This series of posts will be co-authored by phoenix, who is an Engineer heavily involved in the energy sector. It will be based on a submission we made recently to the Australian Government.

INTRODUCTION

Energy is a gateway resource.

Given abundant energy, minerals can be refined from seawater if necessary. But in the absence of energy even the richest mineral deposits are inaccessible.

Similarly, given sufficient energy, a valuable energy resource such as oil can be made synthetically from virtually any organic input. In theory (given the right infrastructure and energy production) the production rate of synthetic oil would be limited only by the availability of sufficient energy.

In this series of posts we will attempt to do 7 things:

1. Discuss Energy Return on Energy Invested (EROEI). Show that a net-zero EROEI for a resource does not necessarily mean that the energy resource has no utility - it simply means that the energy resource has become an energy carrier, not an energy source. The burden of energy production must be moved to a different energy source. If reduced energy returns exist in our future (as they clearly do – this is happening already) then an infrastructure for this alternate energy source (or sources) must logically be built before the energy available from fossil fuels approaches zero.
2. Discuss the lifespan of Australia’s endowment of fossil fuel (FF).
3. Present an order-of magnitude estimate for the amount of time necessary to build an alternate energy infrastructure.
4. Show that the lifespan of Australia’s current FF energy endowment is likely to be less than the time required to design and build an alternate energy infrastructure.
5. Show that the energy required to build the infrastructure is likely to be a substantial fraction of all the energy that we have available, leading to an inevitable impact on GDP and living standards.
6. Examine the same issues from a US/International perspective.
7. Discuss solutions.

The April 2009 edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.9 MB, 28 pp).

The Oilwatch Monthly is a newsletter that is available free of charge with the latest data on oil supply, demand, oil stocks, spare capacity and exports. Readers who want to receive the Oilwatch Monthly in their e-mail box each month can subscribe at this weblink, by filling in their first name, last name, email adress and selecting Oilwatch Monthly in the mailing list box. To finalize your subscription push the 'inschrijven' button below the form.

A summary and latest graphics below the fold.

Considering the fundamental nature of oil supply and demand provides a coherent explanation not just for the rapid rise in oil prices, but also the dramatic fall.

In recent years, I despaired when I heard economists on TV explain oil's spectacular run up in prices by saying that 'demand was exceeding supply'. How could trained economists, in just a few short words, contradict the basic grounding in economics that I was taught early in my engineering degree?

The January 2009 edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.6 MB, 24 pp).

The Oilwatch Monthly is a newsletter that is available free of charge with the latest data on oil supply, demand, oil stocks, spare capacity and exports. Readers who want to receive the Oilwatch Monthly in their e-mail box each month can subscribe at this weblink, by filling in their first name, last name, email adress and selecting Oilwatch Monthly in the mailing list box. To finalize your subscription push the 'inschrijven' button below the form.

A summary and latest graphics below the fold.