Rising Energy Output/Input Ratio for US Oil and Gas

I discovered something interesting while poking around this morning on the website of the Bureau of Economic Analysis (the agency that produces GDP statistics for the United States).  It turns out they have a spreadsheet with estimates of the amount of energy inputs to different industries.  Since they also have estimates of the outputs of different industries, and for the oil and gas industry “output” means oil and gas, it’s possible to form estimates of the ratio of energy output to energy input.  That ratio is above for 1998-2010 – all the data available.

This is very, very roughly like an energy-return-on-energy-invested (EROEI) for US oil and gas – a familiar concept in energy analysis.  It isn’t that for several reasons:

• We are measuring both inputs and outputs in dollars, not joules.  Since the figures mix oil and gas which have had substantial variations in their price ratios, it’s not straightforward to turn the dollar ratios into energy ratios.
• We are comparing the inputs and outputs for a single year – not comparing all the outputs for projects with all the inputs required for that particular project integrated over time.

The last point, for example, should probably be invoked to explain the spike in 2009 when new investment collapsed in the low price environment following the financial crisis, yet output was still fairly high based on prior investments.

This is also a narrow boundaries analysis – we are looking just at energy used directly in operations by the oil and gas industry, not at embodied energy used in their materials or by their suppliers.

All that said, it’s hard to believe that if the EROEI of the US oil and gas industry were plummeting (due, say, to the excessive investment required to frack oil and gas out of tight resource plays) that this ratio would be rising.  But rising it appears to be: if the numbers are to be believed, over the last decade or so, the industry is producing more dollars of energy output per dollar of energy input.

Early Warning