Tag Archives: peak oil

Energy Return on Investment

What every schoolkid (and investor) should know, and why it is time for fossil fuel divestment.

Energy Return on Investment (EROI) is easy to understand: how much energy do you get out (R) compared to how much energy you had to put in to get access to that energy (I) –R:I. EROI tells you how much net energy you can expect to use for other things (driving cars, running generators, etc.). Traditional petroleum (think gushing oil wells) used to have a lucas_gusherspectacularly high EROI, about 1000:1 a century ago [1]. Since the 1970s, the EROI of the average barrel of petroleum has been dropping fast – it is now below 5:1 [1].

“The evidence suggests that the global production of conventional oil plateaued and may have begun to decline from 2005.” [2]

Essentially, we are expending a lot of energy to scrape the bottom of the barrel, digging out very hard-to-get stuff in deep seas (think Deepwater Horizon and its attendant complications), tar sands, athabasca_oil_sandsand “tight” shale oil.  Because we have to use so much energy just to get at that fuel, it only makes sense (from a profit perspective) if the selling price of the resulting fuel is very high.

“We find the EROI for each major fossil fuel resource (except coal) has declined substantially over the last century. Most renewable and non-conventional energy alternatives have substantially lower EROI values than conventional fossil fuels.” [1]

As you may have heard (or noticed, if you fill a gas tank), the selling price of petroleum has recently dropped a lot.  Seems weird, but there are explanations (more on that later). What this price drop means is that a lot of places where it used to make sense to be extracting these fossil fuels, places where extraction companies have invested a lot in exploration and infrastructure to get at the stuff, don’t make sense anymore.  This is part of what is meant by “stranded assets” (more below) and it can lead to things like bankruptcy [3].

So if energy from petroleum is increasingly hard to get, why would the price be dropping now? Some of it may be due to a drop in demand because of the global economic slowdown, in turn related to China slowing the pace of its phenomenal economic growth [4].  Some of it may be due to the production boom from short-lived tight oil extraction and fracking taking place in the U.S., where production is high enough at first, but seems to fall off rapidly after about 15 years at each new site [2].

“Thus, despite the fall in crude oil prices from a new peak in June, 2014, after that of July, 2008, the peak oil issue remains with us, and broad economic recovery combined with the consequences of recent oil exploration and production cut-backs will bring back further major oil price rises.” [2]
The truth of the current situation is even more complicated than the EROI, of course. There is also the climate disruption represented by fossil fuel reserves.  And this leads to the other reason that fossil fuel companies should expect collapsing prices: we don’t want it so much anymore.  If we are serious about meeting the targets that global leaders just signed onto, we can’t even burn the fuel reserves that people have already invested in developing, let alone continue to develop new ones.  This concern was laid out by Bill McKibben in 2012 in “Global Warming’s Terrifying New Math,” and is even more relevant in light of the Paris COP 21 agreed ambition to attempt to stay below a 1.5C rise in average global temperatures [5].

When whales get stuck on beaches, helping them back to deeper waters is usually the right thing to do [6].  But when fossil fuel titans are stranded, gasping for profits under the weight of their history, the most merciful response for everyone might just be to put them out of their misery.  A few brief moments of economic pain can spare us all from longer decades of climate and pollution disasters if these beasts are allowed to keep flopping around on- or off-shore.  Sadly, we are past the point of easy, painless solutions now.

“If the oil crisis hits the economy hard, then the prolonged recession that results could dampen the rising demand that everyone projects. If oil prices thus remain relatively depressed for longer than expected, this could hemorrhage the industry beyond repair.”[6]

To hasten the inevitable demise of fossil fuels, there are increasing calls for divestment.

“Divestment is the opposite of an investment – it simply means getting rid of stocks, bonds, or investment funds that are unethical or morally ambiguous.” [7a]

Cities, colleges, foundations and individuals are hearing from activists demanding that they withdraw investments from fossil fuels.  And they are responding, with 517 institutions committed to withdrawing their investments in fossil fuels as of this post [7b].

“For the divestment skeptics who believe I am pushing an environmental agenda at the expense of necessities such as financial aid, let it be clear: The financial argument for divestment is sound, even independent of environmental concerns. The investment literature overwhelmingly shows that fossil fuel-free portfolios have higher risk adjusted returns than those invested in fossil fuel companies, which is understandable, considering the increasing risk of fossil fuel companies’ faulty practices and the imminence of carbon legislation. The San Francisco Chronicle reported in August that California pension funds lost $5 billion due to investment in fossil fuels. ” [8]

If you are so inclined, you might think of divestment as a death penalty for criminal corporations who knowingly perpetrated [9] mass murders [10] in the past and who plan to continue into the future. I generally prefer less retribution-focused imagery, perhaps that of allowing an ill and deranged sufferer the dignity of a quick death, but then again, perhaps that metaphor is less accurate.  Either way, the humane thing to do is to get it over with quickly, before more harm is done.  Keeping fossil fuel extraction on life-support with continued investments is doing no one any good at this point.

Since EROI from fossil fuels will continue to drop, and since there is essentially incontrovertible evidence of harm from the stuff,  why would any sane person invest money in fossil fuel extraction at this point?

Divestment is the rational and compassionate thing to do.


(Note: much of the cited information actually came from other primary sources, referenced in the summaries below, because this is just a blog and I didn’t want to take the time to dig for primary sources – not the best scholarship on my part, but still a good starting point for discussion.)

[1] J. Lambert, C. Hall, S. Balogh. 2013.  EROI of Global Energy Resources: Status, Trends and Social Implications  http://r4d.dfid.gov.uk/pdf/outputs/Energy/60999-EROI_of_Global_Energy_Resources.pdf

[2]   M. Jefferson. 2016. A global energy assessment. WIREs Energy Environ 2016, 5:715. doi: 10.1002/wene.179 http://onlinelibrary.wiley.com/doi/10.1002/wene.179/epdf

[3] Carbontracker.org. 2015. The $2 trillion stranded assets danger zone: How fossil fuel firms risk destroying investor returns. http://www.carbontracker.org/report/stranded-assets-danger-zone/

[4] D. Nathman. 2016. Crude Oil Prices In 2016: Made In China?  Forbes.  http://www.forbes.com/sites/dougnathman/2016/01/20/crude-oil-prices-in-2016-made-in-china/#4bc36cb05b23

[5]  N. Scharping. 2016. Half a Degree Makes a Big Difference for Global Climate http://blogs.discovermagazine.com/d-brief/2016/04/22/a-half-degree-makes-a-big-difference-for-global-climate/#.VyWpqjB96Um

[6] Strandednomore.org. 2013. What To Do If You Find A Live Stranded Whale Or Dolphin: An Inconvenient Advice from StrandedNoMore.  http://strandednomore.org/what-to-do-if-you-find-a-live-stranded-whale-or-dolphin-an-inconvenient-advice-from-strandednomore/

[7] N. Ahmed. 2016. This Could Be the Death of the Fossil Fuel Industry — Will the Rest of the Economy Go With It?  http://www.truth-out.org/news/item/35817-we-could-be-witnessing-the-death-of-the-fossil-fuel-industry-will-it-take-the-rest-of-the-economy-down-with-it

[7] Fossilfree.org. 2016. a) http://gofossilfree.org/what-is-fossil-fuel-divestment/ and b) http://gofossilfree.org/commitments/

[8] S. Vaughan. 2015. Divestment Movement Spurs Existential Crisis in Higher Education. http://www.truth-out.org/speakout/item/32926-divestment-movement-spurs-existential-crisis-in-higher-education

[9] S. Hall. 2015. Exxon Knew about Climate Change almost 40 years ago. Scientific American.  http://www.scientificamerican.com/article/exxon-knew-about-climate-change-almost-40-years-ago/

[10] World Health Organization. 2015. Climate change and health.  http://www.who.int/mediacentre/factsheets/fs266/en/


In the red again

As a species, we’re into deficit spending for the year on the stuff that really Earth Overshoot Day 2014: 19 Augustmatters, the stuff that keeps us going.  Yesterday was estimated to be Earth Overshoot Day 2014: the day when we’ve used up our budget on ecosystems services for the year, and we start stealing from the future to keep doing what we’re doing now.  And that’s not even taking into account the nonrenewable stuff like minerals that we’re just plain running out of.

How many Earths do these humans think they've got?

Singapore’s not on here – I’m guessing it’s close to UAE level (tiny place, HUGE footprint).


In these times of change…

A fascinating new piece,

Want to Change the World? Read This First

by Richard Heinberg was published on Resilience.org.  He moves through important ideas from anthropologist Marvin Harris’s cultural materialism to Heinberg’s own important perspectives on the age of fossil foolishness.  Below are some highlights, but you should really read  the whole thing.

Oil has given us the ability to dramatically increase the rate at which we extract and transform Earth’s bounty (via mining machinery, tractors, and powered fishing boats), as well as the ability to transport people and materials at high speed and at little cost. It and the other fossil fuels have also served as feedstocks for greatly expanded chemicals and pharmaceuticals industries, and have enabled a dramatic intensification of agricultural production while reducing the need for field labor. The results of fossil-fueling our infrastructure have included rapid population growth, the ballooning of the middle class, unprecedented levels of urbanization, and the construction of a consumer economy. While elements of the Scientific Revolution were in place a couple of centuries prior to our adoption of fossil fuels, cheap fossil energy supplied a means of vastly expanding scientific research and applying it to the development of a broad range of technologies that are themselves directly or indirectly fossil-fueled. With heightened mobility, immigration increased greatly, and the democratic multi-ethnic nation state became the era’s emblematic political institution. As economies expanded almost continually due to the abundant availability of high-quality energy, neoliberal economic theory emerged as the world’s primary ideology of societal management. It soon evolved to incorporate several unchallenged though logically unsupportable notions, including the belief that economies can grow forever and the assumption that the entire natural world is merely a subset of the human economy.

He means the failure to comprehend:


…With less useful energy available, the global economy will fail to grow, and will likely enter a sustained period of contraction. Increased energy efficiency [and, as outlined earlier in the article, the lower energy-return-on-investment array of renewable alternatives – ed.] may cushion the impact but cannot avert it. With economies no longer growing, our current globally dominant neoliberal political-economic ideology may increasingly be called into question and eventually overthrown.

And don’t forget:

Choose your assumptions—optimistic, pessimistic, or somewhere in between. In any case, this is a big deal.
*          *          *
We are living at a historic moment when the structure of society (economic and political systems) and its superstructure (ideologies) are about to be challenged perhaps as never before. When infrastructure changes, what seemingly was solid melts into air, paradigms fall, and institutions crumble, until a new societal regime emerges. Think of a caterpillar pupating, its organ systems evidently being reduced to undifferentiated protoplasm before reorganizing themselves into the features of a butterfly. [Not entirely accurate for what happens in butterfly metamorphosis, but close enough. – ed.] What a perfect opportunity for an idealist intent on changing the world!
It’s time to take up the role of doula and assist in the birth of a positive future. Let’s help this come out right!

Peak Oil and Transportation Alternatives

I’m a bike commuter.  I’ve said it and I’m proud.  Earthstonstation has a new post about why single-occupancy cars are such a bad idea for the future, with some important updates about Peak Oil and the folly of putting hope in new sources like tar sands:

The era of cheap oil is over. Are you making any preperation for your future transportation needs? The  International Energy Association claims crude oil output peaked in 2006. “All the easy oil and gas in the world has pretty much been found. Now comes the harder work in finding and producing oil from more challenging environments and work areas” according to William J. Cummings, Exxon-Mobil’s official spokesman.  Lord Ron Oxburgh, former CEO of Shell Oil says, ” It is pretty clear that there is not much chance of finding any significant quantity of new cheap oil. Any new or unconventional oil is going to be expensive”.

Some would have you believe that peak oil was a myth and is no longer a concern now that new types of oil are available in the Athabasca Oil Sands of western Canada, the Green River Shale Formation in Colorado, Utah and Wyoming plus the Orinoco Belt of Venezuela. Joe Carroll wrote this headline for the Bloomberg news service on Feb. 6th 2012 ” Peak Oil Scare Fades as Shale, Deepwater Wells Gush Crude“. He goes on to say “Two decades and four energy crises later, the U.S. Geological Survey estimates that more than 2 trillion barrels of untouched crude is still locked in the ground, enough to last more than 70 years at current rates of consumption”. Whoopie! problem solved, 70 years worth of oil. Tell that to your grandchildren. Oh by the way what is the projected rate of consumption when considering the developing economies of China, India and others?

Earthstonstation has nailed some of the critical questions, but leaves out the social and environmental costs of accessing this remaining oil and continuing to release it’s fossil carbon into the atmosphere.  I also just watched the superb  2007 film A Crude Awakening: The Oil Crash (reviewed here and here).   We can’t keep this up much longer; we are already living in the “Age of Consequences,”  and the ride is likely to get much bumpier from here.

I disagree a little with Earthstonestation’s suggestion to get one of those infernal-combustion kit bikes.  Why burn gas, when electric motors can be so much more efficient, and oh-so-much quieter?  My electric bike has the advantage of being a very smooth ride, and VERY quiet. I got it 8 years ago (almost to the day), and it’s still my commute ride about 90% of the time. True, I’m fortunate enough to live in Santa Cruz county, which has a lovely California costal climate and a relatively bike-aware populace, but I am LAZY, and I still haven’t given it up.

Mine’s a Synergy Cycle from Electric Sierra, and the heavy old clunker of a thing can still do 12 miles between charges.  I think it cost me $800, minus a couple hundred because of an incentive the wonderful folks at Ecology Action were offering at the time. It probably costs less than $0.04 per mile to charge it, and when I have a place where I can install solar and/or wind, it won’t even have that electricity as a carbon footprint.  Newer models are lighter and go much longer on a charge, and many cost far less than a high-end non-motorized street bicycle.  Pedal when you can (it’s good for you), electrify when you don’t wanna sweat!

Honestly, I think a much bigger hurdle than the pedaling is the fear. Riding is scary – worse in some towns than others – because of all those big four-wheeled things.   I’m used to feeling like my life is in jeopardy once or twice a day.  It’s kind of like living with grizzly bears might have been.  Sometimes I think I should adopt the nickname “Dances With Busses,” since they move at about the same pace as me while we weave in and out of bike lanes should I happen to coincide with one.

“My bet is on the hairless monkey.”

From the Center for Pattern Literacy (Permaculture visionary and Gaia’s Garden author Toby Hemenway’s site) comes this refreshingly sober and calm blog entry on the realities of Peak Oil: Apocalypse, Not | Pattern Literacy.  It emphasizes the flexibility of our species (our ability to embrace the Anthropocene?) and the responsiveness and resilience of human eco-cultural systems, even in the face of TEOTWAWKI (“The End of the World as We Know It”).  The author may not know the difference between a monkey and an ape, but this post has some interesting things to say about shifting the idea of employment, economics and the “need” for work.

Humanity has reached the stage, finally, where basic survival is not in doubt for many people. We have not yet grasped that the struggle for survival is essentially over, and we have overshot. Instead of noticing that as a species we no longer need to labor all our waking hours for the basics of food and safe shelter, and to fight off disease and predators, we cannot get off the survival treadmill. So we just keep making more stuff, rather than looking up, taking a breath, and enjoying all the wonders possible from being a conscious, intelligent animal that has mastered survival. Perhaps Peak Oil, and a return to a time when resources are dear and labor is abundant, will remind us that there is much more to life than the manufactured desire to have more toys. Perhaps we can lose our small-minded obsession with getting and spending, and finally grow into maturity as a species. (Read this: Apocalypse, Not)

Embracing the Anthropocene

Embracing the Anthropocene – NYTimes.com.

An important look at our capacity to change our home planet, and how we choose to think about it.  Revkin’s thoughtful comments include:

Earth is what we choose to make of it, for better or worse.
Taking full ownership of the Anthropocene won’t be easy. The necessary feeling is a queasy mix of excitement and unease. I’ve compared it to waking up in the first car on the first run of a new roller coaster that hasn’t been examined fully by engineers.

What, you may ask, is the Anthropocene?  It’s a term coined in 2002 for the geologic epoch we find ourselves in, where humans have made sufficient changes to atmospheric and ocean chemistry, not to mention caused or contributed to the extinction of such a large number of species, that it will be detectable later in the geologic and fossil record.

“The Apocalypse?  You’re soaking in it.”
— Lindsay, Angel

Only, it’s up to us to decide how to cope.  We can even choose to build something better.  Or, as Stewart Brand once said:

We are as gods; we might as well get good at it.

To learn more about it, check out what National Geographic had to say on it – complete with photos!

This Earth Week: Taking America Back From the Polluters — Green For All

This Earth Week: Taking America Back From the Polluters — Green For All.

Excerpts from a stirring speech by Green for All’s CEO Phaedra Ellis-Lamkins on the 1 year anniversary of the BP Deepwater Horizon disaster, the oil spill that was like a knife in the gut of our Mother Earth.  It’s time to get over our oil addiction, and make the world a safer place for all the children, of all the species, for all time!  Happy Earth Week.