sjn wrote:I keep hearing this recently, but it shows a worrying lack of understanding. Any politico-economic system requires energy to function at all, that's a given, basic services and production need energy. What this line of reasoning fails to account for, though, is the energy flow required to counter entropy within the existing system before any can be diverted to growth: Roads need repaving, bridges repainting, all capital infrastructure has to be continually renewed.
Sure, but we were underfunding our infrastructure well before 2005.
Furthermore, as primary source ERoEI declines more of the energy pie is diverted to energy procurement, competing with the energy required to keep society functioning, leaving less and less available for growth no matter how highly leveraged
Sure, but energy production ex-oil is up, including more than a quadrillion BTUs from wind. And we've got very profitable companies with fairly low leverage and high capitalization producing natural gas from fracking paying high salaries.
, which brings me to my final point: Oil Intensity, as measured relative to GDP is actually more a measure of financial leverage and derivative market "profits" than it is a measure of energy efficiency, but even greater pure energy efficiency means every joule lost to systemic entropy and ERoEI results in even greater loss of productivity to the economy, and once there's none left...
This is contradicted by the fact that the velocity of money in the economy is actually down, implying less leverage. In addition, outstanding credit derivatives and options, along with credit card debt are down as well. So there's a lot of explaining you've got to do for this very complicated model you've got.
For all the complexity folks talk about in the financial markets, us quants try to go for the simplest and most sensible models and explanations whenever possible. Perhaps a simpler and less complicated explanation is that CAFEs have been up 20% over the past five years and folks are driving less while working the same. Maybe the "leverage" you are trying to talk about is really us being able drive further on the same gallon of gas rather than us borrowing more either via consumer or corporate debt to pay for that gas: http://en.wikipedia.org/wiki/File:CAFEStandard2.png