Chart updated 28 February to take account of this comment from Profbaldwin.

The future of motor vehicles lies in improved efficiency and that is to the left of the gasoline ICE in the chart. That future is electric vehicles powered by high ERoEI renewable electricity.

The following is a post by both Dr. Charles Hall and EROI Guy. Most of the material comes from a recently published book chapter titled “Peak oil, EROI, investments and the economy in an uncertain future.” The book can be found here. Dr. Charles Hall is a professor of Systems Ecology at the College of Environmental Science and Forestry in Syracuse, New York, and has written about energy issues many times on The Oil Drum, found here.

This is a guest post by Roger Brown, known as Roger K, whose graduate work was in physics. In reading about net energy and EROEI, he realized that energy balance alone is insufficient for characterizing the economics of energy production. In this post, he develops a multi-variable approach to account for the cost of other production resources. This post is the first publication of his innovative ideas. A summary is available at the end of the post.

Labor Cost of Energy

In order to produce an economic output, you have to invest production resources. At a minimum some amount of human labor must be invested. There is no such thing as a labor-free production process. Even if you lived in a sparsely inhabited tropical paradise filled with streams jumping with large tasty fish and heavily laden fruit trees growing profusely in the natural forests, you would still have to spend some amount of time gathering fruit and fish.

If you could gather all the food you needed for a single day in a half hour of work, then your food would be very cheap. If you lived in a less productive natural environment and had to spend eight hours a day gathering all of the food you needed, then your food would be very expensive.

_{Annual rates of total drilling for and production of oil and gas in the US, 1949-2005 (R² of the two = 0.005; source: U.S. EIA and N. D. Gagnon). Since drilling and other exploration activities are energy intensive, other things being equal EROI is lower when drilling rates are high.}

As oil prices increase and the presidential campaigns heat up there is a lot of discussion about increased drilling for oil. In economic theory higher prices will give market signals to increase exploration and exploitation of resources and hence deliver more to society, although at a higher price. Will this in fact occur with oil for the United States? Of course we will not know until we do it, but we can look to the past for hints. The enclosed figure represents the history of drilling and production for oil and gas in the United States. The answer seems inescapable: the rate of drilling for oil in the United States has been unrelated to finding or producing oil and gas, which is determined principally by geology. Mother nature, not market theory, determines resource availability, at least in this case and probably many more. (Source: Hall, Powers and Schoenberg (in press))