Energy Returned on Energy Invested Thread pt 1 (merged) Arch

[ashurbanipal]

That may be the case if you had a monopoly over the entire oil market. In the real world if you try to sell above the market price you will go out of buisness rather quickly.

What I'm saying is that this is how market prices are figured in the normal course of business in the real world. Each industry has their standard margin, of course, but 50% is the most common target. If someone has a monopoly, especially on an essential resource, they start going to 100% or even 150% margin. This would work with oil if there were a monopoly. The United States might not, but someone in the world could afford $150.00 a barrel for oil.

Assume US oil has an EROEI of 10 as suggested by C&K data. This was being produced profitably through the 90s while oil was hovering around $20/bbl and fell to as low as $10/bbl. As were tar sands with an EROEI as low as 1.5:1 depending on who you beleive, though that figure is almost certainly too low. When Shell got involved in a tar sands project they didn't try to sell their oil for more. I'm sure they'd like to but the price is set by supply and demand as we all know and not the whims of the oil producers.

I don't think this is correct. It's my understanding that most oil is sold by contract. I would suggest that in that instance, unless the seller has a cash flow problem, it's more or less up to them to decide what to charge. Most of them charge around the same figure because they have similar production methods and similar target margins. The oil majors have established relationships with major buyers, and so there probably is some variance in actual price just due to those relationships.

I suspect, though cannot prove, that the recent upswing in price is caused not just by demand, by also by a small downward shift in EROEI.

I say EROEI is of little relevance once its above 10 or so because the change in net energy gets smaller as the EROEI value goes up. Going from 3:1 to 5:1 is a big difference but going from 10:1 to 12:1 is much smaller. Even the difference between 5:1 and 10:1 is greater (twice as large) than the difference between 10:1 and 20:1. The best way to think about EROEI is the amount you get net out of 100 gross units of energy. This moves towards an asymptote of 100 as EROEI --> infinity.

I understand exactly what you're saying. My point back is that when it comes to money, this doesn't really matter. I suspect that part of the reason my point hasn't made much sense is because of the scale we're using, so try this example on instead:

Suppose oil costs $60.00 a barrel, and a major oil company is pumping 20 million barrels a day. That's a lot, but let's say that's what happens. Now, we'll begin where the EROEI is 100:1. So the oil company gives up $12 million per day in cost of goods. If the EROEI drops to 50:1, they give up $24 million to get the same amount of oil. Any executive in any company anywhere is going to look at that kind of increase and her blood's going to boil; she will insist that their prices be increased so that they attain the same profit/ cost ratio they had previously enjoyed.

Had it dropped to 85:1, it probably wouldn't be so bad. Eventually, it'll cross a mark where, as costs go up, people lose their jobs, marketing budgets are cut, etc. Once an economy is set up with money flows around a certain level, any kind of disturbance has a huge effect on the end user.

As I think about it, though, I think you probably do have a point as we approach closer and closer to 1. Prices won't increase linearly. I don't know, actually, what the relationship would be.

I understand the argumant and energy is clearly a part, but you can't say for sure whether the main cost is energy, or labour, or something else.

Well, I would include labor in energy.

One can argue that the cost of "something else", eg steel, copper, concrete etc represents the energy that goes into producing it....or you could also argue that the cost of oil represents the cost of the material that goes into producing it...its a bit of a chicken and egg argument and causality is difficult to determine.

I don't think so. I think that the thought experiments regarding the use of sunlight and air incline towards energy being the prime factor. As Defiled Engine said, materials by themselves are useless. Someone has to make them useful. No one without the expectation that labor is going to be applied is going to buy a few tons of bauxite. But note that the reverse example--that no one is going to buy a bunch of labor without the expectation of material to work on, just doesn't make any sense. Labor entails work done.

You can get an idea by calculating GDP produced per dollar of energy used, I'm too lazy to do that right now but IIRC energy represents 5-10% of the US GDP, others like China will be more energy intensive, but if money only represented energy all GDP would be spent on energy, resulting in a rather poor economy. I do agree energy is definatly a significant and important part of it though.

This isn't exactly what I'm saying. A little energy=a lot of money is my basic premise. Sure, we attach a dollar value to a barrel of oil, and that dollar value doesn't equal the value of everything that is produced by the energy contained therein. Economically, $60.00 of oil produces perhaps $6000.00 of value. This is why, as the cost of oil goes up, the cost of everything else goes up such a ridiculous amount (eventually). The cost of oil has tripled in the last few years. We probably won't see this work out as retail prices doing the same in the next few, just because that level of inflation would itself be ruinous. Instead, we'll see exactly what we are seeing, only lots more of it. Lower wages, fewer jobs, less benefits, and moderately increased prices coupled with lots of speculation (like "flipping" houses). Businesses are doing this to keep their margins in line. It's a dirty game, and it's not one anybody can win. But that's what we're seeing.

Certain happenings can stave off the inevitable, however. Katrina and Rita will actually be good for the economy in the medium term, as all the cash the oil companies are sitting on will be used for hurricane clean-up. Other opportunities may present themselves to restore or shore up faith in our currency, but eventually, that will stop.

[Joe0Bloggs]

Arguement #2 Economic impact of EROEI is negligible

This argument has it that there will always be a willingness to invest in any energy scheme that generates positive EROEI.

I've been thinking about this until my head burst but still don't know who is right about the EROEI-price relationship, you or antimatter. But I think there is a simpler reason why people will invest in any energy scheme that generates positive EROEI:

If all wealth is indeed derived from energy, then the energy industry is the only industry that generates real wealth, or at least it is the basis of wealth generation in all other industries. Thus when there is not enough energy in the system, any industry other than the energy industry cannot be profitable on a sustained basis. Thus, it will be rational for people to move from whatever industry they were in to the energy industry. I.e. you suggest that if EROEI goes low enough the oil industry would rather invest in some other business; I argue that there will be no other business more profitable than the energy industry. Where there is shortage the consumer will pay as much as it takes to get the scarce resource; thus the energy industry will always be profitable, at least to those companies who have stakes in high EROEI production relative to other producers.

I think what will happen as EROEI goes down is that more and more of the world population will be employed in energy or energy related industries.

To the extent that EROEI going down may cause a crash, I think it won't be caused directly by some fundamental reason related to EROEI--it would be caused by the failure of the market to anticipate the EROEI going down and making appropriate investments in advance. E.g. Shell could be making more money than it is now if it had invested more in tar sands.

[FatherOfTwo]

If your finding costs increase from say $1/bbl to $2/bbl you don't go from selling oil at say $50/bbl to $100/bbl.

You might not, but if you're like any other business person I know, that's exactly what you do. There's a very good reason why, as well.

What a crock. You obviously don't know very many successful business people.

"Hey, look, I know the profit on this barrel of oil was $49 before, but now I have to make $98!" The competition would eat you alive.

This site is hillarious at times...

[ashurbanipal]

Father of Two,

Most of the business people I know are pretty successful. I only know a couple who might be approaching billionaire status; most of the rest run pretty successful companies that have managed to stay afloat and expand for decades in a variety of different industries (mostly grocery and related businesses, but I know some electronics manufacturers and a couple publishers).

"Competition" is a more or less misunderstood term in business (even by businesspeople, who typically don't reflect too much on the philosophical implications of what they're doing), at least for the businesses I'm familiar with. Trade associations usually help set target margins and keep their members prices uniform--and steadily rising. Of course, a business that spends an inordinate amount of money on ineffective marketing is going to tank; management that makes those kinds of poor decisions aren't, by definition, competitive. But assuming similar production methods and business practices, prices are going to stay in a very tight range for just about any business, relative to cost.

Anyway, as I mentioned prior to your post, the way to think about it isn't really profit per unit--at least not in this case. It's total costs against sales.

Of course, runaway inflation is ruinous, and most business people understand that. They're as likely to streamline, cut jobs, wages, benefits, etc. to absorb the increased costs lately. And that's my point; the guys at the top aren't going to accept less profit, not even a nickel's worth. They're not psychopaths (well, some of them aren't), it's just that they're trained to do that because that's how business has always been run. Margins must remain constant, and net profits must remain constant relative to costs.

This, I assert, is the threat of lowered EROEI. Our economy is predicated on costs remaining the same. As they go up, even a little, the results get more and more massive and more and more destructive.

[RdSnt]

The feedback effects of declining EROEI are not immediate and direct: it's not that the oil declines in quality (although it does, to some extent) but rather that it gets a LOT harder to reach and extract. Instead of a 50m hole in the desert, you're in 500m of water, drilling 5000m under the seabed.

If EROEI drops by half, now you need to spend twice as much on equipment! So when you find that the cost of your inputs doubles in relation to your output, you have to double your prices.

Your equipment costs don't increase in a linear fashion. To use an extreme example, I could dig a 50m hole with a shovel, by hand. A 5000m hole in the ocean requires a bit higher tech.
Plus your infrastructure dependencies are much different. Once again, I can haul the goo out of a 50m hole with a bucket; can't do that from the ocean.
Not only is your cash investment different but your energy requirements are exponentially larger.


Part of the problem I have with discussing EROEI is that there is little consideration that petroleum is a subsidized resource. Simply put, we didn't pay to make it and that isn't factored/amortized into the cost of refining and selling it.
Oil is cheap because it is a fossil resource, meaning that it was manufactured so long ago that the accounting records were lost and noone wants to do an audit to include the fossil fuel production costs.

We did this with wood, lumber and pulp mills chopped down trees and sold the product without factoring in the cost of replacing the resource.
Companies are still reluctant to do this but now that trees are recognizably in short supply the companies are starting to invest in reforestation. This increases the cost of the product and also changes the way harvesting is scheduled and practiced.

[turmoil]

This discussion brings up the fact that EROEI is a limited ratio. It does not include the potential energy of the capital of the machinery, for instance. I'd venture to say that the true EROEI value for natural resources is directly related to how efficiently they are used:

I read some time ago that the US is 2% efficient. If the process of oil energy production is 98% efficient ("EROEI" of 50:1) then the true EROEI is 1:1.

This is why natural resources are undervalued, to say the least. But scarcity will fix that right up.

In other words:

US:100 units = 98 wasted, 2 used
Oil:100 units = 98 gained, 2 used

Most of the 98 gained through oil production gets wasted in the system, which enables the oil production in the first place. So most of the 98 gained should actually be counted in the invested energy. Lets say 96 of the 98 get wasted:

Energy returned / Energy invested

98 boe / ( 96 boe (wasted) + 2 boe (used) )

98 / 98 = 1

[SilentE]

Assume US oil has an EROEI of 10 as suggested by C&K data. This was being produced profitably through the 90s while oil was hovering around $20/bbl and fell to as low as $10/bbl. As were tar sands with an EROEI as low as 1.5:1 depending on who you beleive, though that figure is almost certainly too low. When Shell got involved in a tar sands project they didn't try to sell their oil for more. I'm sure they'd like to but the price is set by supply and demand as we all know and not the whims of the oil producers.

I suspect, though cannot prove, that the recent upswing in price is caused not just by demand, by also by a small downward shift in EROEI.

Don't forget that as production expands in response to surging demand (rising prices), the marginal production that's brought on line is the least profitable. So, from an EROEI standpoint, even if most of the oil in market is at 10:1, and some maybe at 20:1, when prices surge rapidly, producers activate production from previously-developed sources at 5:1 or 3:1, as the price supports (perhaps those sources are from older depleted wells). Over the medium term though, more production will come one line: first at 10:1, until all the 10:1 oil is exhausted, and then at 9.5:1, and so forth.

The best way to think about EROEI is the amount you get net out of 100 gross units of energy. This moves towards an asymptote of 100 as EROEI --> infinity.

Suppose oil costs $60.00 a barrel, and a major oil company is pumping 20 million barrels a day. That's a lot, but let's say that's what happens. Now, we'll begin where the EROEI is 100:1. So the oil company gives up $12 million per day in cost of goods. If the EROEI drops to 50:1, they give up $24 million to get the same amount of oil. Any executive in any company anywhere is going to look at that kind of increase and her blood's going to boil; she will insist that their prices be increased so that they attain the same profit/ cost ratio they had previously enjoyed.

Had it dropped to 85:1, it probably wouldn't be so bad. Eventually, it'll cross a mark where, as costs go up, people lose their jobs, marketing budgets are cut, etc. Once an economy is set up with money flows around a certain level, any kind of disturbance has a huge effect on the end user.

Here's the distinction: how does the oil company have to account for the energy expenditure? When we say oil has an EROEI of 10, we're counting ALL the energy that goes into extraction. Some of that energy is natural gas at the well-head used to drive machinery - i.e., it's a direct byproduct of production and is fed immediately back into the process. From an accounting standpoint, it's hard to track and value.

But a LOT of the energy comes from expenditures by the oil company that it has to pay for with cash. Rigs, capital equipment, salaries, trucks, ships, refined fuel products for the trucks and ships, pipelines, electricity to run everything... All that stuff is bought from suppliers who are themselves sensitive to energy costs. Moreover, EROEI is calculated over the lifecycle of the equipment, compared to the lifecycle of the well/facility. So even if your EROEI is 10:1, your investment might only be repayed over 10-30 years.

The feedback effects of declining EROEI are not immediate and direct: it's not that the oil declines in quality (although it does, to some extent) but rather that it gets a LOT harder to reach and extract. Instead of a 50m hole in the desert, you're in 500m of water, drilling 5000m under the seabed.

If EROEI drops by half, now you need to spend twice as much on equipment! So when you find that the cost of your inputs doubles in relation to your output, you have to double your prices.

You can get an idea by calculating GDP produced per dollar of energy used, I'm too lazy to do that right now but IIRC energy represents 5-10% of the US GDP, others like China will be more energy intensive, but if money only represented energy all GDP would be spent on energy, resulting in a rather poor economy. I do agree energy is definatly a significant and important part of it though.

This isn't exactly what I'm saying. A little energy=a lot of money is my basic premise. Sure, we attach a dollar value to a barrel of oil, and that dollar value doesn't equal the value of everything that is produced by the energy contained therein. Economically, $60.00 of oil produces perhaps $6000.00 of value. This is why, as the cost of oil goes up, the cost of everything else goes up such a ridiculous amount (eventually). The cost of oil has tripled in the last few years. We probably won't see this work out as retail prices doing the same in the next few, just because that level of inflation would itself be ruinous. Instead, we'll see exactly what we are seeing, only lots more of it. Lower wages, fewer jobs, less benefits, and moderately increased prices coupled with lots of speculation (like "flipping" houses). Businesses are doing this to keep their margins in line. It's a dirty game, and it's not one anybody can win. But that's what we're seeing.

Actually, $60 of oil is one barrel. Standard conversion: one barrel of oil has 5,800,000 Btu of energy. US energy intensity (EIA 2003) is $1 GDP per 9000 Btu (all sources). So one barrel = $645 of GDP. It's about 10:1...

Inverting that ratio, you find that energy accounts for about 9.5% of US economy. If EROEI drops by half, the energy sector would have to double in size to supply the same amount of energy.

If EROEI drops from 10:1 to 5:1, it's true that the total energy available has only declined from 9 units of every 10 to 8 units of every 10. But its also true that now you need twice as many producing generators, wells, mines, or reactors. That stuff ain't free... Not even for Exxon-Mobil.

Although oil companies are profitable, they do not make profit at EROEI rates. In June, Exxon-Mobil was trading at $60 a share. It made 6 month profits for Q1 & Q2 of $2.42 per share. Annualized, that's $5 a share.

[SilentE]

This, I assert, is the threat of lowered EROEI. Our economy is predicated on costs remaining the same. As they go up, even a little, the results get more and more massive and more and more destructive.

EROEI has already declined. Prices doubled from 1970 to 1990. I would not characterize the 1990's boom as destructive...

Ashurbanipal, I had a bunch of interesting (I thought) posts on EROEI on the M. Lynch thread (see pages 26-29).

I think you're right about some of the effects of rising costs. But you have to set one crucial parameter: what's the timeframe? Will EROEI halve in five years, or 20? It makes a HUGE difference...

Part of the problem I have with discussing EROEI is that there is little consideration that petroleum is a subsidized resource. Simply put, we didn't pay to make it and that isn't factored/amortized into the cost of refining and selling it. Oil is cheap because it is a fossil resource, meaning that it was manufactured so long ago that the accounting records were lost and noone wants to do an audit to include the fossil fuel production costs.

Yes, but I'm not sure what that adds. EROEI helps us answer the question: where is the best place to put our resources to increase the amount of energy available to humanity? There are other considerations as well - pollution, global warming - but we should seek the best return we can.

Wind and Solar have EROEI more than 1, but we did not create the wind or the sunlight. Should we include those costs as well? The Second Law of Thermodynamics guarantees that if we include all the energy used by the universe to create our energy source (oil, wind, sunlight), our EROEI will ALWAYS be less than one!

[ashurbanipal]

Sorry to have taken so long to reply:

EROEI has already declined. Prices doubled from 1970 to 1990. I would not characterize the 1990's boom as destructive...

To the extent that it was a largely immaginary boom (in retrospect), and to the extent that much of our current impending economic danger is a result of it, I think it will turn out to be quite destructive.

Ashurbanipal, I had a bunch of interesting (I thought) posts on EROEI on the M. Lynch thread (see pages 26-29).

I read through that thread, I don't recall those specifically (probably not due to a lack of inherent importance, but rather due to my murderous work schedule at the time) but I'll go back and re-read them.

I think you're right about some of the effects of rising costs. But you have to set one crucial parameter: what's the timeframe? Will EROEI halve in five years, or 20? It makes a HUGE difference...

It makes a difference if we are following sound fiscal policy. We aren't. We're printing and borrowing more money, while our ability to generate things of value declines. This will prove disastrous to the economy. Time will make less of a difference than faith in currency will, except to say that, the sooner the house of cards falls, the better off people will be.

[ashurbanipal]

Part of the problem I have with discussing EROEI is that there is little consideration that petroleum is a subsidized resource. Simply put, we didn't pay to make it and that isn't factored/amortized into the cost of refining and selling it. Oil is cheap because it is a fossil resource, meaning that it was manufactured so long ago that the accounting records were lost and noone wants to do an audit to include the fossil fuel production costs.

You mean, you want to add a line on the general ledger that says "Credit-God: One Bajillion joules" or something?

[ashurbanipal]

The feedback effects of declining EROEI are not immediate and direct: it's not that the oil declines in quality (although it does, to some extent) but rather that it gets a LOT harder to reach and extract. Instead of a 50m hole in the desert, you're in 500m of water, drilling 5000m under the seabed.

I didn't mean to suggest otherwise.

Actually, $60 of oil is one barrel. Standard conversion: one barrel of oil has 5,800,000 Btu of energy. US energy intensity (EIA 2003) is $1 GDP per 9000 Btu (all sources). So one barrel = $645 of GDP. It's about 10:1...

I shot my remark off the hip; of course this analysis is correct. It serves, however, to make my point, which is that alot more money is controlled by oil supply than is represented by the monetary cost of oil itself. Therefore, as oil costs rise, the end retail price of all goods will rise proportionately to the cost, not merely as dollars added.

Although oil companies are profitable, they do not make profit at EROEI rates. In June, Exxon-Mobil was trading at $60 a share. It made 6 month profits for Q1 & Q2 of $2.42 per share. Annualized, that's $5 a share.

Keep in mind that EROEI studies don't usually include factors for the accountants they pay, their marketing efforts, their non-production operating overhead, the hefty CEO bonuses, etc. Those things eat into profit from COGS considerably.

[DefiledEngine]

If EROEI drops from 10:1 to 5:1, it's true that the total energy available has only declined from 9 units of every 10 to 8 units of every 10. But its also true that now you need twice as many producing generators, wells, mines, or reactors. That stuff ain't free... Not even for Exxon-Mobil.

Yes, and all that machinery would require substantial amounts of energy to b miplemented and manufactured. What's the EROEI of the machines?

We couldn't cover half of the world with PV-cells because they require declining minerals like platina etc.

Actually, $60 of oil is one barrel. Standard conversion: one barrel of oil has 5,800,000 Btu of energy. US energy intensity (EIA 2003) is $1 GDP per 9000 Btu (all sources). So one barrel = $645 of GDP. It's about 10:1

Doesn't this show how dependent we are on a high EROEI, which enable us to sell oil cheaper than what it should be?

This, I assert, is the threat of lowered EROEI. Our economy is predicated on costs remaining the same. As they go up, even a little, the results get more and more massive and more and more destructive.

Hasn't prices on things always been going up?

[Doly]

Yes, and all that machinery would require substantial amounts of energy to b miplemented and manufactured. What's the EROEI of the machines?

Eh... If EROEI is calculated in detail, it would include the energy cost of making the machines. As far as I know, generally speaking, it's negligible in comparison with other energy costs. But as EROEI goes lower, it may become significant.

[ashurbanipal]

Hasn't prices on things always been going up?

No. Inflation of the type we currently experience is a relatively recent phenomenon. Not that it hasn't happened before, but never to the degree we see and accept now as a matter of course. If we were to go back to 100 A.D. and purchase a bushel of wheat for a certain amount of gold, and then go forward to 1100 A.D., we'd find that a bushel of wheat had no more than doubled in price. This is because production techniques and energy sources hadn't really changed much; the only thing that had changed was the political system and the relative demand for wheat. In a little more than one century in the modern world, and especially after EROEI for oil peaked in the 1930's, prices have increased 20 times over.

[SilentE]

Yes, and all that machinery would require substantial amounts of energy to be implemented and manufactured. What's the EROEI of the machines?

Eh... If EROEI is calculated in detail, it would include the energy cost of making the machines. As far as I know, generally speaking, it's negligible in comparison with other energy costs. But as EROEI goes lower, it may become significant.

Agreed. Those rising capital costs are built into the EROEI calculation. If the equipment required to extract a barrel of oil becomes more energy intensive expensive, then EROEI drops. Conversely, if technological advance means that equipment becomes LESS expensive and more energy efficient to manufacture - i.e., for wind power generators or solar cells - the EROEI rises.

[SilentE]

Sorry to have taken so long to reply:

EROEI has already declined. Prices doubled from 1970 to 1990. I would not characterize the 1990's boom as destructive...

To the extent that it was a largely immaginary boom (in retrospect), and to the extent that much of our current impending economic danger is a result of it, I think it will turn out to be quite destructive.

I think you're right about some of the effects of rising costs. But you have to set one crucial parameter: what's the timeframe? Will EROEI halve in five years, or 20? It makes a HUGE difference...

It makes a difference if we are following sound fiscal policy. We aren't. We're printing and borrowing more money, while our ability to generate things of value declines. This will prove disastrous to the economy. Time will make less of a difference than faith in currency will, except to say that, the sooner the house of cards falls, the better off people will be.

The 1990's boom was hardly imaginary Real GDP rose for nearly ten years straight at 2.5% or more per year. It only declined - by less than 1% - for two quarters in 2001. Indeed, for 2001, US real GDP still grew at nearly 1%. That is, US real GDP has grown every year since 1991.

In fact, the generally accepted technical definition of a recession is two consecutive quarters of negative growth in real GDP. By that definition, the US did not have a recession in 2000 or 2001. US GDP shrank (by less than .5%) in 2000 Q3, 2001 Q1, and 2001 Q3. That is, there were never two consecutive quarters of negative growth. By contrast, annual real GDP growth was actually negative in 1991 (although only about -0.1%).


As for the fiscal policy, I agree that there is a clear need for major changes in the direction of US fiscal policy. Yet things were similar in the 1980s. Reagan ran up incredible deficits, which came due in the 1990s. The recession of 1990 was particularly sharp and painful, especially given the Gulf War oil shocks. But for all that, the US economy contracted less than 0.5% for the whole year - and then began growing again.

Even if you account for growing population in the US by examining real per capita GDP, you get a similar story. (according to BLS data) Real per capita GDP declined in 1991, but rose by even more in 1992, so that it was higher than in 1990. Ditto for 2001: a small decline in 2001, but growth in 2002 to a higher level than in 2000.

Let's look at the worst economic conditions of the last 50 years: 1974-1982.

Code: Select all

1973 21,323
1974 21,021  decline - oil shock
1975 20,778  decline
1976 21,673     New High
1977 22,447
1978 23,448
1979 23,922
1980 23,594  decline - oil shock
1981 23,948     New High
1982 23,261  decline
1983 24,093     New High

1974-75 was the only time in the last 45 years that rpcGDP fell for two straight years. 1980-1982 was the only other occasion that it fell twice in three years. Aside from the single year 1981, the period 1976-1979 was the shortest sustained rise in rpcGDP. All in all, a bad decade. Yet from 1973 to 1982, rpcGDP rose 9% - almost 1% per year on average!

So even if you think the peak will be a shortage/price hike like the 1974-9 oil shocks, the US economy won't be toast.

See: http://www.bls.gov/fls/flsgdp.pdf

[DefiledEngine]

Umm, hasn't it already been established that the oil shocks were offset by other oil producers? Of course, once the world peaks, there won't be any swing producers, and that why these oil shocks won't be ending like in the 70s/80s.

[SilentE]

Umm, hasn't it already been established that the oil shocks were offset by other oil producers? Of course, once the world peaks, there won't be any swing producers, and that why these oil shocks won't be ending like in the 70s/80s.

The point is that the economic effects of oil show up in prices. Prices soared in 1974 & 1979 - yet the economy did not collapse. In grew at more than 1% per year, at almost 1% per year per capita, and was in fact growing again in 1982, despite the fact that oil prices were four-to-five times higher than in 1972.

But we're getting hopelessly off-topic here.

[Concerned]

This device will convert convert 1000 KJ of energy into 1 KJ of energy.

Show me the error in my understanding and arguments. Thank you.

Your 1KJ of output energy is an overall Energy Sink (-999 KJ). It costs more in energy than it produces. Hence it has a negative energy return. EROEI has nothing to do with profit. It's simply an energy calculation.

Your 0.001 figure shows the percentage of energy returned on energy invested. When it is less than one e.g. 0.9999* You have a negatve EROEI.

[tavewa]

Hi all,

do you guys know of any scientific publications about EROEI or EPR? I'm writing my thesis about energy economics, but I only find old publications about EROEI from Hall and Cleveland. If anybody is aware of recent scientific publications, a link would be much appreciated.

Cheers T.