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EROI < 1:5 => collaps of modern civilisation!

Discuss research and forecasts regarding hydrocarbon depletion.

Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby marmico » Wed 01 Aug 2018, 13:42:53

The reason why growth in prosperity is over is that we no longer have access to
abundant cheap energy


BS

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https://www.eia.gov/todayinenergy/detail.php?id=36754
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby aspera » Wed 01 Aug 2018, 13:55:28

marmico: Morgan's definition of "cheap energy" may be a bit different from the conventional usage of that term. I've highlighted below the linked concepts in his notion of "cheap energy." The first one being what you may have inadvertently taken out-of-context. And the second which explains the "costs" he is talking about.

The reason why growth in prosperity is over is that we no longer have access to abundant cheap energy. Where geographical expansion and economies of scale once drove down the cost of accessing energy, the driving factor now is depletion, which is pushing costs upwards, and is doing so exponentially. The relevant cost here is the amount of energy consumed in the process of accessing any given quantity of energy. This cost is known as the Energy Cost of Energy (ECoE).


Also see his document from Tullett Prebon. Particularly Part 5.
Perfect Storm: Energy, finance and the end of growth.
Tim Morgan, Global Head of Research at Tullett Prebon

Download: https://www.tullettprebon.com/Documents ... rm_009.pdf

TABLE OF CONTENTS

Part one: the end of an era

The four factors which are bringing down the curtain on growth - The economy as we know it is facing a lethal confluence of four critical factors – the fall-out from the biggest debt bubble in history; a disastrous experiment with globalisation; the massaging of data to the point where economic trends are obscured; and, most important of all, the approach of an energy-returns cliff-edge.

Part two: this time is different

The implosion of the credit super-cycle - The 2008 crash resulted from the bursting of the biggest bubble in financial history, a ‘credit super-cycle’ that spanned three decades. Why did this happen?

Part three: the globalisation disaster

Globalisation and the western economic catastrophe - The Western developed nations are particularly exposed to the adverse trends explored in this report, because globalisation has created a lethal divergence between burgeoning consumption and eroding production, with out-of-control debt used to bridge this widening chasm.

Part four: loaded dice

How policies have been blind-sided by distorted data - The reliable information which policymakers and the public need if effective solutions are to be found is not available. Economic data (including inflation, growth, GDP and unemployment) has been subjected to incremental distortion, whilst information about government spending,
deficits and debt is extremely misleading.

Part five: the killer equation

The decaying growth dynamic - The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel
.
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby onlooker » Wed 01 Aug 2018, 14:42:17

Which is what Short and the Hills Group have been saying
"The world's crude reserve can be likened to a car battery. As time progresses the battery's internal irreversibilities increase due to entropy production, and we say the battery "gets weak". The internal resistance of the battery increases until the power production of the chemical processes of the battery can no longer overcome the resistance. We say the battery has "gone dead". Like the battery, the internal irreversibilities due to entropy production, of the world's crude oil production system are increasing. Higher viscosity, increasing well depth, and increasing water cut have the same effect as increasing resistance does in the battery.

All processes approach an equilibrium state with their environment. This is called the "dead state", and represents the point where no additional work can be extracted from the system's energy. It is the point where the system's internal irreversibilities overcome the system's energy. The car battery reached the "dead state" when it permanently went "dead". So also will the world's petroleum production system. "
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby marmico » Thu 02 Aug 2018, 04:53:29

ETP=EROI=GIGO
ECoE=EROI=GIGO

A dart throwing simian is just as accurate as Timmie "Perfect Storm" Morgan's 2012 projections. OMG we are doomed. Timmie says that energy extraction was 97% energy efficient in 1990, 94% energy efficient in 2012 and will be 90% energy efficient in 2022. It's BS and it doesn't matter if you don't adjust for energy intensity. Is all your household lighting LED? Is your ride 20 miles per gallon (mpg) or 40 mpg?

https://www.tullettprebon.com/pressrele ... growth.pdf
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby aspera » Thu 02 Aug 2018, 13:39:28

Citation: Jean-Francois Fagnart & Marc Germain (2018). Net energy ratio, EROEI and the macroeconomy. Structural Change and Economic Dynamics. 37: 121–126.

Abstract: In an input–output model of a two-sector economy (energy and manufacturing), we analyze the macroeconomic implications of the quality of secondary energy production. We measure it by the net energy ratio (NER for short), i.e. the fraction of produced energy available for net final production. NER is shown to be related to the EROEI concept encountered in energy science and to affect (a) the energy intensiveness of final output, (b) the capital requirements of the two sectors of the economy and the aggregate capital–output ratio,and (c) the rate of capital accumulation and the growth rate of the economy at given saving rate. As a consequence, an energy transition characterized by a decreasing NER would exert a drag on economic growth.

Download: https://www.sciencedirect.com/science/a ... via%3Dihub

That last sentence may seem obvious to many of us but is not so to classic economics. The article builds the evidence for this notion.
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby aspera » Fri 03 Aug 2018, 17:12:33

Citation: Michael Dale, Susan Krumdieck and Pat Bodger (2011). A Dynamic Function for Energy Return on Investment. Sustainability, 3, 1972-1985 (doi:10.3390/su3101972)

Abstract: Most estimates of energy-return-on-investment (EROI) are “static”. They determine the amount of energy produced by a particular energy technology at a particular location at a particular time. Some “dynamic” estimates are also made that track the changes in EROI of a particular resource over time. Such approaches are “bottom-up”. This paper presents a conceptual framework for a “top-down” dynamic function for the EROI of an energy resource. This function is constructed from fundamental theoretical considerations of energy technology development and resource depletion. Some empirical evidence is given as corroboration of the shape of the function components.

From Discussion (emphasis added): Although energy dynamics are not well understood, since EROI is a physical property of an energy source, it should be easier to predict over long time periods than energy production costs (in monetary terms) or prices. The EROI function may then enable long-term energy forecasts to be made which are more accurate than those using solely price-based dynamics. Such a projection, based on the principles of energy analysis, will also automatically obey fundamental physical laws, such as the first and second laws of thermodynamics.

From Conclusion (emphasis added): We have presented a top-down framework for determining the EROI of an energy source over the entire production cycle of an energy resource. This function allows production costs (in energetic terms) to be predicted into the future. This EROI function, coupled with a purely physical allocation function to allocate energy demand between different energy sources, will allow a new form of energy supply forecasting to be undertaken, based solely on physical principles.

Download: http://www.mdpi.com/2071-1050/3/10/1972

Only a conceptual framework; Looking for more recent use and/or updating. But an interesting analytic approach to net energy dynamics. Supports why EROEI may be an increasingly useful long-term planning and decision-making metric.
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby marmico » Sun 05 Aug 2018, 08:46:28

Is red your favorite crayon color?

Both papers you cited lack empirics (counterfactuals).

Do explain why the EROI guys ranting about declining EROI and Seneca Cliffs, have witnessed declining energy spending relative to USA GDP since the term EROI was coined ~40 years ago?

The day Charlie Hall does an empirical analysis of EROI from the well head to the gasoline tank will be instructive.
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby aspera » Sun 05 Aug 2018, 13:42:10

marmico wrote:1. Is red your favorite crayon color? Yes, actually; What's yours?

Of course, here it highlights parts I think are more relevant to our discussion.

2. Both papers you cited lack empirics (counterfactuals). Disagree.

These peer-reviewed journal articles are well developed, and internally coherent. Perhaps what you are looking for is in their cited works? A lot to get through, I know.

3. Do explain why the EROI guys ranting about declining EROI and Seneca Cliffs, have witnessed declining energy spending relative to USA GDP since the term EROI was coined ~40 years ago? I can't.

Although I do wonder if this way of challenging EROEI is useful. It may be asking the wrong question? It certainly has many confounds: e.g., uses USA data only, accepts GDP as a gold standard metric, ignores short-term technology advances/applications, ignores the effect of cheap credit on O&G production, may be too short of a time period to see effects, etc.

EROEI is relatively new (as you point out) and understudied (maybe a dozen researchers since Odum in 1973?). It has no where near the maturity or received the research attention that other metrics (i.e., GDP) have received. Thus, at this stage in its development, its outright rejection seems premature. Advocating for such premature rejection would be the hallmark of a non-scientist (of course, they would disagree).

An appealing feature of EROEI is its being based on first principles. This alone appeals to the engineer's mind, to systems analysis, and to any analyst trying to get away from the noise of the current economic system.

4. The day Charlie Hall does an empirical analysis of EROI from the well head to the gasoline tank will be instructive. Haven't read all of Hall's work. Or that of all of his colleagues. But, is it a correct assumption that you are saying no one has done such empirical analysis?

It does seem that you are. Which, if true, begs the question, how can we then know that EROEI isn't providing useful and unique insights?
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby onlooker » Sun 05 Aug 2018, 19:02:04

So, Mr Hall correctly sees the energy after extraction as the efficiencies or inefficiencies in the system in the delivery and use of energy process. What most matters is the EROEI and EROI in exploiting that energy source. All other energy costs are related to how well ie. efficiently or not society utilizes the energy

https://ourfiniteworld.com/2018/04/12/e ... -comments/
As we define again and again we have used the direct (e.g. natural gas to pressurize an oil field) plus indirect (energy to make the capital equipment: see Fig. 6 legend of Cleveland et al.) energies that are used to exploit fuels from Nature. We have consistently defined EROI to mean energy at the wellhead, mine mouth, bussbar or farm gate unless explicitly stated otherwise. We consider the energy used subsequently to deliver or use that energy as efficiency (as in food chain efficiency) of the use system. These data are not easy to gain, requiring many months of research in many libraries and government archives (See Appendix 1 of Guilford et al.) and are becoming more difficult as much of our National data gathering erodes. Such difficulties and their consequences are usually referred to in peer-reviewed EROI research papers by the authors themselves.

2) “The standard EROEI method assumes the energy cost of each of these is zero.” This is most explicitly not true. As appropriate (and as we have become better at the analysis) we have included energy costs of taxes (e.g. Prieto and Hall), Roads (Hall, Balogh and Murphy; Prieto and Hall), labor (e.g. Hall et al 1986; Prieto and Hall) and so on. We have tended to avoid the contentious issue of whether or not to include labor as “input” or “consumption” but occasionally undertook it as sensitivity analysis.

Gail is correct in saying that there are many more costs associated with energy, and that these costs are extremely important to society. But we normally consider these as costs associated with use of energy, but not its extraction from Nature which is the point and definition of EROI analysis. We have considered these before as EROIpou, that is at the point of use, or more recently (and better in my opinion now) as the EROI (at the mine mouth) required to support various levels of societal well-being (e.g. education, health care, arts etc.; Lambert et al.). At the logical extreme we may wish to include all of civilization’s activities as supportive of the energy extractive process so that EROI would be (by definition) 1:1, but that does not seem useful to me. We need to know how much energy it takes to get each actual or potential energy resource. For example, with an EROI of close to 1:1 corn-based ethanol is not a net energy source to a modern complex society. The lower EROI of renewables after accounting for intermittency (see below) will make the transition to renewables, if that is possible, very difficult.
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby marmico » Mon 06 Aug 2018, 08:36:39

Sheesh. Trotting out Tverberg as an expert. She couldn't pass a high school economics exam.

EROI is a distraction. There is no statistically significant difference in net energy (EROIpou) being delivered to the wider USA economy than there was 50 years ago. Yet the standard of living (GDP as proxy) has increased 1.3 fold per capita.

https://fred.stlouisfed.org/graph/?g=kG7w
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby aspera » Mon 06 Aug 2018, 14:33:27

marmico wrote:... Yet the standard of living (GDP as proxy) has increased 1.3 fold per capita.

GDP sure seems a strange metric to focus attention on, increasing on both destruction and development. Seems like it measures mining, extraction and consumption rather than well-being. And that's not even taking into consideration that it misses some important things:
GDP Doesn't Include Negative Effects on Nature

Another point of contention with traditional GDP calculations is that it is ill-equipped to counterbalance the negative effects of events against the positives. Perhaps the most important issues here relate to nature. After a large natural disaster, the subsequent rebuilding efforts require a substantial amount of development and investment, providing a temporary surge in GDP. Yet no one would argue that individuals, or the economy as a whole, are actually better off in the immediate aftermath of catastrophe. Environmentalists would take this logic a step further, arguing that GDP actually incentivizes short-term growth at the expense of long-term global health because it does not take into account the value of things such as clean air and sustainable means of production. One modern day example of this phenomenon can be found in the arguments for and against energy development policies such as fracking.

Source: https://www.investopedia.com/advisor-ne ... e-economy/

It does benefit from the "widespread standardization of methodology for measuring..." (Gordon 2016, 9).

marmico: I'd recommend reading Gordon, R. J. (2016) The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War. Princeton University Press (if you haven't already). He starts off with the notion of a "special century," unlikely to be repeated for reasons he goes into at great length. Given his "special century's" overlap with the fossil-fueling of industrial society, I'm surprised he didn't discuss the role of surplus energy on growth. Energy gets very little treatment in all 750+ pages, but maybe that's to be expected by those who see the economy as superordinate to the environment? His argument is powerful nonetheless (but probably worthy of a separate post on growth, GDP, etc. rather than this one on EROEI).
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby marmico » Thu 09 Aug 2018, 06:00:28

I would recommend that you look at this chart.

Image

My hunch is that Gordon will be proven wrong in the next 50 years just like Ehrlich was proven wrong from 50 years ago.

Is that you in the center of the photo without your red crayon?

Image
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby onlooker » Thu 09 Aug 2018, 09:08:15

Environmentalists would take this logic a step further, arguing that GDP actually incentivizes short-term growth at the expense of long-term global health because it does not take into account the value of things such as clean air and sustainable means of production

Absolutely! Beyond measuring negative outcomes, GDP and Economics itself is functioning as though in a vacuum regarding Nature as "externalities" as defined "a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved, such as the pollination of surrounding crops by bees kept for honey."

It is astonishing considering the huge impact to Nature that our enormous world population and Industrial Civilization have had and are having on the planet
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby aspera » Fri 10 Aug 2018, 00:55:26

marmico wrote:I would recommend that you look at this chart.
...
My hunch is that Gordon will be proven wrong in the next 50 years just like Ehrlich was proven wrong from 50 years ago.

Perhaps you thought that the chart you posted contradicts Gordon (2016). In fact, it is fully consistent with his major theme. The time-span it shows coincides with what he calls the "special century." The growth depicted is his starting point.

His thesis expects just such a chart; he presents many like it in his book. But he then goes on to explains, in some detail, why such growth came to be. Why it is unlikely to continue. And why it is unlikely to be repeated in the current techno-industrial society. What is fascinating is that he makes a coherent argument without ever referring to peak oil, energy descent, "limits-to-growth," EROEI, climate disruption, resource constraints, loss of soil fertility, or any of the other notions discussed on this website.

I trust that you agree that anyone believing that GDP can grow indefinitely on a finite planet is practicing magical thinking.
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby godq3 » Wed 03 Oct 2018, 03:56:34

marmico reminded me why I no longer visit this site. Because of idtiots who don't know the difference between cost of extracting oil, and oil sales price. Also many idiots here, who think that if civilization didn't collapse so far, then it won't.
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby GHung » Wed 03 Oct 2018, 07:57:49

.... and the chart marmico hopes you won't see,, or maybe he thinks growth since 1970 isn't related to debt/GDP: https://www.macrotrends.net/1381/debt-t ... ical-chart


https://tradingeconomics.com/united-sta ... nment-debt
Image

Kind of goes vertical about where marm's chart ends, eh?
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby pstarr » Wed 03 Oct 2018, 14:13:06

marmico wrote:Is red your favorite crayon color?

Both papers you cited lack empirics (counterfactuals).

Do explain why the EROI guys ranting about declining EROI and Seneca Cliffs, have witnessed declining energy spending relative to USA GDP since the term EROI was coined ~40 years ago?

The day Charlie Hall does an empirical analysis of EROI from the well head to the gasoline tank will be instructive.
.
You know nothing. Models as per Hall, Cleveland, ETP are the only possible tools to measure net energy. 'Empirical' analysis is impossible given the quandary of unlimited recursive boundary control.

IE if one were to consider the energy deficit embodied in fracting (2000hp turbine pumps) must one include 10,000 ft of pipe/steel foundry coal? How about the transportation fuel for delivery? Workers?

Stay out of the adult conversation, pls.
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby shortonoil » Mon 08 Oct 2018, 20:09:04

Hi pstarr,
Long time no see. Here is a graph that I call the "Graph that Rules them All". It is, and has been world petroleum production that leads world GDP. With two primary producers, Venezuela and Iran, falling fast, we will undoubtedly hit Peak this year, or next. It looks like it is going to take at least an additional 3 to 4 mb/d to compensate. There are no other producers in the world who can make up that difference, and with no growth in production there will be no growth in GDP. The world's $237 trillion in debt will very rapidly become unserviceable.

The US has now become the go to place for world capital out flows, and according to the IMF that is about $4 trillion a year. Artificially high oil prices and rising interest rates are forcing bond and equity holders out of weaker economies, and those funds are coming predominately to the US. Elevated oil prices have wiped out $3.4 trillion in capital in the last year. As a result almost every country in the world saw its currency fall against the dollar this year. The Emerging Markets (EM) are really going to get hammered this coming year. As the peripheral economies fail the rot will spread into the the core.

By cannibalizing the rest of the world the US will be able to remain solvent for a few more years. It is no wonder that almost everyone is now attempting to distance themselves from the dollar. It is the only possible avenue that they can take, but with 68% of world foreign debt held in dollars it is most likely going to be too little, a little too late. They should have been paying attention to the ETP model five years ago when they still might have been able to have avoided the dollar trap.

I'll be coming out with a book in the spring: "DECLINE, the coming end of the oil age. A survival guide." Although it is not likely that anyone will be able to completely avoid the impact of the crash, there are several possible options that will be available for insulating one's self from the effects. It is mostly about knowing, and recognizing what will be coming next, and being the first to respond. It will be all about having a good working model; those that do will survive, those that don't - not so much. That will be be good for the entire species, it will raise the average intelligence level.

http://www.thehillsgroup.org/
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby GHung » Mon 08 Oct 2018, 20:18:23

Hi, Short! Good to see you're still kicking :-D
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Re: EROI < 1:5 => collaps of modern civilisation!

Unread postby onlooker » Mon 08 Oct 2018, 20:23:25

Yes Short, we look forward to your ongoing analysis. Do you see higher interest rates triggering a stockmarket collapse this year or next?
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