Nice post, Blue. You correctly note some of the key components necessary to discuss the topic: energy return on energy invested (EROEI), how oil production was supercharged due to low interest rates and massive debt increases via fracking even as new oil field discoveries decreased, and how the peak oil proponents looked bad as they were caught flatfooted by this. Basically, peak oil is true even though it's effects were masked and pushed off into the future.
Other issues I would like to see touched on off the topic of my head include the strong and direct correlation between cheap energy and a country’s wealth (and the inverse), how the elites know future oil production is falling but they hide the numbers from the public and keep prices low for political reasons, how declining future production forms a major part of the hidden basis for the push to alternative energy (which is wildly inefficient and expensive, to the point a society based on it is going to be dramatically poorer as we see starting now in England and Germany), the oil politics in the Middle East (and the reason Assad was overthrown), and the competing theories of oil formation (how does it form and does it replenish?).
When you leave out biofuels, NGPLs, processing gain, etc. oil in 2024 is still below late 2018 numbers worldwide. It’s very much starting to look like 2018 was the peak (even including tar sands/light tight).
My understanding is that many oil wells still have a massive amount of oil in them (20-40%) even when they stop producing; it’s just the lack of pressure means the oil isn’t extracted economically. Is this true?
One note: about half the oil consumption in the USA is food production and distribution. This gives us the chance to decentralize food production and make it more local to each region, thereby reducing transport costs. This has some potential to extend oil reserves. Add to this a move away from plastic packaging en masse to reusable glass/ceramic/wood containers. That will stretch oil reserves a bit farther. Reorganizing cities and housing will also reduce oil consumption. We CAN get by on a lot less oil if we start changing things NOW.
We could also have a lot of nuclear built out and factories that mass produce easily replicable small reactors so the process would continue to scale up... but we don't. Nuclear doesn't have an EROI anywhere near 20th century oil, but this probably would have been the best thing to smooth degrowth.
No political system of any kind on Earth considered this, because it would have meant sacrificing a significant fraction of current/short term wealth and prosperity for the distant future, and people won't do that.
People won't even fess up to the reality of coming energy scarcity. There's only one JMG, and he isn't very popular. The vast majority of people anywhere on the political spectrum still insist the future is going to have unlimited cheap energy, and talk about space colonization and fully automated global techno-communism like they are inevitable, and coming soon.
Denial and unwillingness to think long term appears to just be human nature. People are going to have to adapt to the reality of energy scarcity the hard way.
Given that there is also a financial return on investments, if oil were $200 per barrel, wouldn’t more oil be economically feasible to extract? Also, there are different types of energy. So using nuclear energy plants to extract oil from tar sands might make sense even with a low EROI because the utility function of oil fuels may be more valuable than the electricity from the nuclear plant.
Sure. Oil will not completely run out, until it becomes more expensive to get than synthesize, for the reason you describe. It will be for niche uses.
However, this has no bearing on the argument about avg EROI of all energy used by a society tracking directly with overall societal complexity. The type of societal structure you see prior to the use of coal was mostly dependent on how extensive slavery was used - that's where the surplus energy that allowed development of cities, technologies, specialized occupations, art, etc... Slavery was why Rome was a huge empire with aquaducts and too many lawyers when northern Europe had small villages with grass longhouses.
Without slavery, the surplus comes from E sources, and how much net E you get from those sources determines how much complexity it will support. In the 20thC, oil had an astronomical EROI, and it provided enough surplus to get the global economy and tech we have now... for a fraction of the world's population only. Not all. There still wasn't nearly enough for space colonization.
Population is higher now and the developing world increasingly demands a cut, and aggregate EROI of all sources is going down. Decline in overall complexity is inevitable. There isn't going to be automated luxury communism for billions of people, or any space colonization.
All I can say is that "Green Energy" is basically a scam by some and a misunderstood political policy by others that doesn't and won't essentially work long term.
I would like to see some kind of layman-accessible piece on EROI, laying out clearly what they are including. I've looked at a lot of them, but don't really have the ability to check their math or come up with my own.
The values you have here show way higher EROI for renewables and lower one for oil than I've seen elsewhere. Energy Policy magazine appears to have a built-in pro-green bias. I wonder if they are cherry-picking or getting various kinds of EROI mixed up in their aggregation. Most EROI estimates I've seen put real world wind at 1.x to negative, not 18, though I've seen estimates in that range as a hypothetical value that did not discount from actual maintenance and downtime, and maybe not even decommission.
They've got coal at nearly double pre-peak 20th century conventional oil. If this were true, why did oil even become so dominant? The transition from the Steam Age to the Oil Age was a massive step up in cheap energy availability and societal complexity. If coal is twice as cheap, why? Unless coal supplies are forecasted to peak and drop way more sharply than oil, EROEI that high would also deflate oil scarcity doom arguments, because it's better and there is still plenty of it. Seems more likely that the real EROI is more in the ballpark of where oil is now, or lower.
>I would like to see some kind of layman-accessible piece on EROI, laying out clearly what they are including. I've looked at a lot of them, but don't really have the ability to check their math or come up with my own.
I'm very interested in doing a piece like this. Did you feel like my paragraphs on EROI were clear enough that someone without knowledge of EROI would understand it? I am aware that EROI rates are a trickier concept.
>The values you have here show way higher EROI for renewables and lower one for oil than I've seen elsewhere. Energy Policy magazine appears to have a built-in pro-green bias. I wonder if they are cherry-picking or getting various kinds of EROI mixed up in their aggregation. Most EROI estimates I've seen put real world wind at 1.x to negative, not 18, though I've seen estimates in that range as a hypothetical value that did not discount from actual maintenance and downtime, and maybe not even decommission.
Wind was calculated to have an equivalent EROI to oil but that does not mean that wind is as effective an energy source as oil, as oil has an EROI rate 117.98x higher than wind, meaning that oil can much more quickly be "harvested" for energy. Even if the EROI are similar, oil has much more ability to produce a lot of net energy in a given time period, not to mention the lack of mineral constraints that plague wind.
>They've got coal at nearly double pre-peak 20th century conventional oil. If this were true, why did oil even become so dominant? The transition from the Steam Age to the Oil Age was a massive step up in cheap energy availability and societal complexity. If coal is twice as cheap, why? Unless coal supplies are forecasted to peak and drop way more sharply than oil, EROEI that high would also deflate oil scarcity doom arguments, because it's better and there is still plenty of it. Seems more likely that the real EROI is more in the ballpark of where oil is now, or lower.
I'm going to contact the analyst who made this table about this, John Peach. I believe one reason why coal's EROI is so high is due to a lack processing needed to transport and use it (you just dig it up, put it in a crate and burn it where you need). As coal is a natural resource it also has supply constraints and the additional demand from oil becoming less viable would speed the pace which coal reserves are depleted. Either way I am now more interested in coal and may do a piece if I find anything interesting about it.
Your explanation seemed good, but then again I already understand the concept.
I see your point about rate, but I can't believe wind has an ultimate EROI of more than about 2, if it is positive at all. It isn't even a good technology for simple well water as innumerable ghost windmills in my part of the country can attest.
My interest is more in ultimate EROI that includes all energy costs from finding/getting the materials to decommissioning the equipment, as opposed to rate, because I am interested in the long term macro level systems implications: the overall cheapness and abundance of energy is what drives societal complexity.
As such, I think almost everyone and all science fiction are completely deluded about the future trajectory of civilization. It isn't going to be space colonization and fully automated communism, it's going to be technological regression, depopulation, social and economic de-complexity, and re-localization.
What level it settles at depends directly on the availability and energy cost of energy. Renewables like solar and wind are probably unable to even pay for or reproduce their own equipment, so won't be used. Nuclear probably won't be widely used or maybe at all - lowered societal complexity probably ultimately means lacking the competence to build, maintain, and get/refine the materials to make it work.
This leaves coal as the only hope for civilization at roughly Steam Age levels of complexity. If coal becomes prohibitively expensive, then we're back to whatever complexity can be supported by human and animal labor and burning wood. We know from history, the only way to build complex civilization on that basis is large scale use of slavery...
Interesting article. I'm well aware of the issues to calculates EROI, as I read the book from Mr. Hall and Mr. Prieto about spanish renewables.
I'm another Peak Oiler, from Spain, and I also saw the pitfalls about EROI and Fracking. Money and energy are interwinned and complex.
Mr. Prieto (and I guess Mr. Hall too) tend to use money as a proxi for energy when calculating EROI (their value for PV is below 5 IIRC).
After many years trying to figure out how all this will play out, I made the reverse step.
Instead of EROI, there is a much straigh forward measure, in the economic real, that makes much more sense, and in the end, is akin to the "net energy gains", but on the money side.
I mean Purchasing Power (PP).
GDP is useless.
PP is the real measure here: when EROI drops, also the PP drops.
And PP had been decreasing since 2009 in Spain.
I wrote about that here (in spanish, I wonder it is easy to translate):
To be fair many of the commenters on, eg, The Oil Drum talked about the prospect of new more efficient methods like fracking, but they were likened to a 'more powerful straw', effectively taking consumption from the downslope of production and steepening the decline curve. Your first graph is the most important, thanks for sharing it
I might be behind the curve on this, but what is the EROI of nuclear? Posing a hypothetical here, what if we had sensible people here that actually took energy security seriously and diversified power generation, including to shifting cargo transport back to rail (which can use electricity)? You could then encourage switch to electric heating, etc, where you know you have a reliable and cheap power supply. Obviously I am talking about a robust network of nuclear generators and natural gas plants, not wind or solar. Would that stretch our oil reserves and let them last that much longer?
I have seen widely varying EROI for nuclear, from 100 to 15. The table I used by John Peach states ~20. One of the troubles with nuclear is that it's extremely slow to deploy. We effectively know every nuclear power plant that is going to be finished in the next 20 years, and it's not enough to substitute for oil. As all energy generated by nuclear is electricity, the magnitude of its contribution to the world's primary energy consumption is overstated (most people only see electricity generation charts). Nuclear is around 10% of the world's electricity generation, but ~3% of the world's primary energy production.
I do believe that the importance of nuclear as oil and gas declines will rise, but I am not under the impression that it will be substitute for fossil fuels. Fossil fuels are deployed on a truly enormous scale in our society. Perhaps nuclear will allow very organized states to prosper relative to others who are in severe energy scarcity, but globally, current primary energy consumption is too high to find a non-fossil substitute.
“I may write a dedicated article on EROI Rates and a comparison of energy sources in the future.”
This would be great.
I would also request an article - including the math, if you wouldn’t mind sharing - with the EROI or EROEI of each power source.
For whatever reason, I keep coming across articles where nuclear power possesses either the greatest or the worst EROEI. It can’t be both so really wondering how authors come up with their numbers
Yes keep writing. Make the articles simple with deep complex ones for paid subs. People really need to get this into their heads so they can begin to invest their current energy subsidies (living with cheap oil) towards lower energy system living. Passive ie insulated houses, gravity fed water supply etc. austerity is coming for all who ignore this.
I recommend Tim Morgan’s work at Surplus Energy Economics for a thorough (albeit grim) assessment of what the world after ‘Peak EROEI’ will look like: https://surplusenergyeconomics.wordpress.com/
Nice post, Blue. You correctly note some of the key components necessary to discuss the topic: energy return on energy invested (EROEI), how oil production was supercharged due to low interest rates and massive debt increases via fracking even as new oil field discoveries decreased, and how the peak oil proponents looked bad as they were caught flatfooted by this. Basically, peak oil is true even though it's effects were masked and pushed off into the future.
Other issues I would like to see touched on off the topic of my head include the strong and direct correlation between cheap energy and a country’s wealth (and the inverse), how the elites know future oil production is falling but they hide the numbers from the public and keep prices low for political reasons, how declining future production forms a major part of the hidden basis for the push to alternative energy (which is wildly inefficient and expensive, to the point a society based on it is going to be dramatically poorer as we see starting now in England and Germany), the oil politics in the Middle East (and the reason Assad was overthrown), and the competing theories of oil formation (how does it form and does it replenish?).
When you leave out biofuels, NGPLs, processing gain, etc. oil in 2024 is still below late 2018 numbers worldwide. It’s very much starting to look like 2018 was the peak (even including tar sands/light tight).
This makes sense from what I’ve seen from Art Berman
My understanding is that many oil wells still have a massive amount of oil in them (20-40%) even when they stop producing; it’s just the lack of pressure means the oil isn’t extracted economically. Is this true?
One note: about half the oil consumption in the USA is food production and distribution. This gives us the chance to decentralize food production and make it more local to each region, thereby reducing transport costs. This has some potential to extend oil reserves. Add to this a move away from plastic packaging en masse to reusable glass/ceramic/wood containers. That will stretch oil reserves a bit farther. Reorganizing cities and housing will also reduce oil consumption. We CAN get by on a lot less oil if we start changing things NOW.
We could also have a lot of nuclear built out and factories that mass produce easily replicable small reactors so the process would continue to scale up... but we don't. Nuclear doesn't have an EROI anywhere near 20th century oil, but this probably would have been the best thing to smooth degrowth.
No political system of any kind on Earth considered this, because it would have meant sacrificing a significant fraction of current/short term wealth and prosperity for the distant future, and people won't do that.
People won't even fess up to the reality of coming energy scarcity. There's only one JMG, and he isn't very popular. The vast majority of people anywhere on the political spectrum still insist the future is going to have unlimited cheap energy, and talk about space colonization and fully automated global techno-communism like they are inevitable, and coming soon.
Denial and unwillingness to think long term appears to just be human nature. People are going to have to adapt to the reality of energy scarcity the hard way.
Given that there is also a financial return on investments, if oil were $200 per barrel, wouldn’t more oil be economically feasible to extract? Also, there are different types of energy. So using nuclear energy plants to extract oil from tar sands might make sense even with a low EROI because the utility function of oil fuels may be more valuable than the electricity from the nuclear plant.
Sure. Oil will not completely run out, until it becomes more expensive to get than synthesize, for the reason you describe. It will be for niche uses.
However, this has no bearing on the argument about avg EROI of all energy used by a society tracking directly with overall societal complexity. The type of societal structure you see prior to the use of coal was mostly dependent on how extensive slavery was used - that's where the surplus energy that allowed development of cities, technologies, specialized occupations, art, etc... Slavery was why Rome was a huge empire with aquaducts and too many lawyers when northern Europe had small villages with grass longhouses.
Without slavery, the surplus comes from E sources, and how much net E you get from those sources determines how much complexity it will support. In the 20thC, oil had an astronomical EROI, and it provided enough surplus to get the global economy and tech we have now... for a fraction of the world's population only. Not all. There still wasn't nearly enough for space colonization.
Population is higher now and the developing world increasingly demands a cut, and aggregate EROI of all sources is going down. Decline in overall complexity is inevitable. There isn't going to be automated luxury communism for billions of people, or any space colonization.
Human Beanz's greatest flaw is the inability to think ahead.
I can recommend this video.
https://www.youtube.com/live/0hOnwaRcMmw?si=dpXkTRGC2mK4v1JQ
All I can say is that "Green Energy" is basically a scam by some and a misunderstood political policy by others that doesn't and won't essentially work long term.
Bookmarked
I would like to see some kind of layman-accessible piece on EROI, laying out clearly what they are including. I've looked at a lot of them, but don't really have the ability to check their math or come up with my own.
The values you have here show way higher EROI for renewables and lower one for oil than I've seen elsewhere. Energy Policy magazine appears to have a built-in pro-green bias. I wonder if they are cherry-picking or getting various kinds of EROI mixed up in their aggregation. Most EROI estimates I've seen put real world wind at 1.x to negative, not 18, though I've seen estimates in that range as a hypothetical value that did not discount from actual maintenance and downtime, and maybe not even decommission.
They've got coal at nearly double pre-peak 20th century conventional oil. If this were true, why did oil even become so dominant? The transition from the Steam Age to the Oil Age was a massive step up in cheap energy availability and societal complexity. If coal is twice as cheap, why? Unless coal supplies are forecasted to peak and drop way more sharply than oil, EROEI that high would also deflate oil scarcity doom arguments, because it's better and there is still plenty of it. Seems more likely that the real EROI is more in the ballpark of where oil is now, or lower.
>I would like to see some kind of layman-accessible piece on EROI, laying out clearly what they are including. I've looked at a lot of them, but don't really have the ability to check their math or come up with my own.
I'm very interested in doing a piece like this. Did you feel like my paragraphs on EROI were clear enough that someone without knowledge of EROI would understand it? I am aware that EROI rates are a trickier concept.
>The values you have here show way higher EROI for renewables and lower one for oil than I've seen elsewhere. Energy Policy magazine appears to have a built-in pro-green bias. I wonder if they are cherry-picking or getting various kinds of EROI mixed up in their aggregation. Most EROI estimates I've seen put real world wind at 1.x to negative, not 18, though I've seen estimates in that range as a hypothetical value that did not discount from actual maintenance and downtime, and maybe not even decommission.
Wind was calculated to have an equivalent EROI to oil but that does not mean that wind is as effective an energy source as oil, as oil has an EROI rate 117.98x higher than wind, meaning that oil can much more quickly be "harvested" for energy. Even if the EROI are similar, oil has much more ability to produce a lot of net energy in a given time period, not to mention the lack of mineral constraints that plague wind.
>They've got coal at nearly double pre-peak 20th century conventional oil. If this were true, why did oil even become so dominant? The transition from the Steam Age to the Oil Age was a massive step up in cheap energy availability and societal complexity. If coal is twice as cheap, why? Unless coal supplies are forecasted to peak and drop way more sharply than oil, EROEI that high would also deflate oil scarcity doom arguments, because it's better and there is still plenty of it. Seems more likely that the real EROI is more in the ballpark of where oil is now, or lower.
I'm going to contact the analyst who made this table about this, John Peach. I believe one reason why coal's EROI is so high is due to a lack processing needed to transport and use it (you just dig it up, put it in a crate and burn it where you need). As coal is a natural resource it also has supply constraints and the additional demand from oil becoming less viable would speed the pace which coal reserves are depleted. Either way I am now more interested in coal and may do a piece if I find anything interesting about it.
Your explanation seemed good, but then again I already understand the concept.
I see your point about rate, but I can't believe wind has an ultimate EROI of more than about 2, if it is positive at all. It isn't even a good technology for simple well water as innumerable ghost windmills in my part of the country can attest.
My interest is more in ultimate EROI that includes all energy costs from finding/getting the materials to decommissioning the equipment, as opposed to rate, because I am interested in the long term macro level systems implications: the overall cheapness and abundance of energy is what drives societal complexity.
As such, I think almost everyone and all science fiction are completely deluded about the future trajectory of civilization. It isn't going to be space colonization and fully automated communism, it's going to be technological regression, depopulation, social and economic de-complexity, and re-localization.
What level it settles at depends directly on the availability and energy cost of energy. Renewables like solar and wind are probably unable to even pay for or reproduce their own equipment, so won't be used. Nuclear probably won't be widely used or maybe at all - lowered societal complexity probably ultimately means lacking the competence to build, maintain, and get/refine the materials to make it work.
This leaves coal as the only hope for civilization at roughly Steam Age levels of complexity. If coal becomes prohibitively expensive, then we're back to whatever complexity can be supported by human and animal labor and burning wood. We know from history, the only way to build complex civilization on that basis is large scale use of slavery...
Hi, Blue.
Interesting article. I'm well aware of the issues to calculates EROI, as I read the book from Mr. Hall and Mr. Prieto about spanish renewables.
I'm another Peak Oiler, from Spain, and I also saw the pitfalls about EROI and Fracking. Money and energy are interwinned and complex.
Mr. Prieto (and I guess Mr. Hall too) tend to use money as a proxi for energy when calculating EROI (their value for PV is below 5 IIRC).
After many years trying to figure out how all this will play out, I made the reverse step.
Instead of EROI, there is a much straigh forward measure, in the economic real, that makes much more sense, and in the end, is akin to the "net energy gains", but on the money side.
I mean Purchasing Power (PP).
GDP is useless.
PP is the real measure here: when EROI drops, also the PP drops.
And PP had been decreasing since 2009 in Spain.
I wrote about that here (in spanish, I wonder it is easy to translate):
https://substack.com/@beamspot/p-136777638
Regarding renewables, I had been writing extensively also about how they are not up to the task, and will never be.
I guess my substack can be useful for you!
Guillem, aka Beamspot.
Mr Hall and Mr. Prieto about photovoltaic EROI
https://www.amazon.com/Spains-Photovoltaic-Revolution-Investment-SpringerBriefs/dp/144199436X
To be fair many of the commenters on, eg, The Oil Drum talked about the prospect of new more efficient methods like fracking, but they were likened to a 'more powerful straw', effectively taking consumption from the downslope of production and steepening the decline curve. Your first graph is the most important, thanks for sharing it
Excellent insight. Thank you,
I might be behind the curve on this, but what is the EROI of nuclear? Posing a hypothetical here, what if we had sensible people here that actually took energy security seriously and diversified power generation, including to shifting cargo transport back to rail (which can use electricity)? You could then encourage switch to electric heating, etc, where you know you have a reliable and cheap power supply. Obviously I am talking about a robust network of nuclear generators and natural gas plants, not wind or solar. Would that stretch our oil reserves and let them last that much longer?
I have seen widely varying EROI for nuclear, from 100 to 15. The table I used by John Peach states ~20. One of the troubles with nuclear is that it's extremely slow to deploy. We effectively know every nuclear power plant that is going to be finished in the next 20 years, and it's not enough to substitute for oil. As all energy generated by nuclear is electricity, the magnitude of its contribution to the world's primary energy consumption is overstated (most people only see electricity generation charts). Nuclear is around 10% of the world's electricity generation, but ~3% of the world's primary energy production.
I do believe that the importance of nuclear as oil and gas declines will rise, but I am not under the impression that it will be substitute for fossil fuels. Fossil fuels are deployed on a truly enormous scale in our society. Perhaps nuclear will allow very organized states to prosper relative to others who are in severe energy scarcity, but globally, current primary energy consumption is too high to find a non-fossil substitute.
Some extra details on troubles with electrification (what will be required in a nuclear system) and primary energy production can be found here: https://bluevir.substack.com/p/metals-shortages-will-make-the-renewable
“I may write a dedicated article on EROI Rates and a comparison of energy sources in the future.”
This would be great.
I would also request an article - including the math, if you wouldn’t mind sharing - with the EROI or EROEI of each power source.
For whatever reason, I keep coming across articles where nuclear power possesses either the greatest or the worst EROEI. It can’t be both so really wondering how authors come up with their numbers
Yes keep writing. Make the articles simple with deep complex ones for paid subs. People really need to get this into their heads so they can begin to invest their current energy subsidies (living with cheap oil) towards lower energy system living. Passive ie insulated houses, gravity fed water supply etc. austerity is coming for all who ignore this.
I mention hubberts peak in my rap track! https://m.youtube.com/watch?v=gtsRhv0gj5Q&pp=ygUgRG9vbXNkYXkgcHJlcHBlciB0aHVtYm5haWwgZ3JlZW4%3D
Would the input from financing count, such CEO salaries, office space, etc?
Ask your self
How is oil made in the earth?
How can you say we are at peak oil when no one can answer that question.
Sure we have theories, but the truth is that no one know for sure
I recommend Tim Morgan’s work at Surplus Energy Economics for a thorough (albeit grim) assessment of what the world after ‘Peak EROEI’ will look like: https://surplusenergyeconomics.wordpress.com/
If we were actually constrained by resources they would be going after the Africans rather than holding them up as the most important things.
I'm going to resume shorting oil after the seasonal pump this spring.