The whole peak investment = peak oil theme: peak oil as in peak profitable oil, is really the only truly calamitous fast crash scenario I've yet seen.
The
"Tipping Points" paper and lots of others painted a scenario where
geologic peak oil led to a cascading, systemic, self reinforcing failure of everything - the end of growth/capitalism/yadda yadda. That idea seemed pretty short sighted to me because everything wouldn't just stop because of a lower energy availability, it might seize up for a period as some debt was realized to be worthless but then it would "normalize" at the lower state supportable by the lower oil production, then repeat. Maybe that would be continuous or maybe punctuated but it didn't make sense that everyone would just fall over dead, LOL
The idea of
peak oil profit is different. The economy can only pay a certain amount for energy at a given level of economic activity. The result of oil production costs higher than the economy can afford means there is no profitable investment in new production by for-profit entities. Governments would be forced into the energy business by subsidizing unprofitable extraction.
Of course that means that not only would the EROEI become negative but so would society's ROI as well and that
would be a self reinforcing spiral. That's the thing about capitalism, you can only fool the bottom line for so long. Consider the amount of tight oil "reserves" the big IOCs gobbled up and now are choking on. Someone is bound to buy up those paper barrels when they are coughed up and maybe that buyer will get a little bump in their stock price. But what happens when the economy can't afford to pay the freight on those "technically" extractable reserves? Are they still technically reserves?
Gail's point is that input costs for all resources are reaching a critical phase after falling for years as technology offset increasing scarcity. Take a look at the chart of the metal Index, either the fix is in and financialization and commodity pirates have taken over and now control the markets - or - scarcity has begun to trump technology.
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
-- Abraham Lincoln, Fragment on Government (July 1, 1854)