The contents below are paid advertisements. Their appearance does not imply an endorsement by The Oil Drum.
“For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled.”
—Richard Feynman
Search The Oil Drum with Google
User login
Contact
- Content: editors at theoildrum dot com
- Tech support: support at theoildrum dot com
Personnel
- Editors: Prof. Goose, Heading Out, Stuart Staniford, Nate Hagens
- DrumBeat Editor: Leanan
- Contributors: ace, Engineer-Poet, Gail the Actuary, jeffvail, JoulesBurn, Khebab, Robert Rapier
- TOD:Local: Glenn
- TOD:Europe: Chris Vernon, Euan Mearns, Francois Cellier, Jerome a Paris, Luís de Sousa, Rembrandt, Rune Likvern, Ugo Bardi
- TOD:Canada: benk, Libelle
- TOD:ANZ: Big Gav, Phil Hart, aeldric
- Technician: Super G
Recently on TOD:World
TOD:Local
- Ask not what your next President can do, Ask what you can do for your tribe
- Summer Streets a Success!
- Plan for Hydro-Fracture Drilling for Unconventional Natural Gas in Upstate New York
TOD:Europe
- UK - Stansted Airport expansion gets go-ahead
- RAMseS: a new agricultural paradigm
- RAMseS: a new agricultural paradigm
TOD:Canada
- In this house, we obey the laws of thermodynamics!
- Compressed Air Energy Storage - How viable is it?
- Oil Megaproject Update (July 2008)
TOD:ANZ
Peak Oil Primers
Blogroll
Energy Sites
- The Coming Global Oil Crisis
- Die Off
- Dry Dipstick
- Energy Bulletin
- From the Wilderness
- Life After the Oil Crash
- Peak Oil Crisis
- Peak Oil News and Message Boards
- Powerswitch
- Rigzone
- Matthew Simmons
- Wolf at the Door
Environment & Sustainability Sites
- The Daily Green
- EcoGeek
- Eco Street
- Green Car Congress
- Green Options
- green.alltop.com
- Gristmill
- RealClimate
- Sustainablog
- Treehugger
- WorldChanging
Blogs
- The Big Picture
- Casaubon's Book
- Cleantech Blog
- Clusterf
k Nation (Jim Kunstler) - The Cost of Energy
- David Strahan
- The Energy Blog
- Entropy Production
- European Tribune
- GraphOilology
- jeffvail.net
- Mobjectivist
- Peak Energy (Australia)
- Peak Energy (USA)
- R-Squared
- Resource Insights
Finance & Economics Blogs
- Calculated Risk
- Ecological Economics
- Econbrowser
- Environmental Economics
- Infectious Greed
- The Mess That Greenspan Made
- Mish's Global Economic Trend Analysis
Organizations
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
GAIA Host Collective
Thank you for two good responses. I don't disagree with much of what you say.
What I am trying to accomplish here is to get a fundamental understanding of exactly what EROEI means and how it can be effectively applied in project analysis. EROEI and ROI will be key tools in making energy decisions in the future. My point is that there is a fundamental connection between the two and that they should be identical except in a finite set of conditions that can be defined. Given how frequently the term is used on this site, it makes sense to better understand it.
In some cases - deep sea drilling, a negative EROEI may doom a project. If the amount of oil required is greater than the amount of oil produced, the project is not viable. In others - cell phone batteries - it would not. In a third category - ethanol - it could imply a misalignment of pricing - i.e. energy is wasted, but financial returns are assured through subsidy.
My original post said that there were three reasons for divergence between EROEI and ROI.
"In order to believe that any rational investor could take on a project with a negative EROEI you have to believe that they are:
- Using a cheap form of energy to get a more expensive one in return
- Not paying the full price for their energy input, or
- Going to lose money"
Your cell phone example meets the first criteria, using one form of energy to produce a preferred form of energy. I expect that the corn ethanol meets a variation of point #2, specifically getting paid more than market value of output. I have modified my list to include this as a new criterion.So I now claim that divergence between ROI and EROEI can be explained by one of the following:
I think we disagree over what I see as a fundamental issue.
"Pricing" and other "Market" behaviors involve men negotiating with men --humans yakking at other humans about mentally contrived concepts like "values" and what is "fair". Mother Nature is not part of this man-o-man negotiation.
EROEI is one of inumerable mathematical expressions that we humans can concot to better understand how Mother Nature works. She does not need our understanding of her. We need it. Desperately. Experiment after experiment appear to verify that Mother Nature does "conserve" this thing we refer to as "energy". Experiment after experiment show that Mother Nature does "conserve" this thing we refer to as "mass". All our economic machinations will not change this.
If we develop a social order that continuously operates on EROEI being less than one (or negative as you keep refering to it), we are simply driving ourselves faster into the abyss.
Mother Nature doesn't "care". There are no "Care Bears" out in the woods. We are the ones who have to care --if we humans intend to continue as a species for a foreseeable future.
Bottom Line: EROEI and $RO$I have almost nothing to do with each other because "$" is a mental fabrication of mankind.