I asked Dr. Hall what his thoughts were on Nate's comment. This was his response:

I agree in principal with the thrust of Nate's comments, and surely wish we could do a better job with actual energy data. But we did what we could and my gut feeling (supported by a fair amount of other analysis) is that we are about right, depending upon what "about" means! Lets say +/- 33 percent if we are ever to get some real energy cost data on the subject, and with overall time trends basically in the right directions.

Now to specific questions: Although a great deal of money does go to the financial sector, and that may change over time, that should be accounted for in the explicit year to year dollar cost/energy cost ratios we derived for the US and the UK (and these were similar) for our base case. We did NOT use societal averages except to estimate our indirect energy costs but they are only 11 percent or so of the total.

I think this argument also applies in part to Nate's second question, we are not basing most of our analysis on the societal energy/GDP ratio but only that for production itself. I do not see the need to include the cost of reconstructing all the infrastructure since it is in place and making it was part of the cast of some past EROI assessment I suppose, as some of what is being spent today will be part of the cost they will not be paying in the future: hence our use of the term "rolling average". Now if we are not undertaking sufficient infrastructure replacement as Matt Simmons suggests, I would not be surprised and that would indicate our EROI estimates are conservative. I am also not surprised that oil price and EROI are correlated as a lower EROI should be relfected in higher market price, if that is what is meant.

Point three seems to me to be a restatement of Ricardo's point about demand for corn and average prices, and helps explain I think the patterns we see.

Nate, you make excellent points. We need the DOE and IEA economists to pull together the resources and get the best data available assembled. You'd hope by this time some of them would be looking more seriously at the physical systems problem with continually running up our economic overhead costs and running down our resource quality.

You're right to be cautious about using MJ per $ for the physical economy energy intensity. The financial system did indeed just go through a major inflation and deflation of misinformation about the physical world. The data I have is hopeful about the validity of the measure none the less. Maybe I'll get to update my curves and see if there's a new bump that would show whether that effect will turn up or not.

What I found in looking at the IEA's most detailed world product and fuel use accounts was miraculously smooth exponentials for both the world GDP and fuel consumption rates, and so for their ratio too. What I'm saying is that the fantastic money supply bubble of the past decade does not seem to appear in that as a distortion. The curves show methodically regular slow improvement in total economic efficiency. In my view you don't get regular exponential curves like that unless the growing system is acting as a whole, efficiently allocating its resources, and pushing steadily against its limits. So, I think it's possible that the economists actually succeeded in defining "real product" and the portion of economic activity that takes energy to produce, just maybe.

I labeled the periods of rapid energy use increase since the energy intensity curve (see www.synapse9.com/issues/World-eff_grow.pdf for it) show slowing improvement during the periods of rapid energy use increase and accelerating improvement in the periods of slowing energy use growth.

Robert, how does the increase in percentages of heavy sour crude factor into the amount of refining energy required?

Robert,

Dr. Hall and I have looked at this very issue and published a paper that makes an attempt at including "downstream" costs into EROI estimates. We found that once all of the downstream costs are included, that our energy sources must provide energy at an EROI of around 3:1 to maintain current society. See here for a full text PDF of this paper.

Don't they just burn whatever part of the oil barrel they can't sell? There's a lot of confusion on what EROI does or doesn't imply. Poor EROI means that ethanol or oil shales don't become much more profitable as the price of oil increases. But given the value of gasoline to our car crazy culture, oil can be pumped at negative EROI if the input energy is electricity or concentrating solar for heat or burning garbage or some other less desireable form of energy. Saying BAU can't exist without some minimum EROI is a fallacy. Not as long as there is a star 93 million miles away. Price of energy will go up, sure. Civilization collapse no.

Do you have a source for that Robert? The most recent data I've come across points to an EROEI of 5-6:1 for refining.

Will,

I also believe that a decline in EROI will have more of an exponential decline shape rather than a linear shape (i.e. resembling a Hubbert curve), as the high EROI sources (conventional oil) will be lost very quickly but numerous very low EROI sources (corn ethanol, tar sands, etc.) will persist for a while.

Hi Will,

Graphing costs we get increases that could be exponential (click for larger view).

I put in trend lines both ways for Canadian natural gas so they could be compared. The linear fit looks better for natural gas, but clearly oil (graphed in the main article) is not behaving the same way.

Along the bottom are two lines, one at an EROI of 5 and the other at an EROI of 2.5. Somewhere between those values it will take as much energy to produce, transport, and use the energy as we get out of the energy and the natural gas will no longer be an energy source.

Even with an exponential decline, it does not take that long to cross the minimum boundary.

I'd like to jump in at this point.

It seems to me that the EROI function is composed of two components: one technological which increases energy returns with a decreasing marginal return (similar to an inverted 'learning curve') the other physical due to the greater energy required as resources are depleted.

Combining these two components leads to the peaking EROI function that Hall et al proposed in their fantastic "Energy and Resource Quality: The Ecology of the Economic Process" This does not tell us whether or not the depletion component is linearly or exponentially decreasing, but overall the EROI function seems to decrease non linearly.

Another factor that is seldom recognised is the difference in capital/fuel requirements between non-renewable and renewable resources. Oil and other fossil fuels require little physical capital but fuel to operate - that's fine it's what they produce. Renewables are capital intensive and that capital has to flow through the rest of the economy first. That could cause big problems for the economy in a transition away from fossil fuels.

I've been producing some models around this and will share results as I have them.

Mik

30 years "behind schedule" only accounts for the technology transition problem, as if energy sources were "plug and play" and there was general infrastructure problem, like where we built the cities and how we sprawled the suburbs, and how we centered all our government and financial institutions around ever more rapid expanding use of cheap energy,... and things.

If you think of steering things, say like in canoeing or skiing, where the only really safe turn is the one you start at the very earliest possible time, we might well have needed to start the turn toward sustainability about 100 years ago, and have now probably lost control of much of what is now about to happen as a result.

Stripper wells still get very favorable tax treatment, but the Obama administration would like to change that.

If oil production were reduced because of such a tax change, it seems like the EROI calculation would change as well. Production used in the calculation would go down (upper limit 20%), but the investment numbers would remain essentially unchanged, implying a lower EROI.

All of these calculations are so long-term, it is hard for me to understand what should be matched against which other numbers.

That is a good point. Some readers may not remember that oil was at its relative lowest point about 1998 in terms of price. This is a chart from one of Euan's post's showing oil and other energy prices as a percent of GDP.

This is another chart, from one of Dave Murphy's posts, showing oil alone as a percent of GDP, and its inflation adjusted price.

Hello Majorian,

If one narrowly restricts the ERoEI discussion boundaries to strictly math concepts or definitions: you are right--the math ratio ERoEI can't be less than zero.

But in the larger concept or bigger boundary of Life: negative ERoEI regularly leads to starvation. Imagine an old, half-blind, arthritic cheetah that can no longer reap a strongly positive ERoEI from it's earlier high-speed sprint for harvesting gazelles. It has to now chase much smaller/slower african game. If the old cheetah is mostly unsuccessful in attaining a positive ERoEI on this smaller prey: the cheetah is merely delaying the final day of reckoning as it is only burning off its fat and muscle energies faster than it can harvest, digest, and restock [a negative ERoEI].

The same applies to humans: I remember reading somewhere that celery [although tasty] takes more energy to chew and digest than the calories contained within the celery [again a negative ERoEI].

I picture the miles and miles of MRC horizontals, plus the ever expanding networks of rusting pipelines and other FF-infrastructure, as our increasing global energy reliance on 'aging steel celery'. This ongoing change to our 'FF diet' will lead to much starvation or worse, IMO.

use a source other than oil itself.

I presume you were trying to reply to Robert2734 above, and his comment about it being theoretically OK for oil to have a negative EROI.

Yes, it's a secret technique of scientists who know better to describe things non-sensically just because they feel they are not confused by what the non-sensical description means (like describing progressive change as linear). The default presumption for all accumulaltive development curves should be that they fit a sequence of regular progressions, with reorganizatin of the system producing them during the transitions. The real effect, that the scientists that draw straight lines for the beginnings and endings of developmental processes is that they miss all the questions about how the shape of the most likely true curve points to the true behavior of the system doing it.

For example, if you understood that the random fluctuation in a curve *is above and below the mean of the physical continuity* of the underlying process... you would draw the implied continuity as a line connecting the midpoints of he fluctuatins and see if that made more sense in terms of describing the underlying process.