Articles tagged with "eroei"
Posted by Gail the Actuary on November 16, 2012 - 3:30pm
Tags: eroei, iea, imf, oil prices, recession, shale oil, tight oil, us oil production, weo 2012, world energy outlook [list all tags]
The International Energy Agency (IEA) provides unrealistically high oil forecasts in its new 2012 World Energy Outlook (WEO). It claims, among other things, that the United States will become the world’s largest oil producer by around 2020, and North America will become a net oil exporter by around 2030.
Figure 1 shows that this increase comes solely from the expected rise in tight oil production and natural gas liquids. The idea that we will become an exporter in later years occurs despite falling production, because “demand” will drop so much.
In the United States, we have been working on scaling up wind energy but not getting very far. In 2010, wind energy supplied only 2.3% of electricity purchased.
Such slow progress seems strange for a product that seems to have such great promise. It can reduce CO2 emissions. It doesn’t require fuel. It is at least partly US made. It seems to have promise for protecting against rising fossil fuel prices.
In this post, I discuss a few of the obstacles facing wind energy in the United States and their implications for the expansion of wind energy.
In recent years, we have heard statements indicating that it is possible to decouple GDP growth from energy growth. I have been looking at the relationship between world GDP and world energy use and am becoming increasingly skeptical that such a decoupling is really possible.
Prior to 2000, world real GDP (based on USDA Economic Research Institute data) was indeed growing faster than energy use, as measured by BP Statistical Data. Between 1980 and 2000, world real GDP growth averaged a little under 3% per year, and world energy growth averaged a little under 2% per year, so GDP growth increased about 1% more per year than energy use. Since 2000, energy use has grown approximately as fast as world real GDP–increases for both have averaged about 2.5% per year growth. This is not what we have been told to expect.
Why should this “efficiency gain” go away after 2000? Many economists are concerned about energy intensity of GDP and like to publicize the fact that for their country, GDP is rising faster than energy consumption. These indications can be deceiving, however. It is easy to reduce the energy intensity of GDP for an individual country by moving the more energy-intensive manufacturing to a country with higher energy intensity of GDP.
What happens when this shell game is over? In total, is the growth in world GDP any less energy intense? The answer since 2000 seems to be “No”.
It seems to me that at least part of the issue is declining energy return on energy invested (EROI)–we are using an increasing share of energy consumption just to extract and process the energy we use–for example, in “fracking” and in deep water drilling. This higher energy cost is acting to offset efficiency gains. But there are other issues as well, which I will discuss in this post.
If GDP growth and energy use are closely tied, it will be even more difficult to meet CO2 emission goals than most have expected. Without huge efficiency savings, a reduction in emissions (say, 80% by 2050) is likely to require a similar percentage reduction in world GDP. Because of the huge disparity in real GDP between the developed nations and the developing nations, the majority of this GDP reduction would likely need to come from developed nations. It is difficult to see this happening without economic collapse.
Posted by JoulesBurn on October 28, 2011 - 10:45am
Tags: behavior, energy, energy scale, eroei, growth, models, sustainability, technofix, transportation and tagged economics [list all tags]
Many Do the Math posts have touched on the inevitable cessation of growth and on the challenge we will face in developing a replacement energy infrastructure once our fossil fuel inheritance is spent. The focus has been on long-term physical constraints, and not on the messy details of our response in the short-term. But our reaction to a diminishing flow of fossil fuel energy in the short-term will determine whether we transition to a sustainable but technological existence or allow ourselves to collapse. One stumbling block in particular has me worried. I call it The Energy Trap.
In brief, the idea is that once we enter a decline phase in fossil fuel availability—first in petroleum—our growth-based economic system will struggle to cope with a contraction of its very lifeblood. Fuel prices will skyrocket, some individuals and exporting nations will react by hoarding, and energy scarcity will quickly become the new norm. The invisible hand of the market will slap us silly demanding a new energy infrastructure based on non-fossil solutions. But here’s the rub. The construction of that shiny new infrastructure requires not just money, but…energy. And that’s the very commodity in short supply. Will we really be willing to sacrifice additional energy in the short term—effectively steepening the decline—for a long-term energy plan? It’s a trap!
The EIA published International Energy Outlook 2011 (IEO 2011) on September 19, showing energy projections to 2035. One summary stated, "Global Energy Use to Jump 53%, largely driven by strong demand from places like India and China."
It seems to me that this estimate is misleadingly high. The EIA is placing too much emphasis on what demand would be, if the price were low enough. In fact, oil, natural gas, and coal are all getting more difficult (and expensive) to extract. Prices will need to be much higher than today to cover the cost of extraction plus taxes countries choose to levy on energy extraction. The required high energy prices are likely to lead to recessionary impacts, which in turn will cut back demand for energy products of all types.
We live in a finite world. While it is true that huge resources of oil, natural gas, and coal are still theoretically available, we are starting to reach practical limits regarding extraction at prices that do not lead to economic contraction.
This is a guest post from Dolores García, an independent researcher based in Brighton, UK.
Recently Jorgen Randers (best known for being one of the co-authors of The Limits to Growth, 1972) asked me to do some modelling work on the World3-Energy model, an updated version of the classic World3 computer model that was used in The Limits to Growth that includes a much larger amount of information about energy. He’d like to use it for the next book that he intends to publish sometime in 2012.
I have published on The Oil Drum before the details of World3-Energy (a dynamic systems model), can be found in:
And a few answers to reader’s questions can be found here:
Part of the work I’m doing for Jorgen Randers is comparing the results of World3-Energy with IEA’s results. I thought the readers of The Oil Drum would be interested in this.
The idea that high oil prices cause recessions shouldn’t be any surprise to those who have been following my writings, those of Dave Murphy, or those of Jeff Rubin. Last month, though, the Wall Street Journal finally decided to mention the idea to its readers, in an article called “Rising Oil Prices Raise the Specter Of a Double Dip“. The quote they highlight as a “call out” is
When consumers spend more at the pump, they often cut back on discretionary purchases.
The WSJ shows this graph, linking oil price hikes to recessions:
A Financial Times blog by Gavyn Davies says something very similar:
Each of the last five major downturns in global economic activity has been immediately preceded by a major spike in oil prices. Sometimes (e.g. in the 1970s and in 1990), the surge in oil prices has been due to supply restrictions, triggered by OPEC or by war in the Middle East. Other times (e.g. in 2008), it has been due to rapid growth in the demand for oil.
But in both cases the contractionary effects of higher energy prices have eventually proven too much for the world economy to shrug off.
In this post, I explain what the WSJ and Financial Times articles are missing regarding the connection between oil and the economy. I also explain how the inability of oil prices to rise very far suggests that the downslope may be considerably steeper than most models based only on the Hubbert curve would predict.
Readers have been asking questions about a couple of shale oil articles recently. One is an AP article called New drilling method opens vast oil fields in US. A similar article is a CNBC article titled Massive New US Oil Supply – ‘Peak Oil’ Fears Overblown? Both of these articles talk about the extraction of shale oil in the Bakken and other locations, using horizontal wells and hydraulic fracturing.
According to the AP article:
Companies are investing billions of dollars to get at oil deposits scattered across North Dakota, Colorado, Texas and California. By 2015, oil executives and analysts say, the new fields could yield as much as 2 million barrels of oil a day — more than the entire Gulf of Mexico produces now.
This new drilling is expected to raise U.S. production by at least 20 percent over the next five years. And within 10 years, it could help reduce oil imports by more than half, advancing a goal that has long eluded policymakers.
There are several questions that might be asked:
1. Is this really a new drilling technique?
2. How likely is the 2 million barrels a day of new production, and the 20% increase in US production, by 2015?
3. Can this additional oil supply really reduce the US’s imports by over half?
4. How much of a difference will this oil make to “peak oil”?
Let’s take the questions in order.
Below the fold is rerun of an essay from Cutler Cleveland on energy transitions. The unfolding drama in the Gulf of Mexico serves as a reminder of how dependent our modern civilization has become on fossil fuels. Dr. Cleveland's essay provides an excellent big picture overview, especially for readers here new to the topic, of what supply side variables we need to consider as we transition away from our extreme fossil fuel subsidy. Replacing stock based (fossil) energy with flow based (renewable) is not as simple as one for one BTU substitution. Professor Cleveland previously wrote "Energy From Wind - A Discussion of the EROI Research", and "Ten Fundamental Principles of Net Energy" posted on theoildrum.com. Cutler Cleveland is a Professor at Boston University and has been researching and writing on energy issues for over 25 years.
Image: Prometheus chained to Mount Caucasus. Source: Pieter Paul Rubens: ''Prometheus Bound,'' 1611-1612, Oil on canvas, 95 7/8" x 82 1/2". (Philadelphia Museum of Art: The W.P. Wilstach Collection)