Hi, Nick.

Yes, I believe that Hirsch's conclusion is a good starting point. To be very clear, he does not say that it will exactly be 1:1. Here is exactly what he says:

...recognizing the approximate nature of these considerations, we conclude that a ratio of 1:1 is a reasonable approximation for a future circumstance where world oil shortages act as a drag on world GDP, i.e., numerical values ranging from 0.6 to 2.5 are of order of unity. A ratio of one-tenth would seem too small and a ratio of 10 would be too large. While greater accuracy would be desirable, this approximation is believed adequate for our analysis, since our final conclusions are not highly sensitive to this assumption.

This is quite a bit different than your comments might lead one to believe he said, no? He is distinguishing the correct order of magnitude, not a precise relationship. He then (correctly, I believe) goes on to demonstrate that for his purposes the correct order of magnitude is all one needs to continue the analysis.

And, yes, I am familiar with what Ayres says. For those reading along, here is a brief overview:
Estimating the Economic Impacts of Peak Oil
www.inspiringgreenleadership.com/blog/aangel/estimating-economic-impacts...

-André

"this is quite a bit different than your comments might lead one to believe he said, no? "

Well, we agree Hirsch's estimate is imprecise, but that wasn't central to my point. Rathre, I'm suggesting that the medium-term relationship between GDP and oil is closer to Ayres' number of .14, which is indeed an order of magnitude smaller.

I believe that I'm disagreeing with your interpretation of Ayres. This: "Ayers and Warr calculate a perfectly intuitive 0.7 for elasticity of demand (see Figure 10) using curve fitting when they introduce energy converted to useful work, and the correlation is excellent" applies to the relationship between GDP and "work", not GDP and BTU's. Therefore, "This is in line with Hirsch's ratios" would be incorrect. This: "Apparently there has been no significant push back from economists even though their paper essentially jettisons the prevailing economic theory." I would suggest is incorrect - Ayres' work does not jettison prevailing theory, it expands it by introducing the importance of energy efficiency, or intensity, as a variable link between BTU's and GDP.

Hi, Nick.

I think it better to look at the relationship between GDP and work, not GDP and BTU's because when we look for some result, the result is a function of work first and BTUs second. If I ask someone to build a house, they base their calculations on how much work is involved, then they split it between their men/women and the machines. The contractor will move jobs between men and machines (assuming the job can be done by either) based on cost, time and quality of the end product.

I view oil as "stored work" in much the same way some people view money as stored work. Converting to BTUs is an interesting exercise but since the various energy forms are not easily converted, or aren't easily converted without significant losses, I think it makes things unnecessarily complex to reduce that far. Work is a better measure for the purpose at hand. This might be why Hirsch chose to go that route.

Regardless, I'd have to go back and look at the context of the 0.14 you cite because it is very suspicious to me. If it turns out that you're using it in the context Ayers intended (which paper and which page?), one way I could see it being valid is with the proviso that much manufacturing continue to be done by other countries. This state of affairs is coming to an end as globalization begins to unwind.

When all is said and done, I'm happy for the moment to say that a 1/10th ratio for oil to work is too small and 10:1 is too great, which leaves 1:1 as the proper order of magnitude.

-André

"I view oil as "stored work" in much the same way some people view money as stored work. "

I don't believe that's how Ayres' uses it. Ayres view oil as a convenient form of BTU's, which must be translated through a complex process into applied work. That "process" can vary enormously in effectiveness and efficiency. For instance, a Prius performs the same work as a similar vehicle with half the MPG, but uses half the BTU's (and half the oil). Strictly speaking, a Prius can perform the same work as a Hummer (transporting people), and use 20% of the BTU's (and 20% of the oil). An EV also does the same work as a Hummer, and uses about 1/3 of the BTU's as the Prius, and 1/15 of the Hummer's, but uses perhaps 1/100th as much oil.

"I think it makes things unnecessarily complex to reduce that far"

I'm not sure what you mean. If you mean what I think you mean, then that's simplifying things way too far.

"This might be why Hirsch chose to go that route."

I think Hirsch is simply trying to emphasize the importance of preparation for peak oil. In doing so, he's reaching for quantitative support, to give his arguments authority. He'd be far better off simply pointing to the historical record, and saying: "It's clear that oil shocks are very bad for the economy.". Everyone would agree with him, and no one would be extrapolating beyond the short-term data.

"I'd have to go back and look at the context of the 0.14 you cite because it is very suspicious to me. If it turns out that you're using it in the context Ayers intended (which paper and which page?"

Edit: I looked through the Ayres article you cite, and couldn't find the number - it must have been in another article. Instead, Ayres shows it qualitatively in the chart on page 11 (definitions are on the bottom of page 9). You can see that the correlation between E (simple energy BTU's) and GDP is not very good, as explained in the 2nd paragraph on page 12, and Ayres rejects simple BTU's as a "production function" (an equation which explains GDP growth).

"one way I could see it being valid is with the proviso that much manufacturing continue to be done by other countries"

That's not the explanation. In fact, there's an easy way to show it: world oil consumption has been flat for the last several years, but GDP growth has been quite strong, stronger than for the US (which itself has grown 8% in the last 3 years, with flat oil consumption).

The 1:1 relationship has been backed by other studies. Here is a paper by C. Cleveland et al. that shows they can account for almost 100% of economic growth by using Fuel Quality as a factor plus energy (and a few other minor factors also). Essentially, once you account for electricity BTUs being more productive than coal BTUs (easier to use precisely) then the "unknowns" drop out of the relationship. This works in the US and across nations.

http://www.esf.edu/efb/hall/.%5Cpdfs%5Cenergy_US_economy.pdf

Ayres uses exergy, which is very close to BTU parity. So he misses the largest secondary factor (after total fuel use itself).

"once you account for electricity BTUs being more productive than coal BTUs (easier to use precisely) then the "unknowns" drop out of the relationship"

First, I'd note that Hirsch is talking about oil: his hypothesis is that GDP will drop in a 1:1 relationship with oil, as oil declines. The summary of the paper quoted above suggests that Cleveland is talking about the relationship of GDP to all fuels, which is very different. That approach suggests that wind, solar and nuclear (or, god forbid, coal) electricity will substitute for oil quite nicely.

2nd, The paper says: "If we are to sustain current levels of economic growth and productivity as minimum long-run goals, alternative fuel technologies with EROI ratios comparable to petroleum today must be developed, or there must be unprecedented improvements in the efficiency with which we use fuel to produce economic output".

Well, we've done that. Wind, solar and nuclear combined with PHEV/EVs fits the first requirement (alternative fuel technologies with EROI ratios comparable to petroleum today), and the improvements in efficiency are being found.

3rd, this paper is from 1984 (so the data is 25-35 years old), well before it was clear that since that time US (and world) GDP would grow much more quickly than it's energy consumption (even including electricity). The best example of this is California, which has kept per capita electricity consumption flat over the last 25 years, while growing it's GDP relatively quickly.

4th, Ayres used "exergy services", which are not "very close to BTU parity". Exergy services are work performed. So, for instance, a Prius performs the same work as a similar vehicle with half the MPG, but uses half the BTU's. Strictly speaking, a Prius can perform the same work as a Hummer (transporting people), and use 20% of the BTU's. An EV also does the same work as a Hummer, and uses about 1/3 of the BTU's as the Prius, and 1/15 of the Hummer's...and so on.

Please note, this has been revised several times.