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Is EROEI Important? Pt. 2

General discussions of the systemic, societal and civilisational effects of depletion.

Is EROEI important?

Yes
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No
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Total votes : 74

Re: Is EROEI important?

Unread postby ralfy » Sun 07 May 2017, 03:30:05

Squilliam wrote:Lets make this clear, we're talking about a hypothetical oil production from the most marginal oil well we can possibly conceive of. Something ridiculously low even by the low standards of many shale plays. The most important point to make about a well so ridiculous is the climate change / environmental consideration of getting oil out of such a terrible place because of the sheer quantity of CO2 produced to yield such a poor resource. It's a ridiculous and marginal well that only exists in any mental model to prove that EROEI can go down that low so as to make the whole metric by itself of marginal importance.

If 100m/b per day of oil was produced using the most ridiculously low 2.0 EROEI wells we could find then 50 million would be spent finding or replacing existing production and the final 50m/b per day would be available to the rest of the economy. Of course this is literally the worst corner case I could possibly imagine. Even then western society would not keel over.


The ecological footprint per capita of wealthy countries is two to five times higher than that of the global average:

https://en.wikipedia.org/wiki/List_of_c ... _footprint

The biocapacity available, which includes not just oil but also copper, arable land, and many other material resources, needed for that footprint is a third lower.

The global population will continue to rise, which means biocapacity per capita will decrease even more. That doesn't include the effects of environmental damage and global warming.

At the same time, the ecological footprint per capita has to keep rising to feed the energy and material resource demand of a growing global middle class, the result of increased credit and profits from businesses that, in competition with each other, have to sell more goods and services to ever-growing consumer markets. Where do you think the present middle class gets it income and ROI for spending on its lifestyle?

That's why energy return is critical and your perceptions about increased credit reversing diminishing returns highly illogical.
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Re: Is EROEI important?

Unread postby pstarr » Sun 07 May 2017, 09:22:46

Squilliam wrote:Lets make this clear, we're talking about a hypothetical oil production from the most marginal oil well we can possibly conceive of. Something ridiculously low even by the low standards of many shale plays.

Let's be clear? You a pundit? ha ha You said the opposite, like, a, one post before. bye bye
/sarc
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Re: Is EROEI important?

Unread postby pstarr » Sun 07 May 2017, 09:36:01

ralfy wrote:The global population will continue to rise, which means biocapacity per capita will decrease even more. That doesn't include the effects of environmental damage and global warming.


It also doesn't include the effects of entropy, everything we built today is wearing out and will have less use, less value tomorrow. Buildings are not like fine wines. Even dams like the one in Oroville, Ca. will fail.

Today the cost to repair/re-use is often more than the cost to replace, so we just knock stuff down and start again. We won't have the energy to do either.
/sarc
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Re: Is EROEI important?

Unread postby Squilliam » Sun 07 May 2017, 13:37:27

ralfy wrote:
Squilliam wrote:Lets make this clear, we're talking about a hypothetical oil production from the most marginal oil well we can possibly conceive of. Something ridiculously low even by the low standards of many shale plays. The most important point to make about a well so ridiculous is the climate change / environmental consideration of getting oil out of such a terrible place because of the sheer quantity of CO2 produced to yield such a poor resource. It's a ridiculous and marginal well that only exists in any mental model to prove that EROEI can go down that low so as to make the whole metric by itself of marginal importance.

If 100m/b per day of oil was produced using the most ridiculously low 2.0 EROEI wells we could find then 50 million would be spent finding or replacing existing production and the final 50m/b per day would be available to the rest of the economy. Of course this is literally the worst corner case I could possibly imagine. Even then western society would not keel over.


The ecological footprint per capita of wealthy countries is two to five times higher than that of the global average:

https://en.wikipedia.org/wiki/List_of_c ... _footprint

The biocapacity available, which includes not just oil but also copper, arable land, and many other material resources, needed for that footprint is a third lower.

The global population will continue to rise, which means biocapacity per capita will decrease even more. That doesn't include the effects of environmental damage and global warming.

At the same time, the ecological footprint per capita has to keep rising to feed the energy and material resource demand of a growing global middle class, the result of increased credit and profits from businesses that, in competition with each other, have to sell more goods and services to ever-growing consumer markets. Where do you think the present middle class gets it income and ROI for spending on its lifestyle?

That's why energy return is critical and your perceptions about increased credit reversing diminishing returns highly illogical.


Energy returns are important because of bio-capacity? I get the concept that increased energy will be required to supply an increasing amount of energy to compensate for the depletion of resources, and that as energy returns decline on average then more energy will be required to extract that energy. We will need more energy to maintain lifestyles, but overall energy required would be rising just to stand still due to a level of depletion of existing energy resources.
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Re: Is EROEI important?

Unread postby vtsnowedin » Sun 07 May 2017, 13:53:00

Squilliam wrote:
Energy returns are important because of bio-capacity? I get the concept that increased energy will be required to supply an increasing amount of energy to compensate for the depletion of resources, and that as energy returns decline on average then more energy will be required to extract that energy.

We will need more energy to maintain lifestyles,

Do you mean that on a per capita basis or due to the rising population in the middle class?

but overall energy required would be rising just to stand still due to a level of depletion of existing energy resources.

I don't know as that is true. Efficiency and innovation can replace a lot of the energy we consume today. Look at the efficiency between your grandmothers wood or coal cook stove and your microwave and then project forward another fifty years.
There is nothing "required " about energy. If we have it we use it and if it is cheap we waste a lot of it but if we don't have it or can't afford it we find other ways.
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Re: Is EROEI important?

Unread postby Squilliam » Sun 07 May 2017, 14:01:48

@Vt: It really depends on which side you look at. Effectively a lot of people here just look at the supply side rather than the demand side. What for instance is the energy return on switching from low efficiency consumption to higher efficient consumption like for instance installing significant amounts of insulation and low e glass. Another good example would be the switch from kerosene lighting to closed LED/Solar systems. There are plenty of good paths forward towards a more sustainable future on both the demand and supply side, but then you're really getting into politics, culture and economics.

If BAU remains the same however, then we will need more energy to stand still. If it takes more energy to extract poorer resources then overall energy consumption will need to rise. It's the degradation of existing high quality resources and the shift to lower quality resources that would do that.
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Re: Is EROEI important?

Unread postby vtsnowedin » Sun 07 May 2017, 14:15:23

Squilliam wrote:@Vt: It really depends on which side you look at. Effectively a lot of people here just look at the supply side rather than the demand side. What for instance is the energy return on switching from low efficiency consumption to higher efficient consumption like for instance installing significant amounts of insulation and low e glass. Another good example would be the switch from kerosene lighting to closed LED/Solar systems. There are plenty of good paths forward towards a more sustainable future on both the demand and supply side, but then you're really getting into politics, culture and economics.

If BAU remains the same however, then we will need more energy to stand still. If it takes more energy to extract poorer resources then overall energy consumption will need to rise. It's the degradation of existing high quality resources and the shift to lower quality resources that would do that.

BAU has never been constant so will not stay the same. It will adapt to what ever energy reality shows up.
If it takes more energy to extract poorer resources then overall energy consumption will need to rise.

We may want it to rise but might not be able to make that happen and may well use efficiency and substitution to make up the difference.
I would use depletion instead of degradation of the high quality resources but that is perhaps a distinction without a difference.
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Re: Is EROEI important?

Unread postby donstewart » Sun 07 May 2017, 14:29:07

'efficiency and substitution'
See:
http://www.igbp.net/globalchange/greata ... 01630.html

I think it takes a lot of religious faith (or unbounded belief in liberal economics) to believe that all of this can unwind without serious repercussions.

I wish they would add debt to the charts. Since 1970 or thereabouts, the debt has marched upward more rapidly than measurements such as GDP.

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Re: Is EROEI important?

Unread postby Squilliam » Sun 07 May 2017, 15:07:42

@VT yeah you're right. That is the fundamental flaw of Ceteris Paribus (all other things remaining the same) is that all other things don't remain the same. The models are broken by the fact that the one biggest fundamental assumption made to create them is so incredibly flawed. Proving that the current system cannot be sustained is relatively easy. Proving the system cannot evolve based on stimulus is not easy at all.

@Don Stewart the debt really represents the inequality in the economy. The rapid inflation of the 1920's destroyed the wealth of many older families. If it were to happen again then the economy would once again start to operate far more effectively. It is only the fact that as of yet it hasn't happened that we have a debt problem.
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Re: Is EROEI important?

Unread postby donstewart » Sun 07 May 2017, 15:58:37

@squilliam
The United States reached an income inequality height in 1929 which it did not equal again until very recently. I don't think very many people would agree that what happened in 1929 and the following decade was an example of 'the economy operating far more effectively'.

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Re: Is EROEI important?

Unread postby vtsnowedin » Sun 07 May 2017, 16:02:20

donstewart wrote:'efficiency and substitution'
See:
http://www.igbp.net/globalchange/greata ... 01630.html

I think it takes a lot of religious faith (or unbounded belief in liberal economics) to believe that all of this can unwind without serious repercussions.

I wish they would add debt to the charts. Since 1970 or thereabouts, the debt has marched upward more rapidly than measurements such as GDP.

Don Stewart
While debt is a problem, especially government debt where they have no intention of paying it off, I think it is often over stated and should be considered in terms of net worth. Dose it matter that a baby boomer stills holds a mortgage of $90,000 on a house worth $300,000? The average baby boomer has a net worth (after all debts are paid off ) of $160,000. Considering that there were 76 million boomers in 2014 that is a lot of assets. It varies of course, some are lip deep in a cesspool of credit card and mortgage debt but apparently that is more then balanced out by more frugal types , myself included, that have managed to finally pay off our bills and have nothing bigger then the cell phone bill to annoy us.
As for the younger generations, yes they are holding a lot of debt but they are driving the cars they bought and living in the houses they finally got a mortgage for and have a job from that college loan they and their boomer parents took out so will work their way out of it in time.
Of course there is the individual that borrowed a lot of money to attend a really nice college and learned nothing there beyond how to roll the most kick-ass joints on campus but there is no helping them.
A problem I do see is a healthcare industry that wants twenty cents out of every dollar you and I make sent directly to them to make every doctor , administrator and insurance bureaucrat independently wealthy ,with yachts and portfolio aplenty, without waiting for us to get sick or being paid based on how well they cure our ills.
The fact you have $160K net worth just means that is how much the nursing home will milk out of you before they let you get an infection and die sitting in your full adult diapers.
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Re: Is EROEI important?

Unread postby donstewart » Sun 07 May 2017, 17:06:54

@vtsnowedin
Three points. The first is that there is an enormous difference between the average assets and the median assets. Median assets are more indicative of how a class of people (baby boomers) are faring. I keep seeing statistics like 'baby boomers can't retire because they can't come up with a thousand dollars of free cash'.

Second point is that assets are only as good as the ability of those who owe the debts to repay them, or the ability of the public to buy the assets with real money. If there is a big deflation, such as happened in 1930-33, then assets will shrink like snowball in July. In some countries, of course, there were violent overthrows of governments and outright defaults on debts. Whether debts can be repaid and what will be the market value of assets like a house depends on whether the upward trajectories in the panel I referred to earlier are able to sustain themselves. If oil and other fossil fuels start down, then I don't see how they can do so.

Third point is Steve Keen's identification of private debt as the big problem. Steve thinks that governments can always solve their debt problems with inflation. But private debtors cannot do so. And government money printing doesn't necessarily benefit those who owe the private debts. All the financial shenanigans of the Central Banks haven't done much for the real economy...but the shenanigans have powered a full-on bubble on Wall Street and fugitive assets such as Vancouver houses.

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Re: Is EROEI important?

Unread postby vtsnowedin » Sun 07 May 2017, 19:00:43

donstewart wrote: Median assets are more indicative of how a class of people (baby boomers) are faring.
OK fine what are those figures? And do you believe the source of those figures? Why do you believe them?
Just saying! I wouldn't believe my mother saying the sun was rising in the East before I went to the East facing window and saw it for myself. :roll:
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Re: Is EROEI important?

Unread postby donstewart » Sun 07 May 2017, 19:48:02

@vt snowedin
Quick search:
https://www.fool.com/investing/general/ ... -comp.aspx

Those over 75 have home equity but not very much else. The home equity is a result of the Federal Reserve blowing an enormous housing bubble. If that housing bubble collapses, then the house will be worth far less money. Likewise, the remainder of non-house assets may be invested in stocks and bonds which would have little value if the bubbles collapse.

A more salient question, from a Peak Oil or Peak Debt or Peak Complexity standpoint, is whether an older family has secure shelter, food, water, and social connections. My observations is that no more than 5 percent of older people can be confident about those things.

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Re: Is EROEI important?

Unread postby ralfy » Sun 07 May 2017, 20:40:22

Squilliam wrote:
Energy returns are important because of bio-capacity? I get the concept that increased energy will be required to supply an increasing amount of energy to compensate for the depletion of resources, and that as energy returns decline on average then more energy will be required to extract that energy. We will need more energy to maintain lifestyles, but overall energy required would be rising just to stand still due to a level of depletion of existing energy resources.


Biocapacity refers to physical limitations in material resources, among other things.

Now you know why energy return is important.
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Re: Is EROEI important?

Unread postby ralfy » Sun 07 May 2017, 20:47:50

vtsnowedin wrote: I don't know as that is true. Efficiency and innovation can replace a lot of the energy we consume today. Look at the efficiency between your grandmothers wood or coal cook stove and your microwave and then project forward another fifty years.
There is nothing "required " about energy. If we have it we use it and if it is cheap we waste a lot of it but if we don't have it or can't afford it we find other ways.


"Efficiency and innovation" do not "replace a lot of the energy we consume today." Instead, they allow us to increase and exploit available energy and material resources readily. That's why instead of wood or coal cook stoves we can now make microwave ovens.

The problem is that energy and material resources are limited, which is why fifty years from now we will at best go back to wood or coal cook stoves.
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Re: Is EROEI important?

Unread postby ralfy » Sun 07 May 2017, 20:59:49

Squilliam wrote:@Vt: It really depends on which side you look at. Effectively a lot of people here just look at the supply side rather than the demand side. What for instance is the energy return on switching from low efficiency consumption to higher efficient consumption like for instance installing significant amounts of insulation and low e glass. Another good example would be the switch from kerosene lighting to closed LED/Solar systems. There are plenty of good paths forward towards a more sustainable future on both the demand and supply side, but then you're really getting into politics, culture and economics.

If BAU remains the same however, then we will need more energy to stand still. If it takes more energy to extract poorer resources then overall energy consumption will need to rise. It's the degradation of existing high quality resources and the shift to lower quality resources that would do that.


Likely, needing more energy to stand still may take place even without BAU, and that's partly due to increasing global population.
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Re: Is EROEI important?

Unread postby ralfy » Sun 07 May 2017, 21:04:19

vtsnowedin wrote: BAU has never been constant so will not stay the same. It will adapt to what ever energy reality shows up.
If it takes more energy to extract poorer resources then overall energy consumption will need to rise.

We may want it to rise but might not be able to make that happen and may well use efficiency and substitution to make up the difference.
I would use depletion instead of degradation of the high quality resources but that is perhaps a distinction without a difference.


For BAU, not staying "the same" means continuous economic growth. That's not the same as adapting "to [whatever] energy reality shows up."

Efficiency as part of BAU does not "make up the difference." That's because in BAU the reason for investing in "efficiency and innovation" is to increase production, and with that consumption, which in turn guarantees better returns on investment.

Both depletion and degradation may take place, and in some cases are connected to each other. More details in the other threads in this forum.
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Re: Is EROEI important?

Unread postby ROCKMAN » Sun 07 May 2017, 23:45:01

S - "The crude delivered to refineries is of less and less quality and they have to buy more and more of it. " I believe I get your point. But that statement got me thinking: exactly whose "BAU" are you referring to?

IOW the US sticking with its BAU isn't going to help. But isn't the situation being made by by a number of countries not keeping their BAU static but actually modifying by aiming for the USA's BAU? IOW China a and India? In fact, as far as consumption goes isn't the increase in Saudi internal consumption driving it to expand BAU to accommodate its growing population?

IOW isn't it the developing economies producing as much or more of the problem by not maintain their lower energy BAU consumption as the US et al striving to maintain their BAU.

IOW what right do those selfish bastards have to increase their consumption of energy that's rightfully "ours"? LOL.
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Re: Is EROEI important?

Unread postby vtsnowedin » Mon 08 May 2017, 04:14:19

donstewart wrote:@vt snowedin
Quick search:
https://www.fool.com/investing/general/ ... -comp.aspx

Those over 75 have home equity but not very much else. The home equity is a result of the Federal Reserve blowing an enormous housing bubble. If that housing bubble collapses, then the house will be worth far less money. Likewise, the remainder of non-house assets may be invested in stocks and bonds which would have little value if the bubbles collapse.

A more salient question, from a Peak Oil or Peak Debt or Peak Complexity standpoint, is whether an older family has secure shelter, food, water, and social connections. My observations is that no more than 5 percent of older people can be confident about those things.

Don Stewart

The article dose not include the value of any pension accounts. That is a huge understatement of retirees fiscal status.
For example lets take a retiree that between Social security and his withdrawals from his retirement 401K nets 36K a year. If he needed to replace that with a stock portfolio paying on average four percent dividends it would have a market value of $900K and probably should be 1.5 million to be as sure of the payouts as his retirement checks are today.
As to the shelter point, home equity is shelter and nobody owns there home totally free and clear. Property tax bills come like clock work and keep going up. Doesn't matter, the nursing home will be glad you kept it up so nice for them after they get their claws into you.
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