A Theoretical Approach
The problem with monitoring and understanding the energy aspects of our economy is the dearth of actual data on what I think are critical factors. We collect a lot of data on gross energy production, e.g. barrels of oil pumped, cubic meters of natural gas, etc. But we don't have public access to data on the amount of energy used to extract the gross energy. Numerous researchers, following the lead of Charlie Hall (EROI fame, Prof. Emeritus SUNY-ESF) have tried to work backwards to consider the various cost factors in extraction that would reduce the net energy actually delivered to the economy for non-extractive economic work. In other words, all of the work that produces our civilization. This is fraught with difficulties because the costs of extraction are considered proprietary by both the private and nationalized organizations that do the work of extraction. One way to get at it might be to simply add up all of the derivatives, e.g. gasoline, diesel, etc. and use that as the net energy value. This would be a balance sheet approach. It provides a raw snapshot in time but doesn't provide the dynamics that we would need. For example, the stockpiles of derivative products could have come from very high EROI stocks whereas the new product being added to the stockpiles are got from, say, tar sands, which is an extremely low EROI source.
With such problems in mind I am still convinced that the net energy per capita has been in decline for a while now, which I claim is the reason our global economy is struggling and the tendency toward income disparities is being driven by what amounts to a shrinking pie. As EROI for all fossil fuel sources goes down the aggregate net energy must either be approaching a peak or possibly already past it. But compound that with the increasing population and it should be clear that the net energy per capita has to be heading south.
In the absence of data to curve-fit, I opt to extend my energy dynamics model from yesteryear by including a population growth and net energy per capita model. Basically I have used the same dynamics that I used for the previous net energy and assets model but derived the net per capita as a function of exponential population growth (enabled or boosted by a rapid initial growth in net per capita.)
This figure is a graph of that dynamic.
Figure 1. Dynamics of net energy per capita. Model start year is 1600. Net energy from that year is from all non-fossil fuels sources. The jump in energy in the late 1700s is due to the advent of fossil fuel usage, coal in particular. That jump is actually too exaggerated due to aggregating all of the fossil fuels together. However the trends shortly overwhelm the effect so that the overall picture is not too distorted.
The blue line represents the growth of net energy. Note that there is a reasonably sudden increase in net as a result of the on-set of the age of fossil fuels, particularly oil. The scale of this jump is distorted because I lumped all FFs together, which is obviously not reality. Even so the net available goes quite high and stimulates the increase in population (purple line), which rises exponentially. The birth rate is influenced by increasing affluence due to the rapid industrialization made possible by fossil fuels and the death rate is similarly decreased.
The green line is the net energy per capita, which can be seen to rise exponentially at first in response to the growing total net energy. But as the population numbers increase and the total net energy declines due to declining EROI we see that there is a peak in net energy per capita. I have shown the peak at roughly the mid 1970s. The scales here are too rough to make a definitive claim, but I find the correspondence between the dynamics model and our experiences in the global economy to be “interesting.” Let me hasten to point out that this is purely a theoretical model. It is a system dynamics model based on fossil fuel extraction rates and some reasonable assumptions about EROI decline. Do note that the population curve is a pretty good match for those generated from real data! This too is intriguing.
The Economy Runs on Net Energy
And the real economy for producing goods and services (not financial so-called assets) will be experienced by all as a function of the net energy per capita. The pie is getting smaller and the number of people trying to get a piece is getting bigger. What else can you say? My firm belief is that every phenomenon you can see in the current global economy, from the grossly unequal distribution of wealth, to the off-shoring of labor, to the race to automate work, to the obscene reliance on debt to keep the engine pumping, is a direct or indirect effect of this dynamic. I should point out that the rapid growth in China and to a lesser degree in India do not provide evidence of the incorrectness of this theory. The reason is that the populations of these countries, and particularly their work force (to which the jobs in developed countries were being outsourced to) had very low net energy per capita requirements at the beginning. Workers in these developing countries simply consumed far less energy in their lifestyles as compared with American and European workers. But as their expectations have been rising, their desire to consume more western-style living is pushing their demand for net per capita upward. The problem is that there isn't any to give them.
Consider a simple example of the situation for a hunter-gatherer tribe when the climate goes bad and food sources start to decline. Each hunting or gathering trip, which takes energy to do, brings less food, ergo less net energy. Meanwhile due to lags in the reaction times of people, more babies have been born. This is pretty simple, yes? People are going to starve and the stronger members of the tribe may have to resort to taking what little there is for themselves. This is simple survival instincts kicking in. In good times people cooperate for the benefit of all. In bad times they start to take care of themselves to the best of their abilities. And because there are diverse high, and low, abilities, what wealth there is will not be shared. People have even resorted to cannibalism when things got really bad.
The dynamic pictured above reflects this same phenomenon. I bet if we dig into the historical record we will find that this dynamic is at the heart of all major civilization collapses not caused by volcanoes or other sudden calamities. The scales would obviously be different because ancient societies depended mostly on real-time solar inputs. But the growth in land use for agriculture and animal husbandry probably is analogous to the growth in fossil fuel production with the same sort of EROI constraints. To put more land into production the farms had to be further away from the civilization center meaning that more energy had to be expended to bring the food to market.
Just because it would be nice to satisfy scientific curiosity I would seriously like to get a project going to see if there isn't some way (or combination of ways) to collect data on net energy to see if what I've developed in a purely theoretical framework seems to hold. Of course the theory only shows the overall dynamic and does not account for things like wars or plagues. It shows the “worst-case” scenario as a boundary condition of the system. So this little bit is meant as a teaser to get people thinking about what might be done to get at these critical numbers. Of the fact that net energy per capita is the most important number we could possibly be looking for I am very certain. Net energy does work to produce economic goods and services. Cut back on net energy and you cut back on total goods and services that can be created. And it the net per capita is trending downward, as I suspect it is, then everyone will have less, and some will literally steal from the weaker members so that they can have more for themselves, but of an ever shrinking pie.