like it then you don't have to listen.


The laws of thermodynamics are indeed widely used by business and government in decision making. They may be used by the engineers and not the CEO's, but they're used.

Thermodynamics is used all the time in both engineering and physics. Obviously it is not a failed concept.

Your prejudice against economists is the ad hominem fallacy.

Your flat-out refusal to consider for even one moment that the economy might, just MIGHT have something to do with eMergy evaluations, despite good faith efforts by myself and others to present evidence in support of that, constitutes ad hominem on my part?

My, that certainly is an easy out for you, now isn't it?.


You're missing the obvious: your clear stereotyping and prejudice against economists, then classifying me as an economist and hence close-minded is a clear example of the ad hominem fallacy.

Note that I attack your ideas; I don't attack you.


Just because businesses and the government ignore eMdollars doesn't mean that the concept or Odum's emergy work in general is a "failed concept." The dollar dominates decisions within gov't and business, but what we don't realize is that those dollars are just proxies for work, i.e. dollars pay for either embodied energy or work itself.

I think that any concept that has been around for forty years and gotten a lot of academic hoopla but has not been adopted by governments or nonprofit organizations or business firms is a failed concept. There are lots of failed concepts--just read the old back issues of academic journals.

Jerry, this seems to be a link to a theoretical model not reality.

Real wealth (food, clothes, houses, materials, water, jewelry, knowledge, literature, art, etc.) is measured by its emergy. Money buys real wealth according to market prices. By dividing the total emergy use of a country by its gross economic product, an emergy/money ratio is obtained (Figure 7). The part of the gross economic product due to an emergy contribution can be estimated as the emergy value divided by the emergy/money ratio. The result is in emdollars (abbreviated em$). The emergy/money ratios of two countries are required to evaluate the real wealth benefits of their international trade and financial exchanges.


So your back to GDP, as currently measured, one criticism of it is GDP measures destruction of environment. I don't think that was Odum's intention. Emergy is simply a tool for Environmental Management Systems, the worlds currencies are fiat not fixed by energy calculations. If the dollar collapsed, it can have no value, yet if it was truly tied to the energy, i.e., represented energy not the notional idea of what's gone before, it would have tangible relationship therefore always have some value.

From "Enviornment, Power, and Society for the twenty-first century" p.255:

Emergy, Emdollars, and the Emergy/Money Ratio

Wheras eMergy measures the real wealth produced and consumed, money buys the eMergy as it circulates. The buying power of the money depends on eMpower. The more eMergy flow, the more the money buys. The ratio of the eMergy used to the money circulating in each state or nation indicates, on average, the money's ability to buy real wealth there.


Good question, Don. Since corporations and government are firmly invested in BAU at this point, Emergy evaluation is limited mostly to academia, with some involvement of researchers in govt. (EPA, for one). Net accessible evaluations are listed at the Emergy organization website, below.

Apropos to the moment, here's an evaluation of the Valdez oil spill sponsored by the Cousteau society (big PDF file):

If you decide to scan this paper, bear in mind that the GOM debacle makes the Exon Valdez spill look like a piker.

And one more, of the National Forests, more current, from 2007, so I'll quote from that one:

Emergy Value of USFS Assets
The assets or storages of matter, energy, and information of the USFS were evaluated grouping into four categories including: environmental assets (such as forest biomass, water, soils, organic matter, etc.) economic assets (roads, machinery, buildings etc.) geologic assets (fossil fuels and minerals) and cultural assets (Indian artifacts and critical species). In addition to these assets, biodiversity and genetic resources were also evaluated. Environmental assets within the USFS totaled over em$5.7 trillion (1012) in 2005, while economic assets totaled 84 billion. The emergy in geologic assets when expressed as emdollars was em$5.7 trillion. Native American artifacts, were estimated to be em$11.4 trillion in value. The emergy values of the genetic resources on USFS lands were the largest storage of natural capital equal to over em$154.1 quadrillion (1015) while biodiversity was valued at over em$209.1 trillion. Endangered species on USFS lands were valued at em$32.7 trillion. While controversial, these values underscore the importance of the Forest Service’s role in protecting genetic resources and biodiversity.

Comparison of USFS Emdollar Values With Economic Values
For comparison with economic values, the natural capital of the USFS was grouped into two categories: capital having market values and capital having no market value. Natural capital for which market values could be generated included forest resources, minerals, water, etc. The economic values of these totaled over $2.7 billion while the emergy derived emdollar values were about 2.5 times the market value or em$9.4 billion. Natural capital with no market values totaled over em$2.8 quintillion (1018) of which the emergy value of geologic formations represented over 94% of this total.

Environmental services were also grouped into those with and those without market values. Environmental services for which market values could be generated included research information, water supply, wildlife hunting and fishing, carbon sink, etc. The economic values of these totaled about $177 billion while the emergy derived emdollar values were about 8.2 times the market value or about em$1.4 trillion. Environmental services without market values were estimated to be worth about em$52.3 billion, the largest of which was the ground water recharge , totaling em$42.7 billion and followed by clean air valued at em$6.9 billion.

My question was ill-formed. I can understand your response as one of reaction to its presumed naivete. Fair enough. However, this is not what I am trying to get at. Huge predictive consequences are justified on the seemingly correct notion of eMergy as a law of nature. If it is a law and if it is important, then it will be useful to make predictions that ultimately will shift the course of human affairs.

The many degenerate discussions here at TOD, often argue a conclusion draped in ill defined generalities. This often serves to weakly justify macro conclusions of the most monumental sort (almost God like), but as substantial argument most always are weak.

It's not as if serious persons are not asking the same questions:

The theories of Odum seem correct to me, as if it matters at all. My questions and comments are really directed at questioning the usefulness of the principles when combined with real systems e.g. oil as the means for transportation and the follow on recursion that as mind experiment, predicts any specific outcome in a useful way. Hopefully smart people will be able to accomplish the rigor to convince the status quo. It does not appear to be quite there yet.

The following excerpt from the paper you linked helps me understand why emergy has not caught on more broadly:

Brown et al.(1995) also argue that price does not determine value, giving the example that “ a gallon of
gasoline will power a car the same distance no matter what its price; thus its value to the driver is
the number of miles (work) that can be driven.” Since emergy does consider all contributions to
the public good and truly measures value, it is suggested as a complete measure of wealth and a
substitute for money (Odum, 1984).

The value of oil may well be related to its usefulness in traveling. That doesn't mean that if my daily commute increases by a factor of two, the value of the drive to work has doubled. The claim that emergy "truly measures value" doesn't seem to be merited.


I am working on it; dissertations take a long time...

Good. Let me be the first to recommend you for a Nobel prize!

Thanks for this article - it's a much overlook fact, that should be much more in forefron the the public debate.

I totally agree.

We also need to look into what are the real costs of the different form of energy, when all cost are faktured in.
For instance today the environmental cost of fossil fuels ore no included in the prices.

As economist John Kenneth Galbraith famously observed, the process by which money is created is “so simple it repels the mind.”

I'm wondering whether our understanding of energy is the same, the net-EROI is so simple and one of the constraints that Dennis Meadows, Bill Rees, William Catton, Joseph Tainter et al all point to. Humanity has over the last two centuries built an enormous infrastructure that needs huge inputs of energy simply to maintain. Combine diminishing energy supply with reduced EROI values and it leads to the perfect storm.

If you look at the history over the last 200 years, serial energy substitution has involved going to more energy dense sources. There may be potentially vast resources, eg, methane hydrates, but not the technology or infrastructure (or primary resources) to scale these up. I'm sure that there is potentially huge conservation available, but there is nothing on the horizon posted that scales up over the next 20-30 years with the energy density, I'm willing to stand corrected though that the industrialised world is at the start of a huge economic contraction.

I'm surprised no one has shot this post down in flames yet, with some vast energy source that we simply need to get around to extract. Does the idea of net-EROI confound the Magical Thinkers?

I'm surprised no one has shot this post down in flames yet, with some vast energy source that we simply need to get around to extract. Does the idea of net-EROI confound the Magical Thinkers?

Don't worry, the Thorium cavalry is sure to show up in short order.

RE: Not shot down..

.. In the meantime, when you find yourself in a lull, don't forget to enjoy it.

I knew someone who decided to take the once-aggravating times they were caught on hold on the phone, and use that time to meditate.

The other side of the equation, which seems to have been overlooked in the discussion so far, is a comparison of energy gain with the non-energy costs of production. With corn ethanol, for instance, the real problem isn't the low EROI, but rather the fact that the meager energy gain comes at a considerable cost of labor, soil quality, fresh water, etc. This consideration becomes especially important when one considers energy sources such as wind power that are not subject to hard geologic caps.

The point that I recall many authors making is that a lower EROI doesn't necessarily mean less net energy, but if non-energy costs are held fixed, then as a society we will have to expend a greater proportion of our economy on procuring energy. This means higher energy prices, as compared to a typical worker's annual wages.

Yes, my thought exactly, though I thought this was an article meant to introduce new TOD readers to a thumbnail sketch of EROEI. Other measures include environmental degradation (soil, air quality, GHG emissions, spills(!)), national security issues (dependencies on quasi-hostile nations, depletion rates), economic (trade imbalances, inflation), and so forth.

Pepper and Will

As you both indicate, energy isn't always the most important comparison to make. Mulder and Hagens (2010?, in AMBIO) just produced a paper comparing the Energy Return on Water Invested for numerous different energy processes. We need more work like this.

"It's even worse than it appears." -- From a Touch Of Grey by Grateful Dead

Figure 4 illustrates energy, but energy is not the only loss in the loop:

1) Raw materials. In most cases, low EROEI extraction takes far more infrastructure. Truck portable rigs (High EROEI) are replaced with huge drilling ships which require significantly more steel both in the rigs and down the hole. The larger holes required by the deeper depths require ever increasing quantities of drilling mud, steel and cement. (And use enough cement please....)

2) Effort (Ideas + Time). Significant R&D is required to design and build these advanced technological extraction platforms. While some of the technology has spill over-effects (pardon the parlance), we as a society are dedicating some of our finest minds to chasing oil to the most inhospitable places on Earth. If energy were still relevantly easy to find those resources could instead be working on the renewable infrastructure that we know is the only practice future.

Even assuming that the energy is accounted for in the raw materials and effort in the chart, the effort and raw materials are also diverted away from society, at the very time they are needed most.

This was a perfectly good article until the last paragraph, where it became deeply unrealistic.

People who are pessimistic about dealing with Peak Oil wonder: so many things run on oil, can we possible replace oil in all of these applications?

The answer is yes, primarily through electrification of surface transportation and building heating. Aviation, and long-haul trucking can be fully replaced with electric rail and water shipping, and aviation will transition to substitutes.

This will proceed through several phases. The first is greater efficiency. The second phase is hybrid liquid fuel-electric operation, where the Internal Combustion Engine (ICE) is dominant - examples include the Prius and, at a lower price point about $20K, the Honda Insight. The 3rd phase is hybrid liquid fuel-electric operation, where electric operation is dominant. Good examples here are diesel locomotives, and the Chevy Volt. The Volt will reduce fuel consumption by close to 90% over the average ICE light vehicle. This phase will last a very long time, with batteries and all-electric range getting larger, and fuel consumption falling.

The last phase is, of course, all electric vehicles, which are are slowly expanding, and being implemented widely (Here's the Tesla, here's the Nissan Leaf). Electric bicycles have been around for a long time, but they're getting better. China is pursuing plug-ins and EV's aggressively.

Here are electric UPS trucks. Here is a hybrid bus. Here is an electric bus. An electric dump truck.

Trucking: trucks can reduce diesel consumption very quickly with speed reduction and improved aerodynamics - Walmart plans to reduce truck fuel consumption by 40% in the next several years. In the medium term, inter-modal rail can replace trucks fairly quickly. In the longer term, trucks can be electrified - Kenworth Truck Company has introduced a new Kenworth T370 Class 7 diesel-electric hybrid tractor for local haul applications, including beverage, general freight, and grocery distribution. Kenworth, a division of PACCAR, already offers a T270 Class 6 hybrid-electric truck. Volvo is moving toward hybrid heavy vehicles, including garbage trucks and buses. Here is the heaviest-duty EV so far. Here's a recent order for hybrid trucks, and here's expanding production of an eight ton electric delivery truck, with many customers. Here are short range heavy trucks: . Here's a good general article and discussion of heavy-duty electric vehicles. Diesel will be around for decades for essential uses, and in a transitional period commercial consumption will out-bid personal transportation consumers for fuel.

Mining is a common concern. Much mining, especially underground, has been electric for some time. Caterpillar manufacturs 200-ton and above mining trucks with both drives. Caterpillar will produce mining trucks for every application—uphill, downhill, flat or extreme conditions — with electric as well as mechanical drive. Here's an electric earth moving truck. Here's an electric mobile strip mining machine, the largest tracked vehicle in the world at 13,500 tons.

Water shipping and aviation can also eliminate oil: see my separate post on that topic.

Here's a terminal tractor that reduces fuel consumption by 60%.

Farm tractors can be electric, or hybrid . Here's a light electric tractor . Batteries can be trucked to the field in swappable packs. Farm tractors are a fleet application, so they're not subject to the same limitations as cars and other light road vehicles(i.e., the need for small, light batteries and a charging network). Providing swap-in batteries is much easier and more practical. Zinc-air fuel cells can just be refuelled. Many sources of power are within the weight parameters to power modern farm tractors, including lithium-ion, Zebra batteries, ZAFC's and the latest lead-acid from Firefly Energy, and others.

Most farmers are small and suffering, but most farm acreage is being managed by large organizations, and is much more profitable. Those organizations will just raise their food prices, and out-bid personal transportation (commuters and leisure travel) for fuel, so they'll do just fine. As farm commodities are only a small %of the final price of food, it won't make much difference to food prices. The distribution system, too, will outbid personal transportation for fuel. Given that overall liquid fuel supplies are likely to only decline 20% in the next 20 years, that gives plenty of time for a transition.

Finally, diesel farm tractors can run on vegetable oil, with minor modifications. Ultimately, farmers are net energy exporters (whether it's food, oil or ethanol), and will actually do better in an environment of energy scarcity.

The US Navy plans to go reduce it's 50,000 vehicle fleet's oil consumption by 50% by 2015. They plan by 2020 to produce at least half of its shore-based energy requirements on its bases from alternative sources ( solar, wind, ocean, or geothermal sources - they're already doing this at China Lake, where on-base systems generate 20 times the load of the base), and it's overall fossil fuel consumption by 50% by 2020 with EVs and biofuel.

Some question the stability of the electrical grid, in an environment of expensive fuel. Utilities like the idea of "eating their own cooking". Here's an electric utility boom lift. Here's a consortium of utilities considering a bulk purchase of plug-ins (and a good article). Here's an individual utility buying electric cars. Similarly, utilities are buying hybrid bucket trucks and digger derricks. Here's a large commitment by two major utilities .

Even hydrogen fuel cells could be used, though they're not likely to be cost-competitive soon with the alternatives. PV roofs certainly could be used to extend battery life, though the cost effectiveness of that will depend on how much of the year the tractor is in the field. Electric drive trains are likely to be much more cost-effective than liquid fuels, but it should be noted that locally produced bio-fuels would certainly work. Also, fuels synthesized from renewable electricity, seawater and atmospheric CO2 would certainly work, though it would be rather more expensive than any of the above.

Any and all of these is several orders of magnitude cheaper and more powerful than animal-pulled equipment. One sees occasionally the idea that we'll go back to horses or mules - this is entirely unrealistic.

Here's a good quote from the Governor of Michigan: "For automakers, replacing the internal-combustion engine with an electric powertrain is both revolutionary and daunting. In a world where economic Darwinism threatens slow adapters with extinction, U.S. automakers know that they can either lead this historic transformation or become history themselves. Even today, as they engage in a struggle to survive, the Big Three are leading the way: General Motors, Ford and Chrysler are scheduled to introduce electrified vehicles next year."

France is planning for a market share for EV's of 7% by 2015, rising to 27% in 2025.

What about things like iron smelting, in which we use a lot of coal?

Iron used to be made with charcoal, and iron oxide can be reduced with hydrogen from any source. Most of the steel used in the USA is reclaimed from scrap (and when industries mature, essentially all of their steel can be recycled) ; all it takes is an electric furnace to re-melt it, and the electricity can come from anything.

What if our current system is less like a train running out of power, where it will just slow down and stop, and more like a jetliner running out of power, energy which it crucially needs to have a safe landing?

Well, at least in the US, there's so much energy used for things with very marginal value that we have a very big cushion. We have an enormous surplus of energy, so we have quite a lot of flexibility.

Isn't this a tricky transition, with fragile balances between politics, communications, labor, logistics, public-calm, etc?

It's true - a transition away from oil will put stress on a lot of institutions. But, isn't it good to know that there technical solutions?

Where will the needed electricity come from?

From wind, mostly. Wind has a very high E-ROI, and is plentiful. Solar, nuclear, geothermal, etc will also be important. Coal is extremely abundant, but we have to hope that we don't use it.

Nick, for me your trying to negate the problem by anecdote, are there things that will substitute, yes. Do they scale up? No, not from figures I've seen because this is a systems problem. Constantly running into limitations as the world trys to keep up economic growth, an idea that has only been around since WW2 and is political insanity.

Ultimately, at some point, human population is going to have to live within its resources base and its capacity to bio-energetic capacity. For me the article is indicating what the Limits to Growth highlighted, that system problems would show up in energy.

Here's the numbers crunched for Climate Change
This is from Hirsch report, if PO is here, and it does seem to be, there is no mitigation time that Hirsch thought so important. But I tend to go on the side of caution.

Portraying something as pessimistic or optimistic doesn't make any difference to sustainability. What you're saying is there can be some kind of BAU, I see your solutions as mitigation on descent not a sustainable solution.

Maybe I've read your comment wrong, but if you think what you've suggested will keep economic growth imperative going I can't see it. This is a cultural problem not a scientific problem.

Nick, for me your trying to negate the problem by anecdote.

If I say that automobiles or tractors can be electrified, the straightforward reply is: "Show me an electric car or tractor.". That's what I've done.

Do they scale up?

Sure. Why wouldn't they? Electric tractors don't take significantly more resources to build than ICE tractors.

not from figures I've seen because this is a systems problem.

There are other problems besides oil, but the Original Post is about oil.

economic growth, an idea that has only been around since WW2.

It's been around a lot longer than that. It's just that it's only been successfully done at growth rates similar to modern rates for the last 300 years.

human population is going to have to live within its resources base and its capacity to bio-energetic capacity.

Sure. Fortunately, energy isn't one of those limits. I'd say that climate change and species extinctions are much larger problems.

The Hirsch report isn't really useful - it's concerned exclusively with finding new sources of liquid fuels.

Our problems are not lack of technology or oil. It's cultural. Technology or more oil can't fix fucking insane. However, they could make things worse.

Define "sane." Has it ever existed?

I know people like to bring out some hitech fixes (I'm referring to fusion, electrification is a no-brainer low-tech fix) like posts seen above to our oil problem, but I don't even think we need to rely on those. Some posts above pointed out that most people are not doing anything productive i.e. just trying to make sales of useless crap and ensure profits. Unfortunately, I do not believe the Zeitgeist approach will actually work because it doesn't quite provide enough motivation or incentive for genuine progress that capitalism now and then brings i.e. the discovery of new drugs. There is too much grunt work out there and you need to provide real incentives to get people to do it. I think we need some sort of hybrid between Zeitgeist and the money system. Imagine if the government made a stronger welfare program where you could simply choose not to work a job and depending on how much money you have saved, you may qualify for a free $500 a month. We would need significant higher taxes on those who do choose to work, but their wages will increase in turn, and I think we will close the gap between the rich and poor as the cost of labour drastically increases as a result of this option. Those who do choose to work would still earn significantly more than those who don't, affording them much better lifestyles. Yet, those who accept the $500 a month can live modest lifestyles, perhaps in government-run condo projects? They would not be trying to sell anything to anybody, and they wouldn't be consuming as much themselves, basically getting us to exactly where we need. On the supply side, I still strongly believe we have not yet taken advantage of high altitude wind power. Unlike low altitude wind, the former is not prone to intermittency. There are several startups that are now doing demonstrations and the EROEI claims are between 50 and 300. It makes much more sense to me to catch a small bit of these trade winds than surface winds. Combine this with more redundant geographical averaging, and I think we have a base power source cheaper than any other. Perhaps it could be so cheap that we could afford to have natural gas plants on standby should we ever need them.

The Long Descent from Peak Oil will change the distribution of wealth and income. Based on historical analogies (e.g. fall of Rome) the gap between the rich and the poor will increase, and there will be little or nothing in the way of a middle class.

I have always liked Milton Friedman's negative income tax proposal. If it had been implemented it would have solved the problem of poverty in the U.S. at much less cost than the mishmash of programs we now have--programs that have not made a dent in poverty over the past forty years.

There are several startups that are now doing demonstrations and the EROEI claims are between 50 and 300.

Would you happen to have links for info?

Now venerable old Lloyd's of London has put out a report supporting transition away from oil etc.:

This is interesting and causes me to pose a question:

Which indirect costs should be included in the cost of energy production?
---Do we include sufficient risk premiums to cover the clean up the results of a catastrophic failure?
---Do we include the costs of deploying military troops to ensure the flow of energy into the world market?
---What about the costs of increased health care as a result of pollution?
---Do we include the costs of dealing with climate change as a result of the carbon going into the air?

At the least, the first one should be loaded into the costs of extracting energy.

All that matters in the long term is do suitable resources exist that can be used economically and does the technology exist to use those resources econmically, with an impessive EROEI.

Right now the answer to both those questions is yes. The bad news is that it's going to take some years to exploit both, in the meantime there may be some pain, I hope the transition doesn't take too long and isn't too hard.

I'm sure some of you know which resources and which technology I'm talking about, not fossil fuel based and not renewable either although we must continue headlong down that path too.

I'm starting to come to the conclusion that the effects of malinvestment will dwarf the actual net energy change.

The simple example is suburbia. Once net energy declines for transportation the value of the infrastructure investment in both monetary and energy terms declines. Also maintenance costs rise. The embedded energy thats lost in this situation is huge and dwarfs the actual decline. Not only are you dealing with net energy issue your dealing with a tremendous loss in embedded energy. Even if energy is cheap the net is still lower and wealth creation is lower and the society cannot create as much wealth as it once did therefore the wealth needed to support infrastructure debt falls.

Certainly higher energy prices aggravate the situation but as long as the net declines wealth creation still declines.

The reason this is import is if its correct then the biggest impact of falling net energy will not be in energy prices but in failing infrastructure investments. For the oil industry a simple example is over capacity in upstream operations from tankers to refineries rendering the investments a loss. Just as obvious these losses are going to impact the backing system which extended the credit which now is impossible to repay.

So if this thesis is correct then the signature that we have fallen off the EROEI cliff is a collapsing banking system and falling asset prices. Losses here literally dwarf energy costs by probably and order of magnitude of not more.

Globally your probably talking about 100 trillion dollars or more in losses over the next few years.

Bad yes but the problem is really even worse than this.

The problem is that most of the infrastructure developed for a cheap energy world is a total loss in one thats energy constrained. Inability to maintain it alone ensures that in time regardless of what you do the value will go to zero.
However its the only infrastructure we have developing new energy efficient infrastructure requires you accelerate the loss in the existing infrastructure and you divert even more wealth away from trying to sustain the status quo.

Next the infrastructure has intrinsic energy needs to even be used suburbia requires a certain transportation grid to function this grid cannot be rapidly replaced. If perhaps the widespread adoption of EV's happened at best it simply slows the decay rate. However even this dramatically devalues investment in ICE transport which lasts for a long time.

What happens is there is a hard lower bound where the infrastructure is either functional and marginally useful or its not. Despite claims of falling demand there are intrinsic and hard limits where even as the infrastructure falls in value it makes sense to continue to pay what ever it takes to use it since you literally don't have alternatives.

Your literally stuck in a losing proposition with no way out flattening energy demand and resulting rising energy prices ensure that net wealth creation falls rapidly and devaluation of the infrastructure increasingly has no real effect.

By this I mean the following example holds someone pays 500k for a house and then defaults then someone pays 250k then defaults thens say 100k cash then sells later for 50k cash. All along the way wealth is simply being destroyed.

Infrastructure wealth has fallen by 90% and perhaps energy prices have rise by say 300% or so.

Theoretically you can recognize this and decide to aggressively devalue the current infrastructure to maximize investment in renewable infrastructure this will result in maximization of the total wealth over time as energy demand falls yet wealth creation grows. However I'd argue its only theoretical as malinvestment in infrastructure extends past simply suburbia to cities and entire regions that should be abandoned. Case in point is Southern California and Arizona and Nevada. This entire region is based on unsustainable water and energy usage and cannot in my opinion simply sustain its current population levels if we moved to true sustainable living.

Indeed the need to shift people to alter the demographics to one more suited to sustainable living extends to countries and the globe.

And last but not least we have no assurance that the current population level itself is viable in a sustainable world.
So even if we did all of this the cold hard truth may be a significant portion of the population simply cannot be sustained in this move to sustainability.

Thus in the end does it really make sense to even try and maximize future wealth ? Realistically the real right answer is to simply let the system fail naturally. This will almost certainly result in much larger population losses over the short term however longer term in a sustainable world its per capita division of yearly energy that determines wealth.

Indeed passive acceptance resulting in a overshoot on the side of population decline almost certainly eventually results in higher aggregate wealth for the survivors. We might lose our knowledge of physics and chemistry and math in the interim but even if we did we won't lose the knowledge of the existence of such knowledge. Thus even in the worst case scenario one can be fairly sure a enlightened age would eventually follow.

So in the end there is in my opinion no real right answer and people basically don't want to change they are happy with the status quo. Why force the issue ? Good chance after all their sacrifices they will end up dying anyway.

Now thats not to say you don't aggressively follow sustainable practices obviously those that manage to develop a sustainable lifestyle will fare much better if they don't get their material goods stolen and even if they do the knowledge is what matters. Stuffing your head with knowledge that can be past down to future generations is sowing the seed for the future. Don't worry about the present just try and live through it. Build your sustainable farm but most importantly live to build another and another if thats what it takes.

Let others create their silver bullet solutions that magically allow BAU realistically it does not matter in the end.
Let others fight in vain to change the status quo who cares it will crumble of its own accord soon enough.

Learn metal working, raising food, civil engineering and don't dismiss that we might well keep our high technology however focus on how it can work in a sustainable world. Technology could well continue and adopt no reason why not its just it will adapt to a world thats returned to living within the carrying capacity of the region not one that can exploit the planet and move goods made with chinese coal in bulk across the globe.

Personally I've been working to move to an interesting new lifestyle where I program computers in the winter and evenings and garden and hopefully one day farm during the summer. High Tech becomes part of the period of time when people created art while waiting for spring. It blends steadily with art and tool making during the long nights of winter. No different from our ancestors of old. Perhaps in the end we lose it I like to think that it will simply become part of a simpler lifestyle where technology is advanced only using the spare wealth we have created from this years crop if you will. We will use it to enrich or lives and I hope also renew our search for knowledge for knowledge's sake but if we do it right then perhaps every spring CERN will shut down its experiments and the scientist go and put in their crops for the next year.

Whats really strange is this is not all that different from some of the crazy things that happened in Communist lands where students with no knowledge of agriculture where forced into the fields. The difference however is I'm proposing we do it because its the way we live not some external force. People don't leave the farm or their small towns simply their professional lives literally become effectively hobbies.

Thus I think and understanding of the implications of EROEI on our current infrastructure investment results in conclusion about what we really should do. And if by chance the majority chooses to live sustainablely well then we choose the best solution. And just perhaps if they do we might just find we can carry our population over and reduce it in dignity but that either happens or it does not its not a "solution".

Once net energy declines for transportation

This premise is incorrect. A Prius runs on 60% less fuel than the average (US) suburban vehicle. A Volt runs on 90% less, and a Leaf runs on 99% less.

Nick it does not matter. Your making the assumption that investment in and electric car is not a malivestment.

Consider this case. I work at home or in walking distance of my job. I don't need to purchase a car period. Thus I don't need the capitol expense. Also lets assume that suburbia retains its value which means that houses remain relatively expensive. Now you apply for my job and my boss tells me that I have a choice take a salary cut or my job is going to Nick.
Well my expenses are lower than Nicks so I take the pay cut and keep my job. Nick who was just laid off does not get my job and is wondering how he is going to make the payments on his Leaf and Suburban house.

Once energy is no longer cheap then investing in a reduced energy lifestyle makes you more competitive than someone who does not. I guess the only way you can win is if the cost of living near work exceeds the cost of living in suburbia with the leaf. But this by definition says that energy cost are not and issue yet the basis of the argument is once they are then investment in low energy infrastructure is more competitive than trying to maintain infrastructure built for cheap energy. This has absolutely nothing to do with the source of energy I could care less if your car is fueled by organic hippy farts. The intrinsic differential between low vs high energy living remains.

And your completely ignoring longer term maintenance costs and these are far from trivial in terms of energy and material.

Once a low energy footprint infrastructure is competitive its competitive its a black and white situation. Your intrinsically fighting a losing battle trying to maintain the value of the infrastructure build around cheap energy.

Once people recognize they come out ahead via adopting lower energy lifestyles well then its over.

Certainly you can devalue the older infrastructure to make it competitive against lower energy lifestyles. Thus for example if you live in suburbia your housing costs are lowered such that your volt or leaf or whatever is effectively free. I.e a suburban home is discounted vs living in a walkable neighborhood to cover all the costs associated with such a lifestyle. But thats exactly my argument it will get discounted and you will suffer real losses both in equity and in maintenance costs rising. You can't win by discounting at best it might slow the rate of loss. However given the outstanding debt loads i.e little of suburbia is actually paid for I argue it can't withstand discounting at all for financial reasons.

Once the cheap energy based infrastructure is no longer competitive against alternative lifestyles the game is up its over. Once you include the debt obligations is probably over in a hurry.

If creation of wealth aka working with a low energy footprint is competitive against a high energy footprint then the lower energy route wins as net wealth creation per joule is higher. Declining EROEI for transportation plays a big role in setting up this scenario however once its clearly in existence then I argue nothing can stop the steady discounting of the incorrect infrastructure vs lifestyle changes and infrastructure changes to compete in a expensive energy world.

And here is where electric cars fail big time. Sure you can generate the electricity to power a electric car but the same electricity can also be used to build windmills or walkable infrastructure or rail etc. All other solutions lead to wealth creation the electric car simply might possible slow the decline in value associated with incorrect infrastructure.

A sink or wealth destructor is simply not competitive against uses that grow wealth. Suburban homes and EV's simply are not competitive against investments in the means of production and reducing energy footprint.

And thats my whole point its fundamentally impossible to save the current infrastructure once energy is and issue even if it just starts with oil energy it does not end there the old infrastructure is fighting a losing battle.

And again just to repeat if it was all paid for for the most part then fine however its not even close its value is based of expectations of future income aka debt and the willingness and ability of people to take on the debt and indeed expand it. Certainly over the short term plenty of people might be willing to assume the debt however if they can't pay they cannot pay. If their lifestyle choice makes them fundamentally less competitive vs others then they will eventually lose.

In the end its no different from the industrial revolution which destroyed countless lifestyles and devalued the existing infrastructure in favor of one better suited for industrialization. Its the same fundamental transition and thus is "incurable" or has no solution. The fact its probably a return to infrastructure similar to what preceded the industrial revolution is simply a result of the fact the problem is the same that wealth creation favors a reduced energy footprint.

Now if perhaps electricity is too cheap to meter and energy is really abundant then to me at least it makes more sense to simply synthesize liquid fuels no reason to really change. Perhaps battery technology improves to be competitive perhaps not it does not matter as synthetic liquid fuels in my opinion offer and intrinsic advantage. If the electricity source is carbon neutral the by definition the fuels would also be so. If electricity is cheap enough then its simply and engineering challenge to create liquid hydrocarbons from air.

On earth this is trivial if you have the energy its the well known Sabatier.

Ammonia is also viable although it has issues and there is CTL, GTL and a thousand variants some using plants ethanol etc.

If we have the energy then its simply a matter of adsorbing the costs of generation of synthetic liquid fuels an no real reason to change anything. If one considers using fuel cells as viable and they can certainly be phased in then electric transport is a questionable solution. The technology challenge can be solved and at least for me if its simply a technical issue and electricity is abundant and cheap I'd bet on synthetic fuels.

If I'm correct and we don't actually have the energy regardless of form then we will be forced to alter or infrastructure and devalue our current investment. To keep our current infrastructure viable and move to some sort of electric based personal transport requires a sort of weird situation where electricity is somehow cheap enough to throw away on transport yet to expensive to power synfuel plants and cheap enough to prevent devaluation of infrastructure via the simply solution of migration to lower footprint lifestyles. I can't see how anyone can plausibly create and air tight scenario which allows all of this to actually happen. I'm not saying it can't happen just its implausible.

What far more plausible is that the promise of the electric car works to keep people investing in the existing infrastructure for a bit longer and most importantly making those mortgage payments. Perhaps if electricity is really cheap then the investment in electric cars is ok not a huge loss and diets us over until synfuels become viable.
Perhaps but I seriously doubt the purveyors of electric cars are that forward thinking. The ability to keep people making the mortgage payment and believing that their is value in our current infrastructure is more than enough to justify the snake oil.

And last but not least assuming that we spent some time developing better nuclear power plants I'm not one bit against developing a cheap electricity based infrastructure that literally leaves everything unchanged yet removes the net C02 pollution. I'd hope we would get more aggressive about fusion as I think fusion is a solvable problem and suffers more from the way fusion research is executed. It needs a bit of support for good old fashioned entrepreneurs.

I'm not anti technology in the least the only reason I don't endorse this route is it does not solve all or other problems namely population growth and other resources esp water that are being depleted. It might kick the can down the road for a while but eventually we still end with way to many people. To put it crudely we are like a prostitute with 15 STD's including AIDS. What finally takes us out and how we go is open to debate however whats not is that we are probably going down fairly soon. The infrastructure problem is just the tip of the iceberg of unsustainable issues that will almost certainly limit us to the only viable solution which is to reduce the population and change lifestyles till we can live sustainable and eventually see average wealth increase again. That could be a long time from as far as I can guess perhaps my great grandchildren if they even happen might have a shot at a better life.

If I'm lucky then perhaps my children and their children can live a happy if somewhat meager life but most importantly teach their own children how to live without raping the planet so we can finally change. And no I'll pass on the EV thank you. Have fun.


One thing at a time.

The key on which we need to get clarity: the fact that HEV/EREV/EV's put a cap on the cost of personal transportation. That means that no matter how costly oil becomes, commuting won't rise significantly in cost.

I couldn't follow all of Memmel's posts entirely because they were full of irrelevant sidetracks which don't add much to his point and had a bunch of econobabble that I'm not quite sure I understand. But he seems to be portraying a doomsday scenario where the economy contracts to the point where an electric car is useless because the electrical infrastructure has gradually collapsed due to lack of maintenance. And even if it hadn't fallen apart, anything beyond food and rent would be a luxury for most people because general living and working conditions have deteriorated to levels not that much better than that of a medieval peasant.

Now I may have misunderstood that, and I don't know if I believe it even if I did get it right, but that's what it sounds like.

That is one set of predictions you hear. It may be possible, but I also think you have to take a stab at there being a future, too. Beyond that, a feature of global economic collapse will be fracturing of regions to some extent, which to my mind means areas will fall or will persevere in different ways. Location, location, location.

One thing EV owners and E-tractor owners have consistently mentioned is HOW LITTLE they've had to do any parts or maintenance on these vehicles. It's a FAR simpler set of moving parts than what we use today.. the internal wear on Electric motors that are not being overworked is extremely minimal, and I've heard quotes of EV motors being rated for a Million Miles of service.

Pick tools that can last..

If only I could get an affordable car body (and all the other bits) that also lasts a million miles before it rusts, cracks, deteriorates, etc. ...

Not if you stay in Illinois it won't .. but there's always corn starch! (I think Ford was building early body panels from Cornstarch polymers) I suggest you try Cuba or Arizona, i apprendez un poquito espanol tambien!

But of course, to get back to the conveniently avoided point, Paul, it would be that even with a ~200k mile ICE engine, it would have had a goodly number of visits to the shop in even that time, a plethora of oil changes, sparks, cables and air filters.


Its the bridges.

Look what people are not considering is the cost of our current infrastructure. I spent a month in India and asked a lot of questions. No way are electric powered vehicles going to work in most of India most of China most of South America.

Because the infrastructure is simply not there. Ours needs to be adapted and maintained. Now the reason its does not exist in these countries is because they simply don't have the money to build it out.

Now back in the US we have much better infrastructure but a good chunk of it is not paid for it was built with bonds that are still outstanding. A move to electric cars large enough to make a big impact on oil consumption would require a significant investment. On top of that current infrastructure values have to at least remain constant if not growing.

If the value of the current infrastructure is falling not increasing then your not going to borrow money against it except at ruinous interest rates. I Greece or Ireland going to get huge loans to put in support for electric cars ?

In many cases the assumption is made that charging stations would be in private parking lots who is going to pay ?

The only use case presented is the suburbanite charging in his private garage. For good reason as its the only one that works.

So in the end how can a solution that works for a single group with assumptions of expansion actually solve the problem.

If you add in the real chance of contraction and loss of value for suburbia then believe it or not the money simply does not exist to support the electrification of suburbia. The suburbanites would have to actually pay for it but this means rising taxes against and asset thats falling in value.

Thats whats impossible to accomplish it cannot be done. Now of course many will argue that the US Government will simply print the money and viola problem solved. However it cannot print past a certain point before interest rates are forced higher. So who is going to buy the suburban houses as interest rates rise at their current values ?

The money is simply not there because in the end the wealth is not there because the EROEI is not there.

There is simply not enough wealth in the world to keep our current infrastructure from being devalued as the price of oil increases. As its devalued all the debt thats been taken out using it as collateral becomes subject to default.
As this debt defaults then you simply cannot take further loans out. I don't care if its private mortgages or public taxes its still extraction of cash based on the collateral value.

And all the other costs for maintenance of the infrastructure remain they don't go away. If the Fed's print it does no good as I said because it sends interest rates up.

In the end just like India can't migrate up to electric cars because they don't have the infrastructure we can't migrate because we basically never paid for what we have today. There simply is not enough time or money to pay it all off and then pay for it to be maintained and upgraded into a post oil world.

In the end its simply not the correct infrastructure and its not worth trying to save it. The value was probably never really there in the first place. Most of the value in our current infrastructure was based on how our banking system works not any intrinsic utility. Cheap energy allowed us to ignore the utility aspect as it simply was not that important. However when it does become important which is when wealth is constrained then the real valuations based on utility become important. When poverty forces people to actually gasp start paying attention to costs of shelter transport etc etc then suddenly the flaws in our current infrastructure loom large.

Show me how Detroit is going to adopt electric cars.

I'm not saying people won't try but in the end we simply cannot afford what we have now thus we can't make the leap to electric transport in any meaningful way. If during the oil age we had actually paid for everything and had the cash on had then we could have leveraged this cash to convert. However we did not thus we can't.

And to be very clear I don't have a problem with electric cars in general I have a problem with them being foisted as some sort of solution to our problems. They simply don't solve our problems and cannot solve our problems.

One day in the future depending on how things go if we manage somehow to get through this and develop a real oil free infrastructure almost certainly centered around electric trains and trolleys and much denser population centers and or villages. Aka walkable living the EV's will make sense for the wealthy that live on the city edges. They are not a solution at all but a toy that allows wealthier people who want to live outside of the city to travel in town.

Now is this enough for suburbia as we know it ? I doubt it. One can look at the demographics of third world cities and in general its slums on the outside with property values rising to the center. It seems to me once the use case is reduced that biofuels probably work just as well or at best some sort of hybrid.

Who knows how things will go I don't but it simply makes no sense to make the claim that EV's are sufficient to ensure that all our current infrastructure can be supported. Throw a couple of batteries in a car and problem solved.

The will allow some people with money who choose to live in suburbia to keep their transport costs in check as oil prices rise. What they don't tell you is how many people will fit this profile. Its a pretty sure bet that its a lower number than today. How is this smaller group of people going to keep the valuation of suburbia up ?

They cannot.

The only reason for electric cars is to try and keep suburbia from falling in value they cannot fulfill this much less any of the other claims people make.

If you add in the real chance of contraction and loss of value for suburbia then believe it or not the money simply does not exist to support the electrification of suburbia. The suburbanites would have to actually pay for it but this means rising taxes against and asset thats falling in value....The money is simply not there because in the end the wealth is not there because the EROEI is not there.

Correct. An example of where we're at already in this process is my own city, Anchorage. Our power plants are almost entirely natural gas-powered, and the Cook Inlet production is currently barely matching demand at times in the winter, to the point that the fertilizer plant across the inlet (which used to sell fertilizer to Japan) has had to shut down. Initial discussions about the potential for brownouts were publicized last winter. There are 270,000 red-blooded Americans in this city, who like to drive big trucks with trailers and motorhead sleds. Public transit is mostly non-existent. We have discussion of new bullet lines from the north slope for natural gas, but there's no hurry because Alaskans have always been rolling in fossil fuels, and the bullet line will only take 10 years to build. Imagine trying to convert any significant portion of the driving population in this one city to EVs, with all the associated infrastructure and pressure on the grid, which is already stressed? Not gonna' happen. The kit for my electric bike cost $1700. It is well worth it to me, and it is a viable alternative to gas-powered cars. EVs are not.

Let's say the inevitable hurricane shuts down GOM production and the LOOP this fall, and makes a mess of a good chunk of the southeast. The USDollar, which has been floating on air relative to the Euro all summer, finally comes crashing down, greatly increasing the price of oil for the US. The US is now bankrupt and immobile. One scenario, and it could happen in a hurry. There is no money (read no available resources) for our massive conversion needs because we have operated off the backs of other countries' economies and resources for the past 30 years through international trade inequities, inflation, and debt leverage. It's too late.

So who is going to buy the suburban houses as interest rates rise at their current values ?
96% of all mortgages in the US are now owned by the US govt. or govt. sponsored entities. I imagine that we are going to find a solution for the unoccupied housing inventory if mass migrations away from the coast become necessary. How convenient!

My guesses for the summer are that FEMA takes over the cleanup on the Gulf coast assisted by the US military, the Navy takes over the spill, BP drills two relief wells, which may or may not be done before the well completely blows out, and mass migrations begin in the fall. And BP will be split-up and nationalized by both the UK and US. Just my WAGs.

Maybe we can use some of the biodegraded oil to help Michigan out with its asphalt problem (they're turning roads back into gravel). And, I already posted this, but it's not completely tongue in cheek, send the bags of oiled up sand to Alberta, with the suggestion to the Canucks that this would be much better net energy than the process they're using now?

Your comment suggests to me far more worries for Cities like Anchorage, than for technologies like EVs.

As I said above, redundant to the COUNTLESS times I've said it before (while I don't know how long you've been listening..), I see them as useful for MANY people, but that doesn't mean it's for everyone or everywhere, and I don't feel the need to defend a universal interpretation of calling them good vehicles.

As far as economics are concerned, the Leaf just presold the whole run for 2011, didn't it? ( There it is.. ) There are people and businesses who see a need there.. I don't extend that into a prediction for the centuries to come, but the simplicity and reliability of this combination will be a very useful assistant to have along for the ride.. and it will be quite a ride, I'm sure.

"Who knows how things will go I don't but it simply makes no sense to make the claim that EV's are sufficient to ensure that all our current infrastructure can be supported. Throw a couple of batteries in a car and problem solved."

How long have you been part of this conversation, Mike? Do I need to put the stupid "It's the BB's.." disclaimer on everything written? No, I don't. Done it more than enough for you to have seen that I'm not proposing a Ubiquitous Solution to any of this, or desperately hoping to maintain suburbia. Please don't extrapolate these hyperbolic conclusions into the mention of a useful application.

Yes, we have countless absolutely massive infrastructure problems to take on.. but as I have said again and again.. the Horseless Carriage is still going to be used here, there and anywhere we can. We will have some smoothed over paths where wheels will roll and carry our occasional milkjug deliveries or furniture repositioning, and it's more than clearly shown that pushing these wheels with an electric motor is a highly useful and durable way to do so. Any presumptions of 'happy motoring' in that are your own contributions to this topic.

Yes, Memmel is highly pessimistic. I think he's being highly unrealistic.

One thing at a time

Nick, however you have to combine all the pieces in the outlook. Just like in a game of chess. If you start an attack on one side of the board, you have to take into account what happens on the other side of the board and in the centre.
Replacing ICE machines with electric cars/trucks/trains,etc is looking at one part of the big picture. Financial constraints come into play, as is declining EROEI of oil, and probably rising unemployment. Last but not least: the biggest threat (in chess: dangerous attack on the king) is not recognised or underestimated by most governments (blindness, delusion, stupidity). This is the threat of not far away declining oilproduction in contrast with the on BAU scenario inspired graph from EIA.
Memmels comments seem among other issues to remind of two things. That is 'receding horizons' and 'the paradox of production'. If an 'ever lasting' economic recession follows, the availability of wind/solar energy and EV's will not change a lot. I remind on the fact that BAU is based on dissipation. It's the wasting that keeps billions of people employed and keeps money circulating.
Another threat: if the middle class is disappearing, people will start to listen to idiots like Hitler. The situation is not hopeless, but I am not too optimistic.

IMO, a common fatal fallacy in the many "terminal destruction of civilization" arguments, is the illogic of: 1) BAU causes doom. 2) Adaptation will occur through a BAU process and therefore must fail. 3) The measure of a successful adaptation strategy is met, only if, a BAU standard of living and economic heirarchy is preserved in every detail, which it can't be, and therefore all is lost. 4) GOTO 1), and reach futile conclusion again.

Why do so many have the imagination to grasp the concept of "fundamental systemic change" caused by, big abstract and fuzzy ideas like AGW and resource depletion, yet rigidly are unable to imagine adaptation strategies that have any substance beyond the BAU status quo?

A hypothetical adaption reality: Humanity hits wall. Attrition, (euphemistically stated) reduces the population from 6.5B to 3.4B in two generations. Big step toward equilibrium. This is crux of the problem, as everyone knows. Of course this hypothetical prospect, in its detail , is no less gloomy a prospect than the many strawmans of doom, but it is not ahistorical, and does not portend extinction.

Rhetorically, why is my energy rich materialism worth more than one who subsists? My own answer, it isn't.

Isaac Newton did his best work by candlelight, and look at the eMergy he embodied. Preserving it is likely under any, however tortured, path to sustainability.

The point is that if people believe, a resource depletion theory is only a nemonic to predict doom, has no potential to usefully aid in the classification of the relative merits of adaptation choices, and really more fundamentally, that no adaptation choice exist that dampen the path to sustainability, why waste any effort? For you, the grand question has already been answered.

Under this flawed logic, my example adaptation response is as good as any other, and avoids the pretend complexity of a mumbo jumbo thought experiment, however unimpressive, needed to reach a predestined doom-laden state.

IMO, a common fatal fallacy in the many "terminal destruction of civilization" arguments, is the illogic of: 1) BAU causes doom. 2) Adaptation will occur through a BAU process and therefore must fail. 3) The measure of a successful adaptation strategy is met, only if, a BAU standard of living and economic heirarchy is preserved in every detail, which it can't be, and therefore all is lost. 4) GOTO 1), and reach futile conclusion again.

Nicely put. :-)

Look our financial system is built on BAU. The value of our money is itself based on the value of the infrastructure that is collateral for the money.

Your absolutely right there is a crazy loop but the problem is thats the way things work. Break he loop and it collapses.
If you can't keep the value up to match the outstanding debt the system collapses. If you can't produce enough excess wealth to pay the debt the system collapses. As far as calling me crazy well look what happened between 1920 and 1950.
Thats crazy.

Despite your remarks on another thread, we can always repudiate past debts by unexpectedly increasing the rate of inflation. Even a 10% rate of inflation will cut the debt burden in half in just seven years and a few months.

I do expect increasing rates of inflation to combat existing deflationary pressures. Whether or not this ends in a true hyperinflation depends on unpredictable political factors. Inflation is as much political as it is economic.

Well lets save this for another day you just got back :)

Some time in the near future oil price should eventually rise to the point they are again considered and issue.
Lets see what happens with interest rates and the dollar and oil and of course the good olde stock market.

And if we get some obvious attempts at monetary inflation we will have to deal with it.

We have time to watch this unfold the economy is not going anywhere :)

Here is my bet:

1.) oil up
2.) interest rates up ( out of fear for default)
3.) stock down ( fear of future viability and ability to pay debt)
4.) dollar weakening agianst fiat all fiat weakening against gold and oil
5.) Housing CR and other assets that require debt or or depending on growth down.

Now you have two cases monetary inflation attempts and monetary deflation.

I'm saying that regardless of how you change the money supply you won't change this situation.

Now I do have a inflation number that I think can change things. Its 10 trillion dollar or the US would have to basically double its debt load. That would I think you agree shake things up a tad.

However I don't think we can go there and anything less say a few trillion won't change things.

I'll try and dig around a bit and pull together some support for my 10 trillion dollar straw man :)
Japan obviously bloated the hell out of their government budget and did not achieve inflation.
That serves as a useful baseline of what does not work. I'm pretty sure that translates into about 10 trillion
of additional debt for the US gov just to fail as Japan has. And thats not in and expensive oil regime.
Also the position of the dollar as a reserve currency makes life interesting.

In any case the thought experiment is what if the US seriously wants to inflate how much would they have to print ?
1 trillion is pretty much a min but then what 2 5 10 20 trillion ?

Its important to consider what this number should be. I think we can put some reasonably sound numbers together fairly easily. Its hard to figure out what we spent so far as the numbers our muddy but its got too be 2-3 trillion and it looks like we have already slid back into a recession.

Not that I think we can turn Japanese but my point is they never pulled it off.

If you actually have some numbers that you think the US would need to hit to induce inflation I'd like to
know what they are.

Deflation obviously won't be helped so it will move at whatever natural pace it wants to move at.
I'm not aware of any modern economy actually deflating on purpose if you know of one that would be cool.
Technically the Euro deflated but more correctly inflated less than the dollar.

No, the Euro inflated more than the dollar.

I agree to your ten billion dollar bench mark. I do think we need to run deficits to equal $10 billion over the next few years to achieve that level. As 2012 approches there will be overwhelming political pressure to "get the economy moving again." That means tax cuts and huge increases in government spending.

Even president-elect Sarah Palin will go along with increasing the deficit in 2012.

Despite your remarks on another thread, we can always repudiate past debts by unexpectedly increasing the rate of inflation.

True enough, there are a bazillion precedents. However, this very tactic taught baby boomers not to save or invest, a lesson which was learned thoroughly and will manifest itself shortly in serious and growing social problems with sustaining retirees. In other words it leads to new debts being tough to incur since most potential creditors can simply consume their income, as did so many baby boomers, instead of investing it in said debts. (In yet other words, it makes what might have been investment into a form of charity.)

That situation doesn't look very pretty with an enormous population relying on infrastructure with a front-loaded cost structure - and intending to rely on even more infrastructure that's even more front-loaded (e.g. wind turbines) in the near future. Doesn't look to me like either route - repudiation or non-repudiation - will exactly be the easy answer sleazy politicians will seek on behalf of entitlement-minded constituents...

BAU also include change, businesses have grown and died within BAU as long as we have had capitalism and this also changes what BAU is. Different countries and regions have been more or less agile in handling this.

Some regions will handle the post peak oil era well and others wont, it will roughly be a difference between creative destruction where something new grows out of the old and demand destruction that becomes more or less tragic when it ends in failure.

Financial constraints come into play

This is the circular argument problem: it's assumed that oil will cause physical problems that will cause financial constraints...but what if PO doesn't cause physical problems? Then we don't get financial constraints.

'receding horizons'

This doesn't apply to wind power, which has very high E-ROI.

if the middle class is disappearing

Again, what if PO doesn't make the middle class disappear?

This is the circular argument problem: it's assumed that oil will cause physical problems that will cause financial constraints.

Agree. However I think that oil decline will cause big problems, especially if the decline is 2-3% or more yearly. I'm starting to think that carpooling, etc won't be necessary. When oilproduction starts to decline there will follow a few more price spikes followed by stepdowns along the staircase. If oilprices permanently drop below 40-50$, then it's the end for deep offshore oil which causes a more rapid oildecline. Aleklett's prediction for 2030 holds only if all the oil- and gasreserves will be produced.

'receding horizons'

This doesn't apply to wind power, which has very high E-ROI.

Apart from the different opinions on this, windpower changes almost nothing regarding PO.

Again, what if PO doesn't make the middle class disappear?

Possible, but unemployment around 20% could also work out badly.

I think that oil decline will cause big problems, especially if the decline is 2-3% or more yearly...but unemployment around 20% could also work out badly.

Well, why is that, if there are no situations where there are important physical shortages of energy? What would be the specific feedbacks that would hurt the economy?

windpower changes almost nothing regarding PO.

True. Are we agreed that PO does not mean peak energy, given the large amounts of coal, natural gas, wind, solar, etc?

What would be the specific feedbacks that would hurt the economy?

Nick, we dicussed this before. Oil price spikes will hurt the economy. One can argue if more price spikes will follow, but I'm sure this will happen when/if the economy recovers.

Are we agreed that PO does not mean peak energy, given the large amounts of coal, natural gas, wind, solar, etc?

Yes, but the big question is: will a lot of that potential energy come on line (in time) ?

Oil price spikes will hurt the economy.

But how specifically? Because of volatility, that makes people defer car purchase? This is temporary - eventually people will decide one way or the other.

Because of transfers of income to oil exporters? That's significant, but not enormous - an additional $80 per bbl means about $320B per year in additional sovereign borrowing from the US, or a reduction in GDP of about 2.5%, or some combination of the two.

What else?

the big question is: will a lot of that potential energy come on line (in time) ?

It's here now. We have plenty of electricity, and there's not realistic prospect that we won't, unless, like the UK, we completely screw up our planning and become excessively dependent on a single source of dubious reliability (imported NG), and then there may be some forced conservation (some shivering in the cfl-lighted low-level light....).

But how specifically?

Oil price spikes will hurt the economy in a way that unemployment rises IMO.
Regarding EV's, etc and infrastructure there is an interesting debate on Drumbeat from yesterday, june 14.

become excessively dependent on a single source

Dependence on coal is too big and increasing worldwide.

Oil price spikes will hurt the economy in a way that unemployment rises IMO.

But why would oil price spikes raise unemployment, besides the two feedbacks that I mentioned above?

Dependence on coal is too big and increasing worldwide.

I agree, but possible for different reasons. There is an enormous amount of coal in the ground - running out any time in the next 50 years doesn't appear to be a realistic prospect. The problem is CO2 emissions - that's a real and very big problem, but it's different from what we're talking about here: it doesn't raise the prospect of "running out" of electricity.

But why would oil price spikes raise unemployment

People (have to) spend more money on energy/food, remains (much) less to spend on other things. Because of this: companies going bankrupt. More and more this type of scenario's can be read on Drumbeat. Today also, interesting comments from Gail and economists like Don. Maybe you could join in the debate, that would be interesting. My understanding of money related things is poor, but I can imagine some bad things can happen.

it doesn't raise the prospect of "running out" of electricity.

Agree, but like wind does coal little to mitigate the PO problem.

People (have to) spend more money on energy/food, remains (much) less to spend on other things.

This means that people's money is flowing overseas, to oil exporters. As I noted above, this has a significant effect, but not overwhelming. The obvious solution, which we are now employing, is to borrow the money back from the oil exporters through sovereign borrowing. Government then uses the borowing to reduce taxes, and offset increased consumer spending on oil-related items.

If exporters are smart they'll anticipate their loss of export income from the ELM effect, and save up their t-bills. If they aren't that smart, they may spend their money elsewhere. That is likely to support other economies and depress the US, not affect the world overall. Lately, of course, the US looks pretty safe. If they're really dumb, they'll put their money in a mattress, and the world economy will stagnate or decline. That's not too likely, though.

This means that people's money is flowing overseas, to oil exporters.

This is looking at the money spend for energy. You also have to look at the money that remains for the people, which is less when energy and food is expensive.

That's what I'm talking about.

Yes, there are some additional expenditures that stay in the country, but they're small, and they go to other people in the same country.

Certainly higher energy prices aggravate the situation but as long as the net declines wealth creation still declines. The reason this is import is if its correct then the biggest impact of falling net energy will not be in energy prices but in failing infrastructure investments. Bingo. Maintaining the current structures consumes a greater and greater percentage of the overall available resources.

The problem is that most of the infrastructure developed for a cheap energy world is a total loss in one thats energy constrained. Inability to maintain it alone ensures that in time regardless of what you do the value will go to zero.A lot of it will be repurposed, downsized, remodeled, etc.

By this I mean the following example holds someone pays 500k for a house and then defaults then someone pays 250k then defaults thens say 100k cash then sells later for 50k cash. All along the way wealth is simply being destroyed. The top four layers of the paper economy pyramid below have got to contract/disappear as the economy contracts. We've still got a lot of joy in front of us.

At the same time, a lot of the top layers in the pyramid below from Kurt Cobb will be wrung out of the real underlying production & consumption economy. In the process, people will also be wrung out of the system, somehow, as you say, Memmel. Your vision of eco-techno-topia is hopeful. We just need to turn the Titanic in time.

We just need to turn the Titanic in time.

It cannot be turned if I'm right its going down. What you can do is decide on your lifeboat and hope for the best.
If you can develop and enjoyable sustainable life and keep your head about you if strife erupts and finally just get plain lucky then you will do well. If you do well others will follow your lead. Eventually its the only game in town all other solutions crumble or sink. Maybe fast maybe slow but sink they will.

Forget about the Titantic get in your boat and sail away soon you will lose the sinking ship over the horizon and can focus on the stars and the wind and charting your own course hopefully with more and more people joining you but alone is fine.

There is no need for collective action each individual needs to make their own choices if enough do then the collective forms naturally if they don't well then so what. Make your own go at a sustainable life and if your happy your happy and it does not hurt. Those that reject the sustainable approach get more for a little bit longer well fine for them let them enjoy it while it lasts. You will end up like me flipping past lake front houses, beach houses, suburban monsters looking at how much land how good is the soil how many trees etc. Right now land is still expensive enough that good sustainable properties are mixed in with the excess trophy properties but I realized the other day the my values had fundamentally changed as I did not even care about these monstrosities. Outside of course of the friggin "Horsie" mini farms often set on top of decent spots grrr. I cannot wait until these people can no longer maintain their lifestyle.
They throw the biggest money wrench in the works from what I can tell. Once people can no longer purchase "horsie" farms then I can finally score some decent land. Everything I read seems to indicate that this lifestyle is crashing fast so I'm hopeful. I don't have anything against horses or people that enjoy riding them just most only ride on occasion despite the expense and their lifestyle choice really screws property values. I'll probably get flamed for that one but it pisses me off that one of the lifestyles most wasteful of useful land is the one that makes it difficult to make a go at sustainable living. That and of course the speculators waiting for a subdivision but they will go down naturally.

I'm finally starting to see land prices falling slowly back to reasonable values.

Assuming you need five acres of mixed use land per person for a four person family you need 20 acres. If you assume that your food/energy consumable costs are about 20k a year and on top of that you need to invest 50k overtime to actually get your land productive say over five years so 10k a year. Over five years its 150k. So to break even within five years you would want to pay at most 7500 and acre. And more like half that or about 4k and acre. Prices in that range actually make it cost effective to live a sustainable life. If you have a lot of money this is not and issue but the basic calculation stands on its own merits. As numbers like this make it viable to reduce your income if needed and you can keep a reasonable renewable lifestyle going self sufficient on a farm.

The other is of course simply going to a walkable lifestyle but I've already taken the approach of working at home come hell or high water so thats not and issue. If I can't make it that way then I bug out back to Arkansas where I can get land at those numbers or my parents farm if I have too. In the interm I'm polishing up my gardening skills and I can tell you right now anyone that thinks our suburban yards can be turned into gardens is a fool. The land is shit for the most part. I can haul in topsoil so I can work on my skills but gardening in suburbia is a joke its a thin layer of topsoil that needs fertilizer and extensive watering to even grow grass. Thats not to say people can't create suburban gardens but crap land is crap land you can't change that overnight.

I think you would like the book by Kains, 5 ACRES AND INDEPENDENCE. It's an old book, but an excellent one.

Book marked.

I like books like this actually they are a lot of fun. I grew up in the country in Arkansas and worked for many years for the Agriculture dept at UofA as a chemist so I got a lot of different experiences. If you need to know how to sex a june bug or artificially inseminate a chicken drop me a email. I'm smart enough to not do turkeys and larger critters thank you.

However since your back one of my main goals in life is to see if I can beat you in and economics argument :)
I don't think a can yet ... :)

Seriously though economics at transition points is absolutely fascinating I don't think the gamut of economic changes that happened during the industrial revolution has been fully explored. Mass production lead to the loss of livelihoods for many forcing them to work in the factories leading to even more trades getting wiped out etc. Economies of scale ruled.

The preceding era of colonialism which opened up markets and set up a cheap influx of raw materials set the stage for the follow on industrial revolution. In the end a number of things over a period of centuries worked to ensure the critical mass was achieved to cause the industrial revolution. If any of these did not happen its not clear at all that we would have taken the road we did.

Economics as we know it seems to be very much a sort of alternative history type situation. You can easily set up and alternative chain of events that would have readily resulted in very different economic situations.

To some extent you had this with Communism but it was intrinsically tainted by being based on economies of scale.

So I see no justification for our current economy in the sense that its somehow fundamental plenty of other outcome are possible most seem to be based on cottage industries of one sort or another. Technically less efficient at first glance but perhaps not. Especially if one considers the role robotics could play in automating flexible cottage industries.
Computers with plenty of sensors couple to cottage industries makes for all kinds of interesting scenarios.

CNC machining alone opens up many possibilities that did not exist when the industrial revolution started.
For agriculture obviously our understanding has advanced dramatically.

Regardless just like at the beginning of the industrial revolution a number of factors that can be deduced after the fact eventually made our current economic system a foregone conclusion but at many points it simply was not a sure bet.

If I'm right how things evolve over the next several years is also a period where in a sense all bets are off. Nothing thats happened up till now provides any assurance on the path that future events will take.

What matters is what ultimately turns out to be the fundamental underlying driving force I think EROEI is it indeed it even more basic than that its oil and only oil and in particular cheap oil aka EROEI that matters all else is irrelevant.

If you dig deep enough I think you will come to the conclusion that after all factors had been accounted for that cheap energy was the critical driver for the industrial revolution it seems very sensible to consider carefully that it will be the undoing of the system. If it is the lynch pin then the system will fail and fail rapidly once its pulled out nothing can stop it.

For now perhaps this is simply a belief because its going to be one of those things who's truth is only known after the fact just as the certainty of the industrial revolution can only be taught after everything obviously and naturally fell into place to support it, even though thats completely false any number of alternatives would have scuttled it.

What does stand out is once cheap abundant energy was available the industrial revolution was a foregone conclusion.
Thus I'd argue there is strong support for its demise being the certain cause of death for it.

So even though perhaps for now it can only be considered a belief not provable symmetry arguments alone make it dang compelling. Indeed the concept of symmetry which is rampant in mathematics and physics and life in general is actually noticeably absent from economics. Its the one field that seems to be highly asymmetric even though basically everything else in the known universe has symmetry at its core. EROEI is a beautifully symmetric theory esp in its expanded form.
Sort of a from dust to dust theory. It in my opinion is the "missing" symmetric economic theory.

Assuming we are at a turning point this practically requires that all current economic models and assumption will get turned on their heads and demolished. Inflation, deflation etc etc all will fail indeed the economic system itself will fail. Its symmetric solution is trivial as it will be similar to what happened before the industrial revolution.
Probably different because of knowledge which has grown but not fundamentally different and back at the same energy and population level.

In between no and then the fun part is figuring out how its going to fail how are the very concepts of inflation and deflation going to be rendered meaningless and indeed our very concept of money in the end ?

What replaces them again seems clear its sort of a endless cycle of living ever better but below a certain finite energy threshold at least on the Earth that ensure the ecosystem remains robust. How on earth does this tree hugging hippy flower child economy utterly destroy our current cold bastard ruthless polluting system ?

If I'm right it must and as far as I can tell our current system has to evolve until it has no choice but to fail it has to corner itself with no way out. This self cornering which is effectively moral hazard on steroids seems to be what I think forces economics into a symmetric model when it steps beyond the sustainable cycle model.

This means of course that our monetary system itself must fundamentally collapse pretty much completely not inflate nor deflate but simply fail. I see EROEI as the way the rug is pulled out no matter what we do.

"...after all factors had been accounted for that cheap energy was the critical driver for the industrial revolution it seems very sensible to consider carefully that it will be the undoing of the system.."

I've been toying with this while I read the rest of your post... (Closest thing I get to watching a movie tonight)

I remember seeing Asimov speak in 1992 about '1492', and his suggestion that the discovery of the Americas was a principal driver in the age of reason, as it allowed Europeans to see that the classic knowledge of Rome and Greece did not, in fact have the whole world wrapped up in it's brilliant grasp, and that further exploration was possible and necessary. Authority could be questioned, and it was.

The industrial revolution seems to me to have been a result of the ensuing inquiry, with the raw exploration of the Materials Sciences, and the Secular pursuit of Power (Joules AND Rules) for Business and National Conquests. It was our refutation of Nature, as we opted to extract Nature's elements distinctly and defy Her power over us.. a secular act that followed several Doctrine-derived attitudes despising Wildness, Lust and Disease from the Holy Roman Empire through to Calvin.

So I do think what you noted correlates the power we wielded, but I think that was only inevitable because we were well on our way to seeking it some centuries beforehand. I think there was already an idea on the march about how we noticed we could use machinery to wrangle and tame power, and that fed into taming wind, water, whaleoil, coalfire, Petroleum, Uranium, Sunlight etc to be quickly reapplied to doing our tasks for us. (Tom Sawyer is coming to mind now.)

It's sort of Chicken and Egg, I suppose, and yet, we do have these other sources still around us, and can look at them through a lens that Oil helped to forge. It seems that the question is, do we have any other option but to keep looking through that when we have to find the next ways to feed the kids? (and I ask that rhetorically.. it CAN be answered Moralistically, but I'm thinking of it more as one of the remaining routes in the maze that we will have available to take, as the other dead ends start getting written off.)

Are you familiar with the concept of social traps? I think BAU is one big set of social traps, especially the distance that most people live from their jobs.

Before you try to beat me in an economic argument, remember that for seven years I took a full load of graduate economics and business administration classes.(During the same period I took Intermediate Tennis about fifteen times and got to be a pretty good amateur player. For some reason, tennis is the sport favored by many economists, including Paul Samuelson, Milton Friedman, George Stigler, Alan Greenspan, and William McChesney Martin, a former Fed chairman.) So if you take time out for a prolonged career in a good university's graduate economics program, then we'll be even. Maybe you could beat me at tennis, now that I'm seventy years old--but don't bet too much on that.

Final question: Have you read THE LONG DESCENT by John Michael Greer? If not, please do so; I'd be interested to see your remarks on the book.

No I need to read it.

However for me at least the intrinsic problem with economics is that humans have a huge gulf between our needs and our wants. We need food/clothing/shelter. These needs are fairly easy to meet even with very primitive technology.
Beyond that its all wants not needs. This gulf is so large that economics itself is generally based on the satisfaction of wants. Needs are almost always so low that its impossible to understand the economics of need not want.

Peak oil reintroduces needs into the economic picture. Suddenly and economic system based on wants is confronted with a problem of meeting its needs. This is highly disruptive and in my opinion simply not modeled by traditional economics.

Indeed in the end it simply does not handle this reversion of humanity back to considering its needs before its wants.
This conversion throws a massive monkey wrench into the value proposition for literally everything. Almost all the stuff that we make and do is geared towards fulling wants not needs. The fundamental value thus is based on expectation of demand based on wants. If the desire for theses goods and services fall because humans become more focused on their needs then the whole system comes crashing down.

Once wealth creation fails to satisfy need and thats what happens when EROEI declines and absolute production levels decline then need becomes a ever larger factor in the economy.

I know my own valuations have altered dramatically over the last few years. Perhaps I'm ahead of the crowd but so what a good portion of the crowd will follow probably enough to force the rest to follow.

This means the demand side of the equation based on wants becomes highly volatile its not a smooth curve. Economics in my opinion does not address this variable demand caused by a reversion to consideration of need not want.

And the economy required to actually meet basic needs is far removed from anything we have today.

So first and foremost I question any assumptions that don't capture needs vs wants and the impact of how these change.
As far as I can tell at least on the surface this is a problem not dealt with in mainstream economics.

I'll read the long decent and get back to you. I've not read it because I don't see the "long" part happening :)
What I see is a sharp transition as the requirement to consider needs over wants simply grows enough to not be marginal.

You are correct that the economic literature has little or nothing of articles on making a transition away from fossil fuels and how we might manage economic decline. Such papers in mainstream academic journals can never be published because they would never get past the referee committee.

John Michael Greer might be wrong about energy and economic decline being gradual over the next twenty years. Nevertheless, he has done his homework.

@Memmel: one of the best posts I've read in a lonog time. I'll read your other comments while you're reading the Long Descent.

I've changed/cancelled my wants so much that what looked like a painful retirement has become a life of fulfilled needs, and the husks of wants scattered all about.

It's not necessary to take vacations if you just cultivate your neighbors and phone your family.

It's not necessary to buy new clothes, shoes, cars, toys. My neighbor next door and I are competing to make prettier views for each other.

The internet seems to be making "entertainment" seem less and less interesting, as high quality sites are burgeoning.

If they don't make SUV's, bombs and stadiums any more, I won't mind. The insurance people can work in hospital administration, the SUV plants can make solar-powered tractors, the defense contractors can shift to windmills and TGV's.

If you need to get around, try taxibus.

I look forward to the golf-carting of the freeways.

We just need to turn the Titanic in time.

Anyone one paying attention has abandoned ship.

Thanks for an interesting perspective, I find myself in complete agreement.

What underlies all of this, of course, is the relentless decline in oil production which must happen. This bears repeating because no matter how long the current plateau lasts, it is guaranteed that every subsequent plateau (if indeed it is a staircase model) will not hold. This isn't news of course, everybody here knows this, but the implications are staggering to say the least.

As you correctly point out, no amount of technology can solve what is essentially a question of malinvestment. Electric cars or not, present infrastructure cannot be maintained.

Depressing thoughts, but necessary.

The simple example is suburbia. Once net energy declines for transportation the value of the infrastructure investment in both monetary and energy terms declines. Also maintenance costs rise. The embedded energy thats lost in this situation is huge and dwarfs the actual decline. Not only are you dealing with net energy issue your dealing with a tremendous loss in embedded energy. Even if energy is cheap the net is still lower and wealth creation is lower and the society cannot create as much wealth as it once did therefore the wealth needed to support infrastructure debt falls.

Certainly higher energy prices aggravate the situation but as long as the net declines wealth creation still declines.

So if this thesis is correct then the signature that we have fallen off the EROEI cliff is a collapsing banking system and falling asset prices. Losses here literally dwarf energy costs by probably and order of magnitude of not more.

Globally your probably talking about 100 trillion dollars or more in losses over the next few years.

I am in agreement with you until your very last conclusion, as you imply that financial assets will be basically lose most of their value rather quickly.

2005-2010 has been a oil output plateau, and just to maintain that plateau, we have already started to agressively use marginal sources of oil, like tar sand and deep water. So I have no dispute that we already started down the EROEI cliff, otherwise known here as the 'shark fin'. In fact, I frequently question why the price of oil is not higher, for example, why isn't oil at $100 more or less already. The answer appears to be the disruptions to the financial system have caused wild and widespread systemic shocks as we start down the shark fin.

The question I have is that at what point do financial losses keep extending to where essentially there is no turning back, and perhaps more importantly is there a specific point where the current financial system will seize to function.

Due to the massive amount of debt in the financial system, I don't think it will take a huge loss in values of existing investment to cause a breakdown of some sort. However at present, where oil output has made a minor rebound off its recent downtrend, that may not happen right away. After that there will be another wrenching adjustment phase.

If supplies are not subject to some kind of shock, I believe the financial system could more or less hold up another few years. But it appears that you are saying the days of the financial system as we know it are nearly finished. Would you explain that further?

This will be politically sensitive, but: much of our oil/energy problem comes from so many adults working, and most of them driving (in some way) to work. Women have as much right as men to do a give job, but note that adding so many to the workforce didn't really add the proportionate net return value on the effort. It added labor supply which held wages down, it padded the economy with more and more people struggling to produce and employers found things for them to do: mostly in competitive struggling against other companies which creates no net utility, etc.

But the worst thing was the extra demand on gasoline, the extra congestion which made driving less efficient per mile, and so on. We need to work on this: reduce total hours worked per adult and make them more compact. It could be increase PT jobs and have lots of people working four days per week, and so on. But the model of most adults driving off to work five days a week, caught in bad traffic and using - what, 50% more gas than if they could cruise efficiently to the job location? - just has to stop, however it is hashed out.

If you really want to be politically incorrect reference that episode on Star Trek TNG where people over 65 (or something like that) had a big party and then “departed” to make space / free up resources for the young
Aging populations are effectively a resource sink so the logical thing to do is a) make euthanasia legal (a USA centric comment) b) make it explicit that health insurance doesn’t really exist, that really it is health care rationing.
(quickly putting on my flamesuit).....


Well, the issue of how many people and/or who is productive is totally different from the question, isn't it silly for most adults to drive to work and use all that gas if we could divide up work differently.

lots of old folks play here. Finally got my children's attention. Please give me another season to teach them some things that might get them trough. But then, what i know may not serve them well, because at my age i am not a very good warrior, which might be required in the "mad max" future i fear. Me, I just know how to get by on very little, which i produce myself if left alone. What is the old saying, "When an old man dies a library burns down."

John Michael Greer, over at the Archdruid Report, has been extolling the virtues of the household economy for some time, and urging families to have only one person with a "job", while their partner does useful work at home. Of course, we don't have to go back to old cultural patterns where it must be the male of the family who has the job.

Finally a thread which is back at the level where pretty much all TOD posts used to be. Relevant to energy, well argued, polite, posters offer evidence and logic to support viewpoint....Awesome!!!
I'll start posting some more!


This kind of topic is why I started reading 2 years ago.I am acutely aware that my existence since I was born in 61 has been a privileged one.I have lived in an era of super inexpensive energy, and benefited from it tremendously.I enjoyed cars that had over 370HP and got 8MPG.Great fun, and while doing so, I knew it couldn't last.
My modified 1995 honda civic gets 53 MPG highway, 43 city.And I have had it 4 years now.Before I bought it, I took my son to a large mall parking lot.It had few cars in it.It was mostly sport utilities and vans.I told him "take a good look.When you are my age, it will not look like this.In fact, in 5 years it will be very different...because fuel will be very expensive.I am sorry you won't experience what I did growing up, but those days are over." He has a 1995 honda civic too.
A paradigm shift is happening.If we are wise, we will get ahead of it and make investments in the future while energy is still not that high.If we wait till depletion is rampant, it will not be nearly as easy.
A culture and society as dependent as ours is on cheap energy is very vulnerable.And the lack of leadership to take us safely into the future is horrifying.The people take so much for granted, and when it stops, it will be bad.Everything within reach of me right now is made from oil(save the old wooden table the computer is on).Plastics, medicines, fertilizer, food...all oil products.The shock is coming.Will our current infrastructure make sense in 25 years?I very seriously doubt it.
So a thank you to TOD.Keep up the good work.Hopefully those interested because of the Epic gulf fail will read the rest of the site.Thanks again!

Having read close to 150 comments and appalled at the lack of attention paid to AGW and pollution and illegalresource extraction, ALL as externalities not accounted for.

A blindness continues. There's never been a shortage of academics who know nothing of the desolate wasteland in Nigeria, the copper miners, etc.

When I see pictures of Louisiana, I can only see decades of Nigerian destruction, Lake Baikal. But of course they're not us, so they get crossed out of the equations, for simplicity, they say.

I tire of these endless ivory tower calculations that ignore the climate, the pollution and the people of the world.

Those concerns are fine to notice, ormondotvos, but I don't think this crowd is unaware of those things at all. Some individuals, perhaps, but I think the accusation is misplaced.

Please understand that this discussion is focusing on a single type of metric for energy systems, and does not pretend to cover a source's overall 'fitness', including its environmental impact or implications.. it is a very specific evaluation to see if and how much energy a given source can return above and beyond the energy required to make and run it. That's it.

Personally, I think EROEI is a completely critical factor to understand when looking at a power source, but it does not in any way excuse us from also realizing the environmental effects of a technology at all.

In this conversation, it does require some trust that people here are aware of that.

And Still, I appreciate your bringing it up. It does get forgotten and lost, again and again. Thanks.

Thanks for the response. I intend offense to no one in particular, but when I hear about the EROEI of coal without mention of pollution and AGW, I hear theology, not human economics.

I think I understand EROEI, but discussing it without AGW, pollution and human misery for 150 posts makes me hear angels dancing.

If the human aspects aren't front and center, what's the point? Might as well be talking about compression ratios of drag racers.

Well these issues are discussed extensively and often on a number of threads. AGW will almost certainly play a role in making it difficult to live sustainably at our current population level as the EROEI for oil dwindles. Same for pollution.

Aggressive extraction of marginal resources such as deep water oil for a fairly marginal profit will ensure that later when the oil would be really useful to help us migrate of oil it won't be there. Indeed all of these issues will eventually come back to haunt us in spades when we finally get around to trying to change.

The full impact of the damage we have done including senseless early extraction of difficult to extract resources the moment they show a short term profit will hit hard a bit later down the EROEI cliff.

I have a whole slew of what I call checkmate events which will serve to eventually ensure that the longer we wait to change the lower and lower probability of a successful transition without systematic collapse.

Over the very short term however the actual impact on short term profits is practically zero. For example the GOM spill and resulting slow down in drilling is almost certainly sufficient to drive of oil prices until profit levels are restored. BP will almost certainly fight for a long time over its responsibilities. During the long fight we can assume that rising oil prices will make any final payout far lower than if it had been paid out now.

Assuming if you will that somehow we manage to struggle along for say 10-15 years which is what I think it would take before BP makes any significant payments well its not unreasonable to expect oil prices would be well north of 300 a barrel at that point. The costs of the spill for BP esp assuming they pay just a fraction of whats sought will be fairly small. This includes all the issues you mention as long as BAU persists all of these issues can be succesfully extended until the costs are not only bearable but simply not a huge issue.

Thats why in the end nothing ever really changes as corporations are effectively immune. How long did it take for our corporation to make a mockery of being "green". Its a joke. Or organic farming for that matte Whole foods ?
We can efficiently corrupt any ideal and turn it into profit with the costs shoved out into the future.

But the main point is these are problems which come back to haunt us in the future not right now. Not all that far out but far enough that over the short term the failing financial system because of net wealth creation issues is larger.

Overtime however the fact we have really messed up will loom increasingly large and in the end these issue are probably going to I think play a large role in making further decent down the EROEI curve extremely painful.

So no one is really ignoring them but for me at least for now I see their roles becoming and issue just a bit later.

For AGW and probably just as import sulfur dioxide and particulate production from china etc this could change rapidly.
Perhaps AGW is playing a role in the current sea surface warming for example. In general more extreme extreme's is par for the course as heat is added to the system. Literally any year this could result in and extreme weather event that has a significant impact perhaps to the food supply for example. Now we can no longer recover from these issues. Like we probably will never recover from the GOM oil spill. Not that the land won't heal itself but that economic system around the gulf will never recover. And thats where all these issues hit home as each one occurs the system can no longer rebound one of them could easily be the trigger for collapse.

So yes they are important but they either lead to events that cannot be timed or predicted are become important at later points in time. That does not mean they should be ignored just that its probably something of interest for a different thread.

First and foremost perhaps the concept of what I call checkmate conditions would probably need to be formalized.

A very obvious example of a checkmate condition is desertification. Over extraction alters the land such that it permanently loses its ability to grow crops. This is something that cannot be easily undone if at all. There are claims that in some cases desertification hase been reversed however I've not seen it proven through several years of drought.
I'm not saying it can't be but in general its a permanent checkmate or close enough.

We have plenty of similar examples however as far as I know most people don't like to acknowledge that we have true losses we cannot recover from in any reasonable time span say 50 years or less. The extinction of a species is another example of and absolute loss that cannot be undone.

Until you recognize that we have suffered irreparable harm and recognize that the true cost is thus effectively infinity leading to this checkmate condition acknowledgement of the damage won't happen.

As a final example I've come to the conclusion that we are probably going to see a die off at some point in my life time on a scale never before seen in history. The vast majority of these people will be innocent victims simply trying to eke out a living just because of the shear numbers few will be Americans for example. If this does come to pass what is the real cost ?

Every SUV/Mcmansion owning American would be directly responsible for genocide that dwarfs anything in all of history.

Its not just destruction of our environment but in the end probably the selfish killing of billions that we have brought on ourselves.

So yes when the system is finally forced to account for all the damage it has done the price that will be paid is hard to comprehend. And no the US won't walk merrily away from it unscathed even though the worst will probably be elsewhere things will get bad enough here that I'm pretty sure we can no longer turn a blind eye to the results of our duplicity.

If it does get as bad as I think it will probably the only vicious thoughts I have is I hope the US pays mightily for its sins. Perhaps things take a turn such that the US gets hammered. If so we deserve it. Heck I have a hard time not just simply going off into the woods and never coming back. Simply trying to disengage and yet provide for my family is often painful. I want out yesterday. However as long as I live I think that I can set a ever better example of how to look past all this and think towards the future. Sure a lot of the current generation is culpable but realistically our children need not "sin" as we have. Its not passed down if you recognize the problem and root it out. As the magnitude of what we really have done becomes more obvious it will be even easier to explain to our children.

So for me at least I find it far more important to focus on opening the eyes of the younger children to the truth of what we have done. Not as graphic as I write here but by making them think about ecology and energy and stuff.
Progressively getting clearer as they get older. I don't want to scare them I just want them to understand.

In the end its our children that will have to finally decide to go about life a different way circumstance may will leave them little choice but that does not mean that they cannot fully understand why things are the way they are and pass it on to their children on into the future. If we are lucky then perhaps even if the horror I think is going to happens happens it won't be in vain and mankind will finally grow up and take a different road.

Its and absolutely awful way to grow up as a species but perhaps collectively its going to be whats needed for us to change. I have a hard time convincing myself that any lesser catastrophe would actually cause us to make fundamental changes no matter what. Heck already the drilling moratorium in the GOM is under debate. A responsible species would have simply banned deep water drilling and immediately started eliminating use of oil assuming some how they got themselves in such a predicament in the first place.

Nobody in their right mind would consider desperately drilling a mile underwater for oil with the attendant ecological issues after such a disaster.

You have to be insane.

We are.

Thanks for a great series of posts. somewhere above is a request for info on where one might learn more about this EROEI. Several books were recommended. I would like to recommend the following. It is just a short article, but it gives a splendid overview of what this is all about. written by one of the giants of the 20th century. guaranteed to whet the appetite for his books. Peace.

Good post, ormondotvos

Some more data-

The richest 10% account for 60% of all private consumption

The richest 20% account for 77% of all private consumption

The richest 30% account for 85% of all private consumption.
And the remaining 70% -- ALL the people on the planet who are
either poor or of modest means -- consume only 15%. And we're
telling them that the problem is that they are having too many
kids, which is causing resource and environmental problems?

Sub-Saharan Africa had 18.5% of the world’s population growth and just 2.4% of the growth in carbon dioxide emissions

--- The United States had 3.4% of the world’s population growth and 12.6% of the growth in carbon dioxide emissions

--- China had 15.3% of the world’s population growth and 44.5% of the growth in carbon dioxide emissions. Population growth rates in China have come down very rapidly – but greenhouse gas emissions have increased very rapidly

--- Low-income nations had 52.1% of the world’s population growth and 12.8% of the growth in carbon dioxide emissions

--- High-income nations had 7% of the world’s population growth and 29% of the growth in carbon dioxide emissions.

It's too much money, not too much sex that is the problem.

All capitalism is, is one big misallocation of resources --- for profit

No, that's a red herring. We (any rational "we") aren't telling "them" that their problem is having too many kids. We're telling everyone not to have lots of kids, wherever that may be. It causes different problems in different places. Indeed, how terrific if conservatives had no power in the US and lots of birth control was practiced, such that our population was now around 200M instead of 300M. Gas would be much cheaper, less loss of species and habitats, etc; lots of things easier to do, etc. And I don't think the problem is too much money, it's too much money in too few hands.

Conservatives had nothing to do with this population increase, it was liberal Ted Kennedy and the Immigration Act of 1965.

"Even if we are able to fix the well expediently and extract any remaining oil, the energy costs of this well will likely be greater than the energy gains."

With few people understanding the concept of EROEI mistakes are bound to be made as we come up against diminishing marginal returns. I expect we will see a rash of costly disasters as we sink and waste energy into projects all over the place to try and offset fossil fuel declines.

Anyone want to join my on the promotion of a fussion reactor energy project so we can at least secure some government funding for ourselves while the ship is sinking?

First off, nice article, great for sharing with people that don't pay much attention to energy issues.

However, I'm a bit of a math geek and I notice you actually have an arithmatic error in the EROEI calc and graphic. An EROEI of 1.2 means 83.333 units invested and 16.666 for society B. (83.333*1.2=100)

For an investment of 80 and a return of 100 (net 20) the EROEI should be 1.25

The title of this article reflects a fundamental misconception. The True Value of Energy lies in its end use utility. This obvious fact is often obscured by discussions that stop at EROI.

A negawatt of energy saved at the point of use through (for example) a zero energy residential house design is more valuable than a watt of energy fed into the electric grid by burning coal or reacting atoms because it requires no transmission costs, utility overhead, system maintenance, military security,or wars to secure foreign energy resources.

That could well be, but this forum is largely technical and contributors constantly try to put the analysis into quantitative terms.

So if you have an idea about how to quantify your end-use value criteria, I am sure that everyone would like to see it. Unfortunately, I fear that it will suffer due to its subjectivity. That's why we have these posts that stop at some objectively quantifiable level.

The True Value of Energy lies in its end use utility. This obvious fact is often obscured by discussions that stop at EROI.

A negawatt of energy saved at the point of use through (for example) a zero energy residential house design...

isn't this two sides of the same pane of glass...?

a MW saved = MW produced @ zero EROI...

and doesn't a zero energy residential design... incurr additional costs over a traditional design... for the purchaser / owner at least...

the construct is valid either way... what does it cost?

my political spin on this too... granted... investment... capital... and labor... have been at the heart of all systems... even the pyramids... 'cept that was a little less than democratic... esp. if you was hauling the stones.... up...

the political "energy" seems split three ways... those that actually discuss peak oil or diminishing returns... those that dismiss thos "doomsdayers"... and those that haven't really started thinking about it...

they say... in some circles... your shed your worst habits in the order they are killing you...

GOM... and all extraction... one time use... i.e., oil refine and burn... permanent effect... i.e., depleted wells and / or now... destroyed ecosystem...

will we be a planet of drilling rigs... or pull back from the precipice... unfortunately.... that can may get kicked down the road to our children...

hope they're getting a good education...

a MW saved = MW produced @ zero EROI...

A distinction needs to be made between discretionary end uses and non-discretionary end uses. A MWh saved in discretionary recreational travel (e.g. a road trip), may be a MWh 'produced' at zero EROEI. But a MWh saved in an "end use" that is related to an energy producing process (e.g. the energy costs of a cleaning up a massive oil spill) increases the EROEI of the energy production process.

(BTW, it's appropriate to use units of energy, not power; like a Megawatt-hour instead of a MW.)

Discretionary and non-discretionary end uses are probably much more difficult to separate than it may seem at first. For example, take the gasoline used to commute to work by government regulator who might help insure that a multinational oil company pours the right amount and type of cement to avoid a catastrophic deepwater oil well blowout. How much of that regulator's gasoline use can be considered discretionary? How much of the rest of his energy use?

How much of that regulator's gasoline use can be considered discretionary?

All of it - he should be driving a Leaf or Volt.

You missed the point. It's an abstract point about EROEI. Substitute any energy source for gasoline, if you like.

I got the point. I was just taking the opportunity to point out that we shouldn't take for granted that oil is necessary.

It's time to eliminate our dependency on oil.

How much of that regulator's gasoline use can be considered discretionary?

As little or as much of it as would be considered discretionary for any other commuter. With commutes, there's nearly always a component of forced choice, and another component that's discretionary. At the margin the distinction will be very fuzzy, not black-and-white. (One catch is that this varies widely and individually, so any one-size-fits-all bureaucratic rationing scheme no matter how it is designed is guaranteed to be wildly unfair to a substantial number of people.)

The latest issue of "The Economist" has a graph of energy consumption in tonnes of oil equivalent on the back page. For 2009 it is about:

tonnes/capita billions of tonnes US 7.2 2.18 China 1.6 2.18 Russia 4.5 0.65 India 0.4 0.50 Japan 3.6 0.45 Canada 9.6 0.35 Germany 3.5 0.30 France 3.9 0.30 South Korea 4.9 0.25 Brazil 1.2 0.20

It seems clear that:

  • a high level of development and well being can be maintained while using about half the energy per capita than does the US currently, and
  • India, Brazil, and China are likely to increase their consumption significantly in competition with the rest of the world

The per capita figures and and US and China annual figures are as printed, while the rest of the annual figures are read off the graph.

Beware the "tonnes of oil equivalent", my friend, the jaws that bite, the claws that catch*.

TOE does not equal oil.

*With apologies to Lewis Carroll.

No, I realize that energy from a variety of sources is being converted to "oil" for purposes of comparing the intensity of energy usage in the various countries.

France and Japan use more nuclear than most. China is heavily dependent on coal.

and Hast Thou Slain the BOP, my Beamish Boy.. oh Frabjous Day

Thank you all for the attention paid to my concerns. Having been a technoid all my life, since the age of eight, and having endured decades of comments about the failure of science to address sociological concerns in its headlong foray into more and more complexity, I've developed a sense that many of the critiques, while easily brushed away on rhetorical grounds, or technical quibbles, have a large kernel of truth in them.

This kernel has blossomed into a massive tree, as we confront overpopulation (kids don't die enough due to scientific advances), conspicuous consumption by increasing numbers of too many people, a really vicious dog-in-the-manger attitude of the world's most comfortable recipients of science's largesse (Americans) and the endless whining and threats, finally, against all critics of the speed of the advances and the direction of the disaster.

Have you ever been in a car with a drunk driver? Do you remember that crushing terror? The fear that you might NOT be killed instantly?

anybody know the aggregate % of energy used by all professional sports...

you know... lessay baseball... how many teams... how many people to support a team... how many cities traveled to... how many times.... times number of teams... times number of sports leagues... from nascar to golf to wwf...

it'd be curious to see that quantified...

The blowout preventer would have capped the well if it had worked properly.

Today BP is saying they cannot cap the well because of fears the pipe would rupture down deep in the hole. Someone is not telling the truth.

If the BOP had worked the well would have been capped and at that time they were not worried about a pipe rupture down below. But now this is their excuse to continue to try and tap it not plug it.

The US government must tell them to CAP it now or else face the wrath of the US government !!!!

I'm guessing, but isn't there a lot of strain on that riser since the rig above it sank and crumpled things?

It's all well and good to insist on Tough Love, but we have to be smart before we're strong, or we're just swinging blindly.

problem is... there's now a track record of unreliable information... even of the "known knowns"...

in addition to the difficulty of assessing the true situation at sea level and below... it's more difficult when known information is suppressed or presented incorrectly...

like the "...20% increased flow upon shearing the riser is expected..."

dr. leiper (and i apologize for the spelling of his name)... has been discussing on cnn thurs - fri - that - he cannot now - until they recalculate the flow based on newly released data... know what the 20% is of...

20% of... 1000/bbl/day... 5000/bbl/day... 12000/bbl/day... 19000/bbl/day... ????000/bbl/day...

We know there is a huge potential gain in energy efficiency.

I'm familiar with a machine that can generate, on average, 75 watts sustained power for eight hours on just a couple of ounces of biomass - a completely renewable source.

That machine is me. I'm super efficient at converting biomass to work.
BP Oil Spill Song [Leaked] "Black Hazy"

So when press releases are made about new discoveries, ask yourself: “how much energy will be used to get that energy, or what will be the energy profit?”

Answer.... Non market economics does not work with profit, be it monetary or energy profit.
Solar energy is free.
Hubbert endorsed that idea of using solar.

Biophysical economics or thermoeconomics is able to balance environment if detached from a monetary economic system... and is based on protection of resources and reducing population levels to a sustainable degree.
Science can figure out solutions, not political or corporate groups based on debt token profit.

Hubbert and Scott proposed the idea in 1934 and sadly people have not caught on so much yet, to what a creative society might look like. Technocracy Study Course.

How can it be that this OIL DRUM site consistently presents information in such odd monetary terms when a viable alternative system is available that makes many questions here obsolete, as to how they are framed and discussed?

Monetizing energy is the problem. Monetizing society is the problem.

Peak Oil is a non issue in a creative society because a creative society would detach itself from measuring energy in a metric to money.

You can not get away from the false premise or throwback contract society premise of 'energy invested' as attached to a Price System.
We have the knowledge and know how to change society, yet:

'The injection of monetary concepts into all discussions of natural wealth and income, wholly confuses the people as to the actual issues at stake. Furthermore, it serves as a handy screen behind which, with a little word juggling, the business/political operators of this Price System can continue their profitable activities without being too greatly embarrassed by outside interference.'

--- Howard Scott.