This is an excerpt from a topic I started recently called Inflation?.
Duende wrote:
$this->bbcode_second_pass_quote('', 'B')ut the trouble I'm having is overturning her objection that until the EROEI is less than one (<1.0) for all energy source inputs for the economy, that we won't have to shrink. In other words, we'll still be creating energy, but less efficiently than with oil. This of course will translate into higher costs, but not less overall energy to go around.
PeakOil is You
Incongruity of economics and physics
Incongruity of economics and physics
by Duende » Tue 16 Oct 2007, 16:17:40
Doly wrote:
$this->bbcode_second_pass_quote('', 'T')he clearest example I can put to refute this argument is coal. Only high-grade coal is ever exported. Low-grade coal is used to run power plants that are next to the extraction site, because as soon as you start to move that coal around, you go into negative EROEI.
The same would happen with any low EROEI source of energy. It becames untransportable. If the very type of energy you use for transport has lower and lower EROEI, you are compounding the problem.
My original post concerned my frustration with demonstrating to my girlfriend, bless her heart, that her assertion that our dependence upon non-renewable resources will continue unabated, right up until there is a physical limitation in the supply of any energy. Based on the posts, it seems to me that the problem is larger than I thought in that there is general ignorance and frequent confusion between the economic dynamics of energy use and the physical dynamics of energy use.
As far as I understand it, the economic dynamics of energy are conceptualized in terms of dollars, while the physical dynamics of energy are best conceptualized in terms of EROEI.
I believe the biggest misconception most people have is that one equals the other, or that these terms are interchangable - WHICH THEY ARE NOT. In reality, economics are a subset of physical reality. I think this subject needed its own post because this confusion leads to the same problem I allude to in the excerpt above: just because some energy is extracted at negative EROEI, it might appear to be a smart move because it is cheaper to do so.
In this way, I'm starting to agree with my girlfriend that inflation - a product of economics - can mask negative EROEI - the effects of physical reality - effectively, right up until there is physically not enough energy to go around. My fear is that as long as energy is considered in terms of dollars and not EROEI, the Peak Oil problem will be lost on most people.
"Where is the man who has so much as to be out of danger?" -Thomas Huxley
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Duende - Coal
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Re: Incongruity of economics and physics
by aflurry » Tue 16 Oct 2007, 18:03:24
$this->bbcode_second_pass_quote('', 'B')ut the trouble I'm having is overturning her objection that until the EROEI is less than one (<1.0) for all energy source inputs for the economy, that we won't have to shrink. In other words, we'll still be creating energy, but less efficiently than with oil. This of course will translate into higher costs, but not less overall energy to go around.
maybe i'm not getting it, but this seems like a gross misunderstanding of EROEI. we will shrink long long long before EROEI is < 1.0.
That point in fact is the point when no more energy will be produced at all. It means that to get the usable energy source you have to use more of an existing usable energy source than you get in return. At that point it is absolutely useless to even produce it because you are better off just using the original energy source.
the point at which we will have to "shrink," if i understand your meaning, is the point at which a fall in the rate of production forces a fall in the rate of consumption. it is a point that is only indirectly related to EROEI.
it is related insofar as you can assume that as EROEI decreases toward it's absolute zero (=1.0), the increasingly difficult logistics of mobilizing ever greater amounts of energy to create more energy, will lead to problems in output, bottlenecks, breakdowns, bankruptcies, and other discontinuities that cap the maximum possible rate of production.
when rate of production caps and falls, stores are depleted, and eventually, rate of consumption must cap and fall.
the term for this point is of course "peak oil," and that is why the site is www.peakoil.com, and not www.eroeiisone.com.
for oil produiction the point at which eroei = 1 is a theoretical limit. it will never be reached because long before then we will have been forced out of the enterprise by a general collapse in the enterprise of oil extraction.
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Re: Incongruity of economics and physics
by turmoil » Tue 16 Oct 2007, 19:43:26
Until Peak Oil, producers have been able to produce more oil with declining energy returns by reinvesting some of that energy to grow production. But post-peak, economies will have less energy to use to keep the economy going. Because efficiency gains happen slowly, people will spend more on energy and less on everything else. Going forward, every year that conservation is greater than improved efficiency, the economy shrinks.
All of this happens until no more efficiency gains can be made. This happens way above EROEI = 1 because society requires a reasonable surplus of energy, just like all organisms on the planet.
All of this happens until no more efficiency gains can be made. This happens way above EROEI = 1 because society requires a reasonable surplus of energy, just like all organisms on the planet.
"If you are a real seeker after truth, it's necessary that at least once in your life you doubt all things as far as possible"-Rene Descartes
"When you have excluded the impossible, whatever remains however improbable must be the truth"-Sherlock Holmes
"When you have excluded the impossible, whatever remains however improbable must be the truth"-Sherlock Holmes
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Re: Incongruity of economics and physics
by kjmclark » Wed 17 Oct 2007, 00:52:09
$this->bbcode_second_pass_quote('Duende', 'I')n this way, I'm starting to agree with my girlfriend that inflation - a product of economics - can mask negative EROEI - the effects of physical reality - effectively, right up until there is physically not enough energy to go around. My fear is that as long as energy is considered in terms of dollars and not EROEI, the Peak Oil problem will be lost on most people.
I see two problems with this. First, I think you mean reduced EROEI, not negative EROEI. That is, as EROEI drops from 20 to 10 to around 1. There's really no point going after energy with an EROEI of less than one, except in rare cases where there are subsidies or low value energy can be used to extract higher value energy (coal or nuclear heat being used to extract oil, for example). Even in those cases EROEI is positive, but less than one.
Second, this assumes that there is an infinite supply of greater fools to go along with your infinite supply of money to chase a dwindling supply of goods. In reality, a civilization (or nation, region, state, family - what have you) has a limited supply of goods that they can exchange for energy. The money is just a medium of exchange, and eventually becomes worthless long before you get to EROEI=1.
Put another way, at some point your inflation starts to make other energy sources, like solar, wind, photosynthesis - even though they are poorly concentrated energy sources and are also inflating - look like a good deal. They may not be sufficiently concentrated to run your civilization in the way you've become accustomed, but they're the best bet you have available. The question is then whether the goods you have to exchange, regardless of the money cost, are adequate to buy those forms of energy.
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kjmclark - Coal
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, so I can't tell you much more than what's in the news and on this site.