[basil_hayden]

$this->bbcode_second_pass_quote('sjn', 'P')ops, what you're saying doesn't jive with the other information we have about where the US economy has grown since the last bubble popped. All the growth has been in regions affected by the fracking boom, almost without exception. That of course include indirect auxiliary services and infrastructure in addition to the growth in the oil patch itself.

Do you really think next time the oil price rises up towards the "maximum affordability ceiling", the financing is going to be as cheap and readily available to shale producers as it was in this last bubble cycle?

[vtsnowedin]

$this->bbcode_second_pass_quote('Pops', 'T')hat is exactly my point! Money transfer from everyone who buys energy to a few in Houston and N Dakota.

[sjn]

I still can't see how that works. The "shale bubble" demonstrated (IMHO) that the value to the general economy from shale extraction was, at best, marginal. That is; the entire enterprise created no surplus. Like the proverbial snake eating it's own tail, once it's finished, it's gone. There won't be a next time, for the simple reason, the economics never really worked out last time, and if it was to be attempted again they would be even worse. [I'm not saying there will be no shale LTO extraction at all, but nothing like the scale we've witnessed over the last few years.]

I personally put this down to an example of a energy production regime with poor EROEI , the "LTO-economy" did not produce enough net energy to pay for itself and ended up drawing resources from other parts of the economy. This in turn left less liquidity available in the commodity markets, pulling down the price of oil and imploding the fracked-LTO-production system ultimately through exergy destruction.

[Revi]

I think you are right. We aren't going to be able to afford this oil, because it take the oil with low EROEI to run the system we are in. We can afford to frack and use tar sands as long as there is still easy to get oil around. After it runs out there will be no point in getting anything but the easy stuff, and there is less and less of that.

[Pops]

$this->bbcode_second_pass_quote('sjn', 'I') personally put this down to an example of a energy production regime with poor EROEI , the "LTO-economy" did not produce enough net energy to pay for itself and ended up drawing resources from other parts of the economy.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'n') 2011 doc the Average American paid $368 a month on gas, at just under $4/gal.
Today @ $2/gal average that would be about half so $175 savings a month - $2,000 savings a year

[Pops]

The numbers I linked were households doc - "consumer units" if you please.

LOL

[sjn]

Pops, I'm hardly a recent convert to EROEI analysis, and I keep reading/hearing this argument that it has nothing to do with the way the economy functions. Usually this is tied to some abstract example of a particular process or activity, and the suggestion is that:-

As long as it is profitable, it will be done.

Now, on the face of it, this is demonstrably true, however, I am not, and as far as I know nobody is suggesting that has ANYTHING to do with it. The point of EROEI and Net Energy analysis, is to determine how it affects the flow of energy and resources within the complex adaptable system known as the Human Ecological Economy.

Many activities are profitable, but are not useful to sustaining the system, and can actually work to undermine it. Conversely, other activities can not be achieved through the profit motive, but are necessary in order to maintain, or improve the well-being of the whole.

[vtsnowedin]

The current average USA auto gets driven 15,000 miles per year and gets on average 24.6 mpg. for 610 gallons of gas per year. Drop gas from $4.00 to $2.00 and save $1220 per Auto/yr times 250 million autos and it comes to 305 billion dollars if I count the zeros correctly. A much better stimulus then anything else they have done as it actually gets to each of us before it gets skimmed off by some fat cat.

[Pops]

$this->bbcode_second_pass_quote('sjn', 'M')any activities are profitable, but are not useful to sustaining the system, and can actually work to undermine it.

[sjn]

The current system is dependent on cheap oil, or thermodynamically: the current configuration of the system (BAU) requires an EROEI higher than that provided by expensive oil.

[Subjectivist]

$this->bbcode_second_pass_quote('sjn', 'I') still can't see how that works. The "shale bubble" demonstrated (IMHO) that the value to the general economy from shale extraction was, at best, marginal. That is; the entire enterprise created no surplus. Like the proverbial snake eating it's own tail, once it's finished, it's gone. There won't be a next time, for the simple reason, the economics never really worked out last time, and if it was to be attempted again they would be even worse. [I'm not saying there will be no shale LTO extraction at all, but nothing like the scale we've witnessed over the last few years.]

[Pops]

I think you all are reading way more into a typical price drop than is there.

All the shale bubble demonstrated was that at a certain price you can drill into tight shale and sell what comes out at a profit. If the price is too low you won't.

Nothing was demonstrated about the energy value of the oil produced because the oil produced burns just like all the rest, in fact it is less energy intensive to refine because lighter factions require less energy to separate than do heavier.

Nothing is being demonstrated whatsoever about EROEI by any price move anywhere near this price point. if there is 10,000 manhours of work in a barrel at $100/bbl you are getting an hour for 1¢. That is cheap wages anywhere.

We are so far removed from doing actual labor (because of FFs) that we simply cannot fathom the value of 10,000 man hours - that is 3.5 years of 8 hr days 7 days a week...

For $100.

You are telling me that is not valuable?

Come on.

[sjn]

No. From the point of view of a Globalised Industrial Economy, 10,000 man hours of labour are not valuable.

[sjn]

We can not run a system anything like the modern global economy on manual labour. We need the multiplier (or leverage) provided by fossil fuels, and any part of that system that isn't involved in energy production is dependent on the surplus net energy. If expensive oil provides less surplus (net energy) then there is less available for the rest of the system.

[Pops]

$this->bbcode_second_pass_quote('', 'W')e can not run a system anything like the modern global economy on manual labour.

[Pops]

Of course eroi will never get to zero, the price would be infinite.

By the same token, if price indicates eroei it will be higher at a lower eroei.

The price today is lower...

[Pops]

$this->bbcode_second_pass_quote('pstarr', 'T')hat is the old hyperinflation theory much adored by the teotwawki crowd. The opposite occurs.