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PeakOil is You

Is EROEI Important? Pt. 2

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

Is EROEI important?

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No
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Re: Is EROEI important?

Unread postby Tanada » Thu 04 May 2017, 09:37:23

Progressiveism was invented by the Republican Party starting with the abolition movement which was actually an attempt to convert chattel slaves into wage slaves that could be fired when they were no longer useful to the capitalists. It waxed and waned for decades until Teddy R inherited the Presidency and boosted it to a whole new level. His ideological successor Woodrow Wilson co-opted Progressiveism for the Democrat party, pushing it to such an extent it became a label with significant blowback from the general population. The D's and R's who were Progressives then changed to calling themselves Jeffersonian Liberals.

Certain religious leaders have always been part of the Progressive/Liberal/Left because they forget that Jesus told his followers to give of themselves, not take from their neighbors to support third parties.
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Re: Is EROEI important?

Unread postby sjn » Thu 04 May 2017, 10:38:53

Tanada wrote:Certain religious leaders have always been part of the Progressive/Liberal/Left because they forget that Jesus told his followers to give of themselves, not take from their neighbors to support third parties.

So that's how Christians rationalise "Rightism"? I've always wondered. How does that work with the recognition that the Earth isn't "of themselves" but people are "of the Earth", that anything taken from the Earth - from the natural world - actually belongs to all life, and impoverishes all but perhaps the recipient?
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Re: Is EROEI important?

Unread postby Squilliam » Thu 04 May 2017, 15:52:16

ralfy wrote:
Energy return is not a contrived metric. That's why we have diminishing returns.

Money, though, is a contrived metric. That's why we have money multipliers.


It is only part of the equation. You also need things like rate of returns from energy invested and you need to consider the wider systems inputs and outputs towards extracting and using that energy. In this money is better because you can account for most of the inputs.

ralfy wrote:
Actually, it functions essentially in terms of credit. That's why its indicators, from GDP to debt, involve money as a metric.

Also, credit doesn't represent resources. That's why the notional value for shadow derivatives alone is much larger than the size of the global economy, which itself is also measured in terms of credit:

http://www.washingtonsblog.com/2012/05/ ... arket.html

You might be talking about another planet.


The shadow financial economy != the real economy.
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Re: Is EROEI important?

Unread postby ralfy » Thu 04 May 2017, 22:40:09

Squilliam wrote:It is only part of the equation. You also need things like rate of returns from energy invested and you need to consider the wider systems inputs and outputs towards extracting and using that energy. In this money is better because you can account for most of the inputs.


The rate of returns from energy investment ultimately involves the amount of energy made available. No amount of increased credit creation can reverse that. That's why we have peak oil.


The shadow financial economy != the real economy.


Exactly. The real economy consists of energy and material resources that make food production, manufacturing, and services available. The former are defined by physical limitations and not by credit. That's why energy returns are important.
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Re: Is EROEI important?

Unread postby AdamB » Fri 05 May 2017, 21:39:59

ralfy wrote:That's why we have peak oil.


Ummm...well...not quite yet. But I understand you are keeping your hopes up on the topic!

Any chance we are ever going to hear a real Ralfy story, about how the horrors of peak oil have affected you ever since it happened and..well...to be honest...it bother anyone much?

Is your fascination with a non-event because you lost a job because of it, or you took Matt's closure of LATOC personally?
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Re: Is EROEI important?

Unread postby Squilliam » Sat 06 May 2017, 08:28:07

ralfy wrote:
Squilliam wrote:It is only part of the equation. You also need things like rate of returns from energy invested and you need to consider the wider systems inputs and outputs towards extracting and using that energy. In this money is better because you can account for most of the inputs.


The rate of returns from energy investment ultimately involves the amount of energy made available. No amount of increased credit creation can reverse that. That's why we have peak oil.


The shadow financial economy != the real economy.


Exactly. The real economy consists of energy and material resources that make food production, manufacturing, and services available. The former are defined by physical limitations and not by credit. That's why energy returns are important.


Energy returns for oil are somewhat important, but they aren't everything. We don't have an 'oil sector' by itself, we have an 'energy sector' In that sector you have your alts, oil, coal, gas, nuclear and hydro. It is a mix that can and will change. Sure you could argue quite strongly that we aren't moving fast enough towards alternative energy sources, but I don't think you have a case that peak oil is a present problem, nor that it is an imminent threat. The fact that the finance sector has become a parasitical part of the overall system in many ways does not preclude the fact that much of what wealth we do have was enabled in large part by the financial system. This is a large reason why the west is wealthy and the third world is not because we can make investments in machines to increase the productivity of the real economy.
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Re: Is EROEI important?

Unread postby ROCKMAN » Sat 06 May 2017, 10:11:18

S - "...but I don't think you have a case that peak oil is a present problem...". Actually one can say PO per se has never and will never be the primary problem. Like the old joke: falling off a building isn't the primary problem...it's that aprupt stop at the end. LOL.

The problem is a lack of affordable/available oil. In the early 1940's there was oil available to purchase if you had the price. But even though Japan had the money the US oil embargo presented Japan with the ultimate PO doomed dynamic over 7 decades ago. And in the late 70's much of the world faced the doomer price scenario at a time when global oil production was much less then today.

So let's make the assumption we just hit global peak oil in the last year or so. So, so what? Countless numbers of folks are buying oil today just as countless are unable to afford to do so. The same situation in 1940, 1950, 1960...2016, 2017.

Again, so what? Countless millions have suffered as a result of their inability to acquire oil (as well as other energy sources). And none of those situations resulted from global PO. So let's make a rediculous assumption: oil is not a finite resource. Someday the world will producing 150 mm bopd...200 mm bopd...300 mm bopd.

So does that mean wars over oil won't be fought? There won't be periods where economies won't be driven into recessions/depressions by high oil prices? That the oil patch won't collapse as a result of a sudden decline in oil prices? That there won't be short term periods of "gluts" as well as "shortages".

There have been millions of words published describing how life will look after we pass global PO. But a simple question: how will life look that much different after we pass global PO then at various periods of time since Col. Drake drilled that first well about 150 years ago?

And if someone wants to offer an answer that's OK. But remember those circumstances will have to differ significantly then any we've already experienced. Otherwise you'll just be predicting the same ol' same ol'. LOL.
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Re: Is EROEI important?

Unread postby ralfy » Sat 06 May 2017, 10:31:16

Squilliam wrote:Energy returns for oil are somewhat important, but they aren't everything. We don't have an 'oil sector' by itself, we have an 'energy sector' In that sector you have your alts, oil, coal, gas, nuclear and hydro. It is a mix that can and will change. Sure you could argue quite strongly that we aren't moving fast enough towards alternative energy sources, but I don't think you have a case that peak oil is a present problem, nor that it is an imminent threat. The fact that the finance sector has become a parasitical part of the overall system in many ways does not preclude the fact that much of what wealth we do have was enabled in large part by the financial system. This is a large reason why the west is wealthy and the third world is not because we can make investments in machines to increase the productivity of the real economy.


These other sources of energy have low quantity and quality:

http://www.theoildrum.com/node/3786

The point that the financial system is parasitical is spot on. How that goes against your argument, I'll let you figure that out.
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Re: Is EROEI important?

Unread postby ralfy » Sat 06 May 2017, 10:34:18

ROCKMAN wrote:S - "...but I don't think you have a case that peak oil is a present problem...". Actually one can say PO per se has never and will never be the primary problem. Like the old joke: falling off a building isn't the primary problem...it's that aprupt stop at the end. LOL.

The problem is a lack of affordable/available oil. In the early 1940's there was oil available to purchase if you had the price. But even though Japan had the money the US oil embargo presented Japan with the ultimate PO doomed dynamic over 7 decades ago. And in the late 70's much of the world faced the doomer price scenario at a time when global oil production was much less then today.

So let's make the assumption we just hit global peak oil in the last year or so. So, so what? Countless numbers of folks are buying oil today just as countless are unable to afford to do so. The same situation in 1940, 1950, 1960...2016, 2017.

Again, so what? Countless millions have suffered as a result of their inability to acquire oil (as well as other energy sources). And none of those situations resulted from global PO. So let's make a rediculous assumption: oil is not a finite resource. Someday the world will producing 150 mm bopd...200 mm bopd...300 mm bopd.

So does that mean wars over oil won't be fought? There won't be periods where economies won't be driven into recessions/depressions by high oil prices? That the oil patch won't collapse as a result of a sudden decline in oil prices? That there won't be short term periods of "gluts" as well as "shortages".

There have been millions of words published describing how life will look after we pass global PO. But a simple question: how will life look that much different after we pass global PO then at various periods of time since Col. Drake drilled that first well about 150 years ago?

And if someone wants to offer an answer that's OK. But remember those circumstances will have to differ significantly then any we've already experienced. Otherwise you'll just be predicting the same ol' same ol'. LOL.


The mistake is to assume that problems take place only when oil production peaks and starts dropping. Actually, it can take place even before that happens, and the reason is the same as that of peak production and decline.
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Re: Is EROEI important?

Unread postby ROCKMAN » Sat 06 May 2017, 11:04:03

"Actually, it can take place even before that {PO} happens...". Problems like the tens of thousands that died and the $trillion of US taxes spent pushing the Iraqis out of Kuwait more then 25 years ago. Long before most here ever heard the term "peak oil".
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Re: Is EROEI important?

Unread postby Squilliam » Sat 06 May 2017, 19:19:11

ralfy wrote:These other sources of energy have low quantity and quality:

http://www.theoildrum.com/node/3786

The point that the financial system is parasitical is spot on. How that goes against your argument, I'll let you figure that out.


Heres the issue. The only time EROEI becomes a problem is when it is less than or around 2.0. At 2.0 you have half available to replace your current energy source and half to invest in whatever you want. However like I have said repeatedly the total EROEI is still well above 20, and it is an energy sector and not just an oil sector. If Oil has low energy returns then it can be subsidised by coal which has high energy returns. All of the alts are good enough at this point that it is possible to transition off oil at a stable economic level.
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Re: Is EROEI important?

Unread postby pstarr » Sat 06 May 2017, 20:03:16

Squilliam wrote:
ralfy wrote:These other sources of energy have low quantity and quality:

http://www.theoildrum.com/node/3786

The point that the financial system is parasitical is spot on. How that goes against your argument, I'll let you figure that out.


Heres the issue. The only time EROEI becomes a problem is when it is less than or around 2.0. At 2.0 you have half available to replace your current energy source and half to invest in whatever you want.


You need to iterate this to understand your confusion:

-- you first drill and expend 1) $50 barrel of energy to produce 2) $50 barrels (that's an EROEI of 2.0), then you either . . .

-- sell those 2) $50 barrels of energy . . . and buy 1 barrel to drill the next 2) barrels, or

-- or sell 1) $50 barrel . . . and use the other 1) $50 barrel (you just produced) to drill the next 2) barrels. It goes around and around like that. In either case net energy profit is 0.

Squilliam wrote:However like I have said repeatedly the total EROEI is still well above 20 . . .

and you know this how? How do you know that aggregate/median/average EROEI across all oil fields and among all plays is 20:1? How's that? Do you have a reference?
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Re: Is EROEI important?

Unread postby pstarr » Sat 06 May 2017, 20:56:34

Squill, you are still posting like mad everywhere else on this board . . . but not here? Wonder why? hum?
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Re: Is EROEI important?

Unread postby Squilliam » Sat 06 May 2017, 22:17:15

pstarr wrote:Squill, you are still posting like mad everywhere else on this board . . . but not here? Wonder why? hum?


And you're replying to me like mad even though you made a big scene about putting me on ignore. Well of course I returned the favour. Know this... you're the ONLY person I put on ignore. 8)

Wondering why? Well it's pretty obvious that I have a completely different opinion on the energy system. Is EROEI important? No. Why? It's a myopic perspective that doesn't consider the wider systems or even the complete energy sector. It doesn't even matter if the net energy from oil production falls to negative as long as other parts of the energy sector remain strongly positive. It's as relevant to energy as the drag co-efficient is to transport efficiency. It's part of an equation, so why are people treating it as if it was the only thing that mattered? It's like saying we should transport our goods in cars because cars have significantly better drag coefficients than trucks -- stupid if you consider the whole system in question.

Account for these costs:

Opportunity cost of other energy projects.
Rate of return (how long to recoup investment)
Supporting costs of training sufficient staff and paying them for their efforts.
Supporting infrastructure costs (roads, pipelines etc).
Base load consumption because of how transport and industrial users rely on this energy source.
Materials costs (steel, rubber etc) that go into the production of capital equipment.

Funny how money is the BEST way to do that. Ironic huh? Money takes into account far more of the overall system costs than EROEI does. It even includes EROEI because of the need to replace consumed resources, or find alternatives. The fact that the financial sector has a lot of BS/parasitism doesn't mean that it is useless, or doesn't perform an important role. It's just the bankers/financiers exploiting a position of power to take a greater proportion of the overall economic surplus.
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Re: Is EROEI important?

Unread postby pstarr » Sat 06 May 2017, 23:10:29

Squil, can you condense that please? I don't have the time. And we are losing interest.

But maybe that's because you don't understand that an eroei of 2 returns no oil to the consumer? Right? You did the simple iterative math and concluded this? Right?

No? Didn't think so, and that explains the rambling meaningless post. As WC Fields once opined: "if you can't dazzle em' with brilliance, you can always baffle em' with . . . "
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Re: Is EROEI important?

Unread postby Squilliam » Sat 06 May 2017, 23:38:47

EROEI of 2.0. You have a bank account that returns 100% after 10 years including inflation. You take half out. What's remaining in the bank? your original investment. has your bank balance gone down? No. Can you continue to do this indefinitely? Yes. Is there a problem? No. Simple!
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Re: Is EROEI important?

Unread postby pstarr » Sun 07 May 2017, 00:27:31

Squilliam wrote:EROEI of 2.0. You have a bank account that returns 100% after 10 years including inflation. You take half out. What's remaining in the bank? your original investment. has your bank balance gone down? No. Can you continue to do this indefinitely? Yes. Is there a problem? No. Simple!

No squil, that is not eroei, that's banking. This will take some time. I still believe you are not a troll, like some of the others. Reread what I wrote above. Then try this:

1 unit of energy input returns (or outputs) 2 units of energy. Is that right? Fine. Good. that is properly referred to as 2:1, 2 to 1, 2 energies returned on 1 energy input. yes?

But to continue the process and start again to keep the oil production system running, to keep producing energy . . . we would need to then take remove 1 unit from the previous 2 gross units that we produced above, just to continue getting oil. We are back to one unit produced. It never grows. Never any oil leaves the oil production system. Got it?
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Re: Is EROEI important?

Unread postby Squilliam » Sun 07 May 2017, 01:38:09

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.
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Re: Is EROEI important?

Unread postby ralfy » Sun 07 May 2017, 03:17:07

ROCKMAN wrote:"Actually, it can take place even before that {PO} happens...". Problems like the tens of thousands that died and the $trillion of US taxes spent pushing the Iraqis out of Kuwait more then 25 years ago. Long before most here ever heard the term "peak oil".


That plus the previous financial crash and the weak global economy since.
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Re: Is EROEI important?

Unread postby ralfy » Sun 07 May 2017, 03:21:50

Squilliam wrote:
Heres the issue. The only time EROEI becomes a problem is when it is less than or around 2.0. At 2.0 you have half available to replace your current energy source and half to invest in whatever you want. However like I have said repeatedly the total EROEI is still well above 20, and it is an energy sector and not just an oil sector. If Oil has low energy returns then it can be subsidised by coal which has high energy returns. All of the alts are good enough at this point that it is possible to transition off oil at a stable economic level.


Given a global capitalist system with a growing global middle class, likely higher. And if one wants that across several decades, an energy return that will increase biocapacity per capita many times over, higher still.

Given that, the alts combined are not good enough in terms of quantity nor quality.
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