Art Berman writes and talks about this. Rationing for essential investments in infrastructure and provisioning pending that depletion would be smart but global capital would rather die first.
Even the oil industry admits we're at EROEI of 6:1, which is just one step away from pre-FF agrarian society. Don't have the link to hand, but I posted it on a recent comment on a different thread.
Thanks for this interview! The points about decentralizing energy and the limits of mineral mining are very important, so thanks for raising those. I'm really excited about the potential of some new super deep geothermal technologies (especially a company called Quaise Energy) that might be able to address both of those problems and also provide most of the world's energy because they can reach deep enough to tap super hot rock (10-20km down) anywhere on Earth, not just the areas near fault lines and volcanoes. If we can figure out how to couple that base-load geothermal energy with less rare-mineral-intensive lifestyles and technologies, we've solved a lot of our problems. Still the problem of a limited copper supply to electrify everything remains. Degrowth is our only hope, but the copper problem is still a big one.
I am a bit baffled byenergy returned on energy invested (EROEI). About 10 yrs ago a number of commentators on The Oil Drum commented that the shale revolution would collapse because of negative EROEI for shale mining. Not only that but the financial investment model for shale was a ponzi scheme built on debt financing.
Yet shale catapulted the US to a major fossil fuel producer. Clearly the system found a way round negative EROEI for shale. How did they achieve that? Will they be able to do that again for negative crude oil EROEI?
I have doubts whether EROEI is a valid lens to view the end of extraction of fossil fuels - just from looking at the expansion of shale mining.
Hypothesis: If the energy you need to extract shale costs financially less than the money you make from mining and selling shale, then you can mine away even though from an energy perspective you are using more energy to extract less energy. I think it's the economic/financial lens that makes this viable. I am willing to bet Gov subsidies will play in here and will have a major play in continuing fossil fuel extraction.
I think understanding the financial and economic lens is as important if not more than the EROIE lens. Your interview has had me thinking all week. Thanks very much.
Is it something to do with government subsidies? If it was, you could imagine that could lead to a deterioration of public services, are we already seeing that in the US, or in the UK?
I think the deterioration of public services is more to do with furthering the frontiers of extraction. A hundred years ago depletion of public services, such as they were, was done on the perpipheries of empire, that is in the colonies (money was funneled out of the system some of it destined for investment into colonial centers). As these over time have been exhausted so the extractors have moved to the centre. In conjunction with governments of the centres they formulate ways of extracting from basic public services. So we see water services, trains, health services, energy as some of the major centers of extraction in the UK. Inequality and poverty rises (bad as it may be nothing like that experienced in the global south) and the UK economy teeters towards a slide into an emerging economy. Just as the colonies did two hundred or so years ago. This is separate from fossil fuel extraction.
Here the extractors lobby governments for fossil fuel subsidies to facilitate fossil fuel mining. Governments oblige and the profits are extraordinary. The headline figure from the IMF, that most colonial institution of modern times, states the subsidy is $7 trillion dollars. But that's a headline and it needs more nuance. However you can get the feel for how big this subsidy potentially is. The US Gov apparently susbsidises new oil well mining. Given shale mines decline rapidly you can imagine continuous subsidies for shale miners as they flip mines every few weeks. This is, in my view, key to decline of humanity. This is the lifeline to the fossil fuel industry. Without cutting the subsidy lifeline we cannot hope to stop the extraction of fossil fuels no matter what the EROIE ratio is.
In short, and with apologies, "it's the economy stupid". I never liked Clinton but it is all about capitalist economics. Neither the physics nor geology will stop it until the centers are bankrupt and there are no more subsidies.
I have only come to view lately after years of reading about the physics, the geology and the politics - blind to the economics. The economics is harder to understand and this is probably why it's least analysed.
Our entire economy is built on debt financing. It is decades since we had a capitalist system. What we have is a debtist system. It is as insane as it was in 2008, and just as vulnerable.
They never even fixed the issue in 2008, they just kicked the can down the road. The same nonsense that caused it is still going on, but at an even greater scale. Ken Griffin is worse than Madoff ever was.
We are facing simultaneous collapse of societal, economical, and ecological systems. All because of the incessant, self destructive greed of a very few.
Quite simply they threw surplus money at it, by conning investors to part with cash up front. Bit like what happened with a lot of English railways back in the 19th century, that ended up never being built. With such gross wealth inequality, when too much money is owned by too few people, it is sometimes easy to part fools from their cash. But ask them to redistribute that wealth to ease the suffering of others, oh no, that's righteous indignation at the loss of privilege.
It was however a temporary blip, and in the long term has changed nothing.
If I have learnt anything from the last 15 years of following the various crises it's that we would do better trying to understand the means by which western capitalists find devious ways to continue extraction and circumvent these crises. This is only kicking the can down the road but focusing on the crises itself only gives us a partial understanding of our present political and economic system.
The full picture would include the how the capitalist will approach continuing the extraction in face of these crises too.
When slavery was "abolished" slavers went on to devise indentured labourers.
When the banking system crashed in 2008 capitalists devised quatitative easing.
There are but two examples of a phenomenon that has little analysis and understanding.
This is such a good point. I’m glad you raised this question. I wonder whether one reason why these economic issues haven’t been studied and written about is that their very complexity makes it nearly impossible for lay people to understand. Which is kind of the point. I remember reading back in about 2010, 2011 in the Wall Street Journal that there just is no financial case for methane fracking in the United States and that goes back to the EROEI. But also the very logic of the capitalist system, which is that when there’s a surplus of methane, prices go down, but the cost of doing business in the fracking fields is so incredibly high, it’s a vicious cycle. They need to keep extracting, because the sunk costs are astronomical.
I have a slightly controversial view of why this phenomena isnt widely studied. It's origins lie in colonialism and slavery. Colonialism is erased from western education and discussion hence there is little analysis of it outside of academia.
Prof Kojo Koram in his book uncommonwealth charts the use of corporate law to control and enslave the colonies. After the decline of empire, the UK and US devised ways to continue enslaving the global south using economic institutions (think IMF and trade treaties) and corporate law (think the rights of corporates to sue nation states). Colonial extraction continued using these new methods.
Even now there is a net flow of capital from the global south to the north. Extraction continues under a new guise. Alex Gladstein touches on this.
Matt Kennard of Declassified chronicles corporate tactics to continue unabated extraction in Silent Coup.
Put simply because these tactics have their origins in slavery and colonialism and its because these subjects are erased from western discourse (until I must say recently) our understanding of them is limited.
Even now France controls the monetary systems of its former African colonies and extracts uranium from them at incredibly cheap prices to build its nuclear power grid, which so often the greens think is so carbon efficient without realising the underpinning colonial extraction.
In summary, continuation of extraction at every turn and every "crises" is as old as colonialism and slavery. It twists and turns and morphs. In my view understanding it is key to charting a way out of these crises. Without that western capitalism will take mother nature further and further down the road of ruin. Just as they did the former colonies.
Yes, this rings exactly true. Are you familiar with Kathryn Yusoff's brilliant book, "A Billion Black Anthropocenes or None"? Thanks for the other references, will check them out. And it's not only the global south. In the U.S. fracking takes place in poor, rural communities desperate for a way out of their long decline into poverty and ruin. It's sold as "economic development," even while corporations poison the water and land, sickening and killing people and animals.
I will check out Yosoffs book thanks for that. You are absolutely right. Extraction from the poor in the US is shocking. I have read bits about levels of poverty and deprivation in white communities (not to mention the African American and hispanic communities). I understand their desperate swing to the right as much as it is counter productive.
The rise of inequality is a sure sign that economic extraction has come home and that the capitalist system is beginning to run out of road. "Shattered Nation" (Danny Dorling again) lays bear the UKs poverty and inequality. (He has some presentations on YouTube).
An empirical analysis of extraction, its history and Its methods would help the green movement formulate more effective responses to the crises faced by us and by mother nature.
Hi Sanjay, can you recommend me a few books on global financial system that could help me gain some insights into the mess and how the tilt of the system still persists in favor of the powerful and rich?
Nate Hagen does an excellent podcast called "The Great Simplification". One episode that is insightful is called "Debt Colionialism, The Petrodollar and Bitcoin" with Alex Gladstein. Alex is from the Human Rights Foundation and has an interesting view of bitcoin which I am not sure about but his insights into debt colionialism is sad and insightful.
Kojo Korams book uncommonwealth is a must read for all children of the colonies. Just how did the British ensnare so much of world? Koram has a powerful argument. He's a law professor so his book is well researched and accessible for non academics like me.
Matt Kennard whose journalism is very insightful in a western world where journalism is more about erasure and lies (to be frank). His book is silent coup and it's about how modern day capital holds nation states to ransom (Koram chronicles the historical version whilst Kennard the modern version).
I am still digging for France's current colonisation of West African states. We know what France did historically but it's still repressing West Africa now, not to mention Haiti. It's hard to find reliable writing (erasure again). But the caspian report on YouTube has an episode called "France owns 14 countries". It doesn't reference the statements in the report so I guess you must remain sceptical but the main thrust of it makes sense.
One really interesting facet of colionialism and it's erasure in the UK was Brexit. Contrary to the lies peddled in the media about the northern red wall, Wales causing the swing to Brexit, Prof Danny Dorling had done a very interesting analysis and found that Brexit was actually majority voted in affluent southern England and furthermore the nostalgic view of empire played a significant hand in the tip to leave. His book Rule Brittania Brexit and the end of empire is a fascinating. In a nutshell one ends up believing the lies one peddles. He writes the book with a education academic from Goldsmiths whose name I forget but she makes a fascinating argument about consequences of erasing British colonial history from the school curriculum.
There are many other sources, but these are the ones that come to mind. I warn you, for myself, I was depressed for quite some time after reading some of this stuff and had many sleepless nights. When I learnt 35million Indians were starved to death by the British I became sick. When I visited the slavery museum in Liverpool I was depressed for ages. But I think all eco socialists should understand western history because it explains the inexorable plunder of mother nature as a continuation of plunder and pillage of the non European world for so so long.
Only then can we understand what we are up against.
I have just finished "The Crash Course: An honest Approach to facing the future of our economy, energy and the environment" by Chris Martenson. While not specifically about the skew to the rich and powerful, I found it very helpful to understand some of the more basic elements of the financial and economic system and why it is such an idiotic mess.
Hi Mark, I am very new to this. Can you recommend a few books which could help me to get an unbiased view of the global financial system and how skewed it is in the favor of the well-placed ultra rich?
Mathematical nitpick: ERoEI is a ratio between two positive quantities (energy returned; energy invested) and can't be negative. It's below-unity if more energy is invested than returned, but never below zero.
You can use the word "negative" to discuss such the concept if you like, but not "negative ERoEI", you should instead say "negative net energy" or something like that.
Below-unity ERoEI processes are commonplace and can be financially profitable, because (for good reasons!) we do not value different forms of energy equally. Thermal electricity generation burns cheap fuel, which for reasons of physics and technology can't help but waste much of the heat, and delivers expensive grid power. Petroleum refining burns relatively cheap crude oil and fossil gas, with substantial energy losses, but delivers refined fuels suitable for use in vehicle engines, selling for much higher prices per unit energy than crude oil and gas do, and chemical feedstocks which are also sold at a premium.
Most mining, for things other than fuels, of course has no energy return at all, but we still do it because we value metals and construction materials and phosphate and so on.
There's no logical reason why we would not mine for energy products at a net energy loss as well, if the output is valued more highly than the inputs. Petroleum extraction certainly doesn't have to rely exclusively on energy from petroleum and could easily continue with cheaper energy from gas, coal, solar, wind, hydro, nuclear, whatever, despite its plummeting ERoEI.
Hi Rachel, super interesting episode, thanks! I think it may be a mistake to assume that passing the "net energy" transition with will lead to a major decline in oil or gas production.
As Andreas Malm lays out in Fossil Capital, the transition from renewable (water) power to fossil (coal) power was not caused by coal being cheaper or more reliable than water. Coal was much more expensive and the steam engines broke down a lot. Instead the steam engines could be placed in cities where cheap labour was abundant, and that made the enterprise more profitable than using water.
I think we will persist with oil and gas extraction even when it becomes absurd to do so. As your guest points out, we are already hooking up renewables to oil rigs. Ultimately, capitalists will invest in the most profitable enterprise. And as Brett Christophers points out in his new book The Price Is Wrong, it's not a given renewables will be profitable for capitalists (not read it yet just reviews).
Basically, I wouldn't be surprised if oil companies continue investing even when it is obvious to all that oil and gas requires net positive energy to extract.
Your long response is very welcome, Sanjay. I will definitely check out sources and materials suggested by you. I have a sister who wants to do bachelors' in economics. Now that the music of economic growth almost destined to end in the enxt few decades, I wanted her to learn Economics from an angle of ecological and historical justice. So, the sources you recommended are for both me and my sister. Powerful people always find some sneaky way to protect their interest. I don't have enough exposure to the global scenario to always capture the trails. But, seems like you do. Do you mind letting me know if you are a journalist or in some other profession? And, thanks a lot.
I have many questions. Do we know why oil and gas are still being invested in if there is clearly no hope of a return - aren't markets driven by the potential to make returns? Do they really not know they are financially unsustainable and when/if they find out will there be an almighty crash?
What is different in this from the earlier notions of "Peak oil"?
I ask because we went past that prediction. So will the industry discount such warnings again?
I remain concerned too, that we over-focus on oil and climate, and on the actions of capital and politics. The problems are systemic and multi-faceted - ecosystems, economic inequity, logisitically unsustainable cities, food, water - and many of them are already impacting the world faster than climate itself.
"Energy return on investment" is here obscuring the more important measure, the actual or capital return on investment.
Economically, the oil companies won't just stop production when it requires too much energy to produce. They have the oil to burn; they're pulling it out of the ground for free (free in the sense in which Marx talks about land and water), so if they have to burn 3/4 a barrel in order to sell the remaining 1/4, it'll still be worth doing. Especially if the cultural ideology is supporting a narrative of scarcity that allows them to sell that 1/4 at a high price.
t throughout petrohistory there has always been an excess of oil reserves that the oil companies were always keenly aware of -- because its a threat to their business, if more oil comes out of the ground and onto the market it lowers the price, potentially below what they could make money off of. So in my reading, most of the cooption of the environmentalist movement that was done by the Oilmen like Maurice Strong and Richardson was supported by the Industry because it generated a narrative of scarcity that supports prices.
Now this Hamilton comes along and says "I've developed a new highly sophisticated THERMODYNAMIC model that says that soon the energy cost of extraction will exceed the energy density of oil itself" it seems to me that thermodynamics is a way for liberals to skirt the issue of CAPITAL: it may become energy intensive to extract unconventional oil, but will it remain economically attractive? Yes, long after it's "thermodynamically expensive."
If we listened to him, we might make the strategic error of believing that the scarcity of oil will help us in our effort to transition the economy off of oil; the belief that at some point soon (2030, he says) we will stop producing oil because of thermodynamics would be a great way not to challenge the current regime.
The problem is NOT that there is too little oil, but that there is too much in the sense that its pollution is warming the climate: we will turn the surface of the earth into the surface of Venus before we run out of oil.
Precisely this! Financial costs do not reflect energy costs at all. Most processes don't really need petroleum energy inputs, but as long as society remains wedded to some that do, we'll value petroleum highly as a commodity, and we'll be prepared to spend a premium for it. Oil companies certainly do have access to much cheaper oil than consumers, but of course they can make more money selling oil than burning it themselves, so they'll readily buy in cheaper energy from other sources (gas, coal, grid electricity, renewable electricity, even nuclear heat has been proposed for use in the Canadian oil sands) providing it's good for their financial bottom line. In the refining of crude oil into consumer petroleum products, the lion's share of the energy consumed (and it's a lot!) is from gas not petroleum; the same already applies to North Sea offshore rigs and the Canadian oil sands. If that non-petroleum energy is cheap enough, and the sale price of petroleum products high enough, the oil business could viably plough in far *more* energy from other sources than it sells in the form of petroleum products. The net energy return does not have to be positive.
I'm working my way backward through missed episodes. Alister explained a few things very well, which got me curious about his research. His U of Edinburgh page lists no publications. A search of Google Scholar for "Alister Hamilton" "University of Edinburgh" comes up with work on neural nets, VLSI application, and radioisotope identification, leading me to wonder if I found the right Alister Hamilton. So I give up. If Alister Hamilton is, as advertised, a "researcher at University of Edinburgh", what exactly does he research there, and what publications has he produced? He's also executive director of Zero Emission Scotland, which has no website, and only appears on his LinkedIn profile, but according to Endole, it's a "dormant" company. Rachel, I hope you can find some good credentials for this guest, because he's impacting your credibility.
Is it possible to estimate what the EROEI of Chevron's Anchor oil and gas projects will be, when they start? And how long it will be before they get to an EROEI of 2-3?
I am very keen to find some information on "deep sea drilling".
Rachel: I suggest complementing this interview with a dedicated session on Peak Oil and the USA Shale Industry phenomenon that catapulted USA back to the largest producer of the world. Art Berman for sure can provide valuable input, but others as well. It is a very important recent development to understand in relation to the 'term' Peak Oil.
Art Berman writes and talks about this. Rationing for essential investments in infrastructure and provisioning pending that depletion would be smart but global capital would rather die first.
Even the oil industry admits we're at EROEI of 6:1, which is just one step away from pre-FF agrarian society. Don't have the link to hand, but I posted it on a recent comment on a different thread.
Thanks for this interview! The points about decentralizing energy and the limits of mineral mining are very important, so thanks for raising those. I'm really excited about the potential of some new super deep geothermal technologies (especially a company called Quaise Energy) that might be able to address both of those problems and also provide most of the world's energy because they can reach deep enough to tap super hot rock (10-20km down) anywhere on Earth, not just the areas near fault lines and volcanoes. If we can figure out how to couple that base-load geothermal energy with less rare-mineral-intensive lifestyles and technologies, we've solved a lot of our problems. Still the problem of a limited copper supply to electrify everything remains. Degrowth is our only hope, but the copper problem is still a big one.
I am a bit baffled byenergy returned on energy invested (EROEI). About 10 yrs ago a number of commentators on The Oil Drum commented that the shale revolution would collapse because of negative EROEI for shale mining. Not only that but the financial investment model for shale was a ponzi scheme built on debt financing.
Yet shale catapulted the US to a major fossil fuel producer. Clearly the system found a way round negative EROEI for shale. How did they achieve that? Will they be able to do that again for negative crude oil EROEI?
That's an excellent question—which I can't answer!
Hi Rachel
I have doubts whether EROEI is a valid lens to view the end of extraction of fossil fuels - just from looking at the expansion of shale mining.
Hypothesis: If the energy you need to extract shale costs financially less than the money you make from mining and selling shale, then you can mine away even though from an energy perspective you are using more energy to extract less energy. I think it's the economic/financial lens that makes this viable. I am willing to bet Gov subsidies will play in here and will have a major play in continuing fossil fuel extraction.
I think understanding the financial and economic lens is as important if not more than the EROIE lens. Your interview has had me thinking all week. Thanks very much.
USA may be a leading fossil fuel exporter FOR NOW, however... "The depletion paradox" https://blog.gorozen.com/blog/the-depletion-paradox
Is it something to do with government subsidies? If it was, you could imagine that could lead to a deterioration of public services, are we already seeing that in the US, or in the UK?
Hi Ann
I think the deterioration of public services is more to do with furthering the frontiers of extraction. A hundred years ago depletion of public services, such as they were, was done on the perpipheries of empire, that is in the colonies (money was funneled out of the system some of it destined for investment into colonial centers). As these over time have been exhausted so the extractors have moved to the centre. In conjunction with governments of the centres they formulate ways of extracting from basic public services. So we see water services, trains, health services, energy as some of the major centers of extraction in the UK. Inequality and poverty rises (bad as it may be nothing like that experienced in the global south) and the UK economy teeters towards a slide into an emerging economy. Just as the colonies did two hundred or so years ago. This is separate from fossil fuel extraction.
Here the extractors lobby governments for fossil fuel subsidies to facilitate fossil fuel mining. Governments oblige and the profits are extraordinary. The headline figure from the IMF, that most colonial institution of modern times, states the subsidy is $7 trillion dollars. But that's a headline and it needs more nuance. However you can get the feel for how big this subsidy potentially is. The US Gov apparently susbsidises new oil well mining. Given shale mines decline rapidly you can imagine continuous subsidies for shale miners as they flip mines every few weeks. This is, in my view, key to decline of humanity. This is the lifeline to the fossil fuel industry. Without cutting the subsidy lifeline we cannot hope to stop the extraction of fossil fuels no matter what the EROIE ratio is.
In short, and with apologies, "it's the economy stupid". I never liked Clinton but it is all about capitalist economics. Neither the physics nor geology will stop it until the centers are bankrupt and there are no more subsidies.
I have only come to view lately after years of reading about the physics, the geology and the politics - blind to the economics. The economics is harder to understand and this is probably why it's least analysed.
Our entire economy is built on debt financing. It is decades since we had a capitalist system. What we have is a debtist system. It is as insane as it was in 2008, and just as vulnerable.
They never even fixed the issue in 2008, they just kicked the can down the road. The same nonsense that caused it is still going on, but at an even greater scale. Ken Griffin is worse than Madoff ever was.
We are facing simultaneous collapse of societal, economical, and ecological systems. All because of the incessant, self destructive greed of a very few.
Quite simply they threw surplus money at it, by conning investors to part with cash up front. Bit like what happened with a lot of English railways back in the 19th century, that ended up never being built. With such gross wealth inequality, when too much money is owned by too few people, it is sometimes easy to part fools from their cash. But ask them to redistribute that wealth to ease the suffering of others, oh no, that's righteous indignation at the loss of privilege.
It was however a temporary blip, and in the long term has changed nothing.
If I have learnt anything from the last 15 years of following the various crises it's that we would do better trying to understand the means by which western capitalists find devious ways to continue extraction and circumvent these crises. This is only kicking the can down the road but focusing on the crises itself only gives us a partial understanding of our present political and economic system.
The full picture would include the how the capitalist will approach continuing the extraction in face of these crises too.
When slavery was "abolished" slavers went on to devise indentured labourers.
When the banking system crashed in 2008 capitalists devised quatitative easing.
There are but two examples of a phenomenon that has little analysis and understanding.
This is such a good point. I’m glad you raised this question. I wonder whether one reason why these economic issues haven’t been studied and written about is that their very complexity makes it nearly impossible for lay people to understand. Which is kind of the point. I remember reading back in about 2010, 2011 in the Wall Street Journal that there just is no financial case for methane fracking in the United States and that goes back to the EROEI. But also the very logic of the capitalist system, which is that when there’s a surplus of methane, prices go down, but the cost of doing business in the fracking fields is so incredibly high, it’s a vicious cycle. They need to keep extracting, because the sunk costs are astronomical.
I have a slightly controversial view of why this phenomena isnt widely studied. It's origins lie in colonialism and slavery. Colonialism is erased from western education and discussion hence there is little analysis of it outside of academia.
Prof Kojo Koram in his book uncommonwealth charts the use of corporate law to control and enslave the colonies. After the decline of empire, the UK and US devised ways to continue enslaving the global south using economic institutions (think IMF and trade treaties) and corporate law (think the rights of corporates to sue nation states). Colonial extraction continued using these new methods.
Even now there is a net flow of capital from the global south to the north. Extraction continues under a new guise. Alex Gladstein touches on this.
Matt Kennard of Declassified chronicles corporate tactics to continue unabated extraction in Silent Coup.
Put simply because these tactics have their origins in slavery and colonialism and its because these subjects are erased from western discourse (until I must say recently) our understanding of them is limited.
Even now France controls the monetary systems of its former African colonies and extracts uranium from them at incredibly cheap prices to build its nuclear power grid, which so often the greens think is so carbon efficient without realising the underpinning colonial extraction.
In summary, continuation of extraction at every turn and every "crises" is as old as colonialism and slavery. It twists and turns and morphs. In my view understanding it is key to charting a way out of these crises. Without that western capitalism will take mother nature further and further down the road of ruin. Just as they did the former colonies.
Yes, this rings exactly true. Are you familiar with Kathryn Yusoff's brilliant book, "A Billion Black Anthropocenes or None"? Thanks for the other references, will check them out. And it's not only the global south. In the U.S. fracking takes place in poor, rural communities desperate for a way out of their long decline into poverty and ruin. It's sold as "economic development," even while corporations poison the water and land, sickening and killing people and animals.
Hi Julie
I will check out Yosoffs book thanks for that. You are absolutely right. Extraction from the poor in the US is shocking. I have read bits about levels of poverty and deprivation in white communities (not to mention the African American and hispanic communities). I understand their desperate swing to the right as much as it is counter productive.
The rise of inequality is a sure sign that economic extraction has come home and that the capitalist system is beginning to run out of road. "Shattered Nation" (Danny Dorling again) lays bear the UKs poverty and inequality. (He has some presentations on YouTube).
An empirical analysis of extraction, its history and Its methods would help the green movement formulate more effective responses to the crises faced by us and by mother nature.
Hi Sanjay, can you recommend me a few books on global financial system that could help me gain some insights into the mess and how the tilt of the system still persists in favor of the powerful and rich?
Hi Abhishek
Here are some resources you try:
Nate Hagen does an excellent podcast called "The Great Simplification". One episode that is insightful is called "Debt Colionialism, The Petrodollar and Bitcoin" with Alex Gladstein. Alex is from the Human Rights Foundation and has an interesting view of bitcoin which I am not sure about but his insights into debt colionialism is sad and insightful.
Kojo Korams book uncommonwealth is a must read for all children of the colonies. Just how did the British ensnare so much of world? Koram has a powerful argument. He's a law professor so his book is well researched and accessible for non academics like me.
Matt Kennard whose journalism is very insightful in a western world where journalism is more about erasure and lies (to be frank). His book is silent coup and it's about how modern day capital holds nation states to ransom (Koram chronicles the historical version whilst Kennard the modern version).
I am still digging for France's current colonisation of West African states. We know what France did historically but it's still repressing West Africa now, not to mention Haiti. It's hard to find reliable writing (erasure again). But the caspian report on YouTube has an episode called "France owns 14 countries". It doesn't reference the statements in the report so I guess you must remain sceptical but the main thrust of it makes sense.
One really interesting facet of colionialism and it's erasure in the UK was Brexit. Contrary to the lies peddled in the media about the northern red wall, Wales causing the swing to Brexit, Prof Danny Dorling had done a very interesting analysis and found that Brexit was actually majority voted in affluent southern England and furthermore the nostalgic view of empire played a significant hand in the tip to leave. His book Rule Brittania Brexit and the end of empire is a fascinating. In a nutshell one ends up believing the lies one peddles. He writes the book with a education academic from Goldsmiths whose name I forget but she makes a fascinating argument about consequences of erasing British colonial history from the school curriculum.
There are many other sources, but these are the ones that come to mind. I warn you, for myself, I was depressed for quite some time after reading some of this stuff and had many sleepless nights. When I learnt 35million Indians were starved to death by the British I became sick. When I visited the slavery museum in Liverpool I was depressed for ages. But I think all eco socialists should understand western history because it explains the inexorable plunder of mother nature as a continuation of plunder and pillage of the non European world for so so long.
Only then can we understand what we are up against.
Sorry for the long post.
I have just finished "The Crash Course: An honest Approach to facing the future of our economy, energy and the environment" by Chris Martenson. While not specifically about the skew to the rich and powerful, I found it very helpful to understand some of the more basic elements of the financial and economic system and why it is such an idiotic mess.
Hi Mark, I am very new to this. Can you recommend a few books which could help me to get an unbiased view of the global financial system and how skewed it is in the favor of the well-placed ultra rich?
Silent Coup by Matt Kennard
Not sure if there is one book, not quite my area of research. Others may chime in with suitable titles.
To me the most important book of the 20th century is Overshoot by William Catton.
Until the world is looked at through an ecological lens, it will always be misunderstood.
One recommendation is The Patterning Instinct by Jeremy Lent, it's in my reading pile but I haven't got to it yet.
Mathematical nitpick: ERoEI is a ratio between two positive quantities (energy returned; energy invested) and can't be negative. It's below-unity if more energy is invested than returned, but never below zero.
You can use the word "negative" to discuss such the concept if you like, but not "negative ERoEI", you should instead say "negative net energy" or something like that.
Below-unity ERoEI processes are commonplace and can be financially profitable, because (for good reasons!) we do not value different forms of energy equally. Thermal electricity generation burns cheap fuel, which for reasons of physics and technology can't help but waste much of the heat, and delivers expensive grid power. Petroleum refining burns relatively cheap crude oil and fossil gas, with substantial energy losses, but delivers refined fuels suitable for use in vehicle engines, selling for much higher prices per unit energy than crude oil and gas do, and chemical feedstocks which are also sold at a premium.
Most mining, for things other than fuels, of course has no energy return at all, but we still do it because we value metals and construction materials and phosphate and so on.
There's no logical reason why we would not mine for energy products at a net energy loss as well, if the output is valued more highly than the inputs. Petroleum extraction certainly doesn't have to rely exclusively on energy from petroleum and could easily continue with cheaper energy from gas, coal, solar, wind, hydro, nuclear, whatever, despite its plummeting ERoEI.
Hi Rachel, super interesting episode, thanks! I think it may be a mistake to assume that passing the "net energy" transition with will lead to a major decline in oil or gas production.
As Andreas Malm lays out in Fossil Capital, the transition from renewable (water) power to fossil (coal) power was not caused by coal being cheaper or more reliable than water. Coal was much more expensive and the steam engines broke down a lot. Instead the steam engines could be placed in cities where cheap labour was abundant, and that made the enterprise more profitable than using water.
I think we will persist with oil and gas extraction even when it becomes absurd to do so. As your guest points out, we are already hooking up renewables to oil rigs. Ultimately, capitalists will invest in the most profitable enterprise. And as Brett Christophers points out in his new book The Price Is Wrong, it's not a given renewables will be profitable for capitalists (not read it yet just reviews).
Basically, I wouldn't be surprised if oil companies continue investing even when it is obvious to all that oil and gas requires net positive energy to extract.
Your long response is very welcome, Sanjay. I will definitely check out sources and materials suggested by you. I have a sister who wants to do bachelors' in economics. Now that the music of economic growth almost destined to end in the enxt few decades, I wanted her to learn Economics from an angle of ecological and historical justice. So, the sources you recommended are for both me and my sister. Powerful people always find some sneaky way to protect their interest. I don't have enough exposure to the global scenario to always capture the trails. But, seems like you do. Do you mind letting me know if you are a journalist or in some other profession? And, thanks a lot.
Thanks Mark. Much appreciated. As soon as I looked up the book on Amazon, I found other good recommendations as well.
I have many questions. Do we know why oil and gas are still being invested in if there is clearly no hope of a return - aren't markets driven by the potential to make returns? Do they really not know they are financially unsustainable and when/if they find out will there be an almighty crash?
What is different in this from the earlier notions of "Peak oil"?
I ask because we went past that prediction. So will the industry discount such warnings again?
I remain concerned too, that we over-focus on oil and climate, and on the actions of capital and politics. The problems are systemic and multi-faceted - ecosystems, economic inequity, logisitically unsustainable cities, food, water - and many of them are already impacting the world faster than climate itself.
"Energy return on investment" is here obscuring the more important measure, the actual or capital return on investment.
Economically, the oil companies won't just stop production when it requires too much energy to produce. They have the oil to burn; they're pulling it out of the ground for free (free in the sense in which Marx talks about land and water), so if they have to burn 3/4 a barrel in order to sell the remaining 1/4, it'll still be worth doing. Especially if the cultural ideology is supporting a narrative of scarcity that allows them to sell that 1/4 at a high price.
t throughout petrohistory there has always been an excess of oil reserves that the oil companies were always keenly aware of -- because its a threat to their business, if more oil comes out of the ground and onto the market it lowers the price, potentially below what they could make money off of. So in my reading, most of the cooption of the environmentalist movement that was done by the Oilmen like Maurice Strong and Richardson was supported by the Industry because it generated a narrative of scarcity that supports prices.
Now this Hamilton comes along and says "I've developed a new highly sophisticated THERMODYNAMIC model that says that soon the energy cost of extraction will exceed the energy density of oil itself" it seems to me that thermodynamics is a way for liberals to skirt the issue of CAPITAL: it may become energy intensive to extract unconventional oil, but will it remain economically attractive? Yes, long after it's "thermodynamically expensive."
If we listened to him, we might make the strategic error of believing that the scarcity of oil will help us in our effort to transition the economy off of oil; the belief that at some point soon (2030, he says) we will stop producing oil because of thermodynamics would be a great way not to challenge the current regime.
The problem is NOT that there is too little oil, but that there is too much in the sense that its pollution is warming the climate: we will turn the surface of the earth into the surface of Venus before we run out of oil.
Precisely this! Financial costs do not reflect energy costs at all. Most processes don't really need petroleum energy inputs, but as long as society remains wedded to some that do, we'll value petroleum highly as a commodity, and we'll be prepared to spend a premium for it. Oil companies certainly do have access to much cheaper oil than consumers, but of course they can make more money selling oil than burning it themselves, so they'll readily buy in cheaper energy from other sources (gas, coal, grid electricity, renewable electricity, even nuclear heat has been proposed for use in the Canadian oil sands) providing it's good for their financial bottom line. In the refining of crude oil into consumer petroleum products, the lion's share of the energy consumed (and it's a lot!) is from gas not petroleum; the same already applies to North Sea offshore rigs and the Canadian oil sands. If that non-petroleum energy is cheap enough, and the sale price of petroleum products high enough, the oil business could viably plough in far *more* energy from other sources than it sells in the form of petroleum products. The net energy return does not have to be positive.
How can I contact Alister?
I'm working my way backward through missed episodes. Alister explained a few things very well, which got me curious about his research. His U of Edinburgh page lists no publications. A search of Google Scholar for "Alister Hamilton" "University of Edinburgh" comes up with work on neural nets, VLSI application, and radioisotope identification, leading me to wonder if I found the right Alister Hamilton. So I give up. If Alister Hamilton is, as advertised, a "researcher at University of Edinburgh", what exactly does he research there, and what publications has he produced? He's also executive director of Zero Emission Scotland, which has no website, and only appears on his LinkedIn profile, but according to Endole, it's a "dormant" company. Rachel, I hope you can find some good credentials for this guest, because he's impacting your credibility.
Is it possible to estimate what the EROEI of Chevron's Anchor oil and gas projects will be, when they start? And how long it will be before they get to an EROEI of 2-3?
I am very keen to find some information on "deep sea drilling".
Can you please reference the UN report you mentioned that faced the reality of transition to electrification and mentioned degrowth. Thank you.
Is there a link to Alister's report? Would love to read it.
Rachel: I suggest complementing this interview with a dedicated session on Peak Oil and the USA Shale Industry phenomenon that catapulted USA back to the largest producer of the world. Art Berman for sure can provide valuable input, but others as well. It is a very important recent development to understand in relation to the 'term' Peak Oil.