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?
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?
It’s interesting to think about how we could probably actually maintain much of the residential infrastructure with clever passive or low-input heating solutions, etc. (if that were desirable), but the politics keep even the most simple solutions from happening. Alas.
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.
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.
Great interview Rachel. This only heightens the urgency to implement a green economy hopefully based on Degrowth as we get closer to 2030 and beyond.
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?
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?
It’s interesting to think about how we could probably actually maintain much of the residential infrastructure with clever passive or low-input heating solutions, etc. (if that were desirable), but the politics keep even the most simple solutions from happening. Alas.
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.
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.
Why is it such a bad thing? We don't seem to understand the polite tone.