Peak Oil: Using Energy To Get Energy

For parallelism with the language of finance, net energy should refer to energy produced minus energy invested, whereas EROI should refer to energy produced divided by energy invested….
The relationship between ROI and EROI is actually very simple and logical. The more energy you have to invest to produce a fuel, the lower your EROI will be. The energy you invest has a cost. Therefore, the profit on the same barrel of oil will be higher when it’s produced from a high EROI source than when produced from a low EROI source. [1]

The optimists believe that our energy problems have been largely solved. I wouldn’t bet on that. The real issue with oil isn’t how much we have or even whether we can continue to increase  production. That’s what peak oil had come to represent and why, in retrospect, it was a misleading term.
Rather, what really matters is the cost of resources, in terms of resources required, including energy resources, to keep producing oil. On that front, the U.S. is losing ground at an alarming pace.
Simply put, it takes energy to get energy. In today’s world, it takes rising amounts of energy to get all the new energy sources out of the ground and ready to use.
The critical concept is ‘energy return on investment,’ or EROI. This means the amount of energy obtained from each unit of energy invested. (links in original) [2]

Lost—intentionally, in my opinion—amid all of the overly-optimistic talk of our massive, vast resources are some critically important factors which determine how much of that below-ground abundance sees the light of day. One of those is energy return on investment—a simple-enough concept that matters a great deal in how much unconventional fossil fuel resources will actually contribute to fulfilling demand by meeting our economy and transportation needs.

It cannot get much simpler than this: the more energy an industry uses to produce an end-product or service, the less it has to do more of the same. Adding in more costly efforts atop that consideration does not magically transform into good math or good bottom lines. We consumers  aren’t reaping much in the way of benefits, either.

As Chris Nelder noted in that same article quoted from above:

As we continue to substitute unconventional fuels for conventional fuels and the overall EROI falls below 10, It’s going to be very difficult, if not impossible, to continue running our complex society. Prices will go too high for the economy to tolerate and kill demand before unconventional substitutes can scale up to replace declining higher-EROI fuels.

Not a cheery message, of course. Reality doesn’t always match the expectations promoted by those for whom full disclosure and discussion of all the facts of energy supply and production would not satisfy their self-serving needs. So we consumers pay the price—literally, in the case of higher prices at the pump—and in other, less visible ways.

Thinking we have oodles of fossil-fuel substitutes just waiting for an innovate and daring industry to extract and send to our friendly neighborhood gas station means we citizens, our elected officials, and our business leaders don’t have to waste any time making plans and preparations for a way of life not so easily or inexpensively powered with the same efficiency and ease of production as conventional crude oil has provided for many decades.

Not planning for important changes is generally not a wise tactic no matter what circumstances are under consideration. No planning and resulting consequences avoidable (or at least mitigated) had facts been properly and honorably shared is not anyone’s idea of a good outcome.

More information about important matters is always a good thing, as is getting both sides of the story. The opportunities are there.

Peak Oil Matters