It is not particularly informative to look at individual US states or countries as examples. Texas has a very energy-intensive economy, but they refine the oil used by a lot of other states. There is nothing about California that screams efficiency. The mild weather helps a lot. Information technology on one level (game programmers, system designers) might use relatively little energy, but the overall system (Si refining, chip fabrication, etc.) uses a lot. The US and Europe have outsourced much of their energy-intensive industry, providing services in return. Yes, there are real efficiency gains that have been and will be made, and a really good meal might not take that much more energy to make than a bad one, but the idea that the electronic age is one of lower energy intensity is a myth with a capital M. As for arts, if we all painted, wrote poetry, or strummed guitar in our spare time, that would definitely be a good thing.

It's almost certain that California gets its low MJ/$GDP by outsourcing the energy consumption to Mexico and China. Selling wines and being the entry portal from China for all import goods helps too. I'd need to see contradictory detailed breakdowns to change my opinion.

"criminals have gained control of all the institutions both public and private"
Gee, I wish I were one of those criminals in charge, so that I could reap the profits.

Or maybe the problem isn't with the criminals themselves but with a system which rewards "optimizing profits" at others' expense. I don't btw think that it has been much different since civilization set root thousands of years ago...

Cheers, Dom

Euan,

thanks for your comments. If you allow me I would like to try state the state the theory you propose in other words than those you use. Maybe that will result in me missing the point. If so it is not intentionally and in such case please excuse me. Thus the theory would sound somewhat like this:

The production of energy that can be used by society demands more and more effort in the form of human work and capital. Therefore such efforts will increasingly displace other activities that produce the things we want in life. (And for which energy is just a means to reach an end.) At some point this will put such strains on the economies that it will have a more or less deleterious effect on them. If this is a correct representation of your hypothesis we agree in principle.

If so further questions becomes: How do we measure the amount of such displacement? When will we reach a limit where energy costs become so large as to seriously harm the possibility to grow the economy or even sustain it at a given level? (In a capitalistic economy the possibility of just sustaining the economy at a given level might not exist. Either we have optimism and growing economies or contracting economies and pessimism!? )

I will stick to my position here, namely, that you if you want to calculate the part of available resources that gets allocated to energy production the data from your figure 4 overestimate this part. This is because a large part of the producers make immense profits at e.g. the prices of 2008. It is only a minor part of the price we pay e.g. the Saudi-Arabians that goes to cover the costs to produce/extract the oil they sell. In this way the high price does not imply that activities to produce other things wanted will be displaced. The high prices will mainly effect the distribution of wealth produced. One may also look at your figure 4. For example the Iranian revolution seems to have had a dramatic effect on the part of total resources that is used solely for energy production. It would appear that the part of the total resources that were used for energy production approximately doubled after the revolution. It is likely that some effect of this kind occurred but the data in figure 4 must greatly exaggerate it. Obviously if easy to produce Iranian oil was substituted by more difficult to produce oil from other areas this would increase the part of total resources used for energy production. However, it is very hard to believe that the effect was of the magnitude indicated by the data in figure 4.

Still it appears to be data that indicate that when the expenditure for petroleum become about 5 or 6 % of GDP this slows economic growth, se for example the post by David Murphy you referred to. I believe I have read other articles talking of something like 8%. There may be a statistical correlation here, but it does not prove a casual relationship. Probably the greatest effect of a run up in energy prices has to do with the imbalances that they create if the increase is rather swift. For example the price increase may result in large amounts of gas-guzzlers that are no longer in demand, in large number of houses with very long commuting distances that no longer are demanded, increasing indebtness of consuming countries, etc. Thus, while hikes in petroleum prices might very well have been at least part of the cause of the present and/or earlier recessions this is not evidence to the fact that the actual level of energy costs caused these recessions or that the actual level of energy costs are/were to expensive bear.

You also propose a remedy for increasing energy prices, namely increasing energy efficiency. Obviously this is one way to handle the problem. Increasing energy efficiency would allow the part of total resources that goes to energy production to remain tolerable even in a situation when the cost of producing one unit of energy steadily increases. I am not updated on where ERoEI lies for the marginal barrel today. But I find it hard to believe that projects with an ERoEI of about seven (or even lower) should not be possible to execute. In line with this it also follows that I do not believe there is evidence that some $ 100-150 / bbl would constitute a level which is necessarily to expensive for our economies to bear. It might have been too much last year, but I believe it should be possible to adapt to such a price level.

All in all I think we agree on the problem, though I believe your calculations/hypothesis give a too pessimistic result. It is probably extremely difficult to pin-point a limit where the cost to produce energy is of such a magnitude as to have a deleterious effect on our economies. Such a limit will to a large extent be fleeting depending on how a (the) difficult situation is handled. Here, I am very pessimistic. The problem receives too little (almost no) attention. Measure to remedy our critical situation most likely need more or less immediately to be taken – so little is done.

Thanks Euan, same thought that I had.

Good luck with your preps!

Gail,
Natural gas has some advantages over oil, it's energy loss is much less than oil from well head to consumer( more efficient transport and low refining losses).
When we generate most electricity from wind or solar, NG will be very valuable for peak power( as it is today) so may be priced much higher but used a lot less.

Clearly we can afford to use oil above $100/barrel but not with vehicles that get <20mpg. Once 2016 CAFE laws take effect new vehicles will be averaging 39 mpg, so fuel costs will be 50% of the cost of a 20 mpg vehicle . For PHEV owners getting >100 mpg they can afford $500/barrel oil( but only use 1/5th the amount). It does need time for drivers to switch to new vehicles, but the higher the price the faster the switch, Prius and Chevy Volts will be back-ordered, SUV production will close down.