A Sort-Of Tutorial
This is something of a tutorial on the relationship between energy and the economy. I have been dismayed by how often people express their lack of knowledge about that relationship. Such expressions come in the form of beliefs that money is what drives the economy. Or the belief that human desire to accumulate monetary wealth is the motive force for economic growth. Indeed I doubt that most people ever think of physics when they think of the economy. But the reality is that the economy is very much a physical process that requires energy to continue operating. All of the money in the world will not suffice to maintain the motivation of the wheels of industry unless it can be used to exchange for energy flow. Here is a guide to how the real wealth of nations is created and a more concise look at the nature of energy flow needed to do so.
Wealth Production, Movement, and Work
Let's start with a basic definition of wealth as all physical and abstract assets that have some value to some human being(s) at some time somewhere. And to generalize the concept a bit more, let's include human, pet, and ornamental plant biomass as part of that definition. We certainly value our selves and consider human beings (their minds and efforts) as instrumental in making more wealth. We value our non-food animals and lawns and flowers. We are willing to spend money to acquire and maintain them.
Humans convert natural resources into assets by performing various kinds of physical work on those resources. The resources must be extracted from the natural world. They must be moved about and modified in various ways. Wealth is the product of various work processes in which atoms are moved and rearranged according to our desires. This applies to what we ordinarily call services as well. The provider of the service did some work, if nothing more than moving signals around in their brain, or moving their muscles. It is all work in the pure physical sense.
In all such activities work requires highly specific forms of kinetic energy (energy in motion). The amount of work that can be accomplished depends on the form and quality of the energy applied and the characteristics of the work process that can employ that energy. Energy that is specifically qualified to do useful work is called exergy. There can be a lot of energy in a flow but only a fraction of that energy is able to be coupled to the process in such a way that actual work is accomplished. The rest is dissipated, usually as waste heat. In our industrial economic systems machines and furnaces are used to produce mechanical and thermally-based transformations of materials (motion, shaping, and composition). These machines, etc., typically referred to as ‘prime movers and heaters’ are designed to extract as much transformation out of an energy flow as is feasible given the level of technology or the thermodynamic limits of efficiency.
In any of the many forms of energy that are used in the industrial and domestic economies (e.g. electricity or liquid fuels) is found the exergy that runs everything we do. Let's take a look at a specific example of an economic activity that is valued by some human beings. There won't be a visible physical asset produced from this activity, but we assume that the activity was undertaken because the people involved will be better off economically in some fashion. Suppose a family elects to move from town A to town B and decides to carry all of their possessions on top of their car. Mass has to be moved from point A to point B. The definition of mechanical work is that a mass is moved from one location to another by applying a force that changes the kinetic energy of the mass. We measure the change in velocity of the object and its mass and then we know how much its kinetic energy was changed.
The unit of work is the joule, defined as a force of one newton over one meter, which is the same for energy content of potential energy (energy in storage). Thus we can calculate how much work is done to move the family if we know the mass of the family, their belongings, and the vehicle. Like all good physics thought experiments we are ignoring friction (road and air) and most other relevant factors just to demonstrate the principle. These other factors could readily be determined and computed as well to get a more realistic number.
The fuel (e.g. gasoline at a particular octane rating) contains a specific number of joules per unit weight (or volume). At the end of the trip we can compute the number of joules actually used by the weight or volume consumed. The difference between the computed work and the actual energy consumed was given off in heat from that friction and inefficiencies of the engine. The total energy of the system (fuel going in and heat given off plus the work accomplished) is conserved in accordance with the First Law of Thermodynamics. The exergy that was represented in the fuel is the same as the actual work accomplished (in joules) not the total potential energy in the fuel.
Figure 1 shows the relevant factors.
Figure 1. Exergy is the amount of energy contained in the fuel (potential energy) that is able to be used by the machine to do the mechanical work of moving the mass over some distance. Once the work is done the exergy is used up, but the energy is dissipated as waste heat.
We are assuming that the move represents some potential greater wealth for the family (as in moving to take a better paying job).
Of course the fuel had to first get into the car tank before this work could be done. For that to happen many steps were needed to go from raw oil deep underground to the product pumped at the gas station into the car. And the relations between many of the relevant factors here are not simple linear ones. Exergy is supplied from a very complex web of transformations. In other words much work had to be accomplished just to get the fuel to the gas station. Figure 2 shows the network of a few of the major relations. Note that electricity is needed in order to run electric motors to drive pumps to move the fuels in the various forms.
Figure 2. The exergy web is a complex set of relations describing the transformations of raw oil to its final form (gasoline) in the tank of the car. This diagram does not account for the energies used in manufacturing and emplacement of the exploration, drilling, refining, and transportation equipment, nor for the electrical generation and delivery system. These are capital costs that could be accounted for with some effort. The red arrow from the car to the exploration represents the information feedback from the users to the oil producers (dollars spent on fuel) to spur further production.
At each transformation the energy going into the work process is greater than the actual exergy available since no transformation is 100% efficient. If we were to work backwards from the car trip to the oil extraction we would find that a great many energy units of oil would be needed to provide the exergy needed for the trip.
Energy Return on Energy Invested — EROEI (EROI)
A great deal of work has gone on in the analysis of energy flow regarding how much energy is returned for every unit of energy invested in acquiring that energy (see: EROEI, Encyclopedia of Earth - EROI, and this by David Murphy & Charles Hall). Generally, when done on oil or other fossil fuels, the energy returned is measured in terms of the raw energy content of the oil (usually given in barrels of oil equivalent) and not in terms of the actual exergy itself. As can be seen from the above diagram doing so would involve calculating (or collecting data on) the energy losses at every transformation from raw oil to final gasoline in the tank. This is a daunting task. Nevertheless it is only the final exergy for the automobile under the specific load that counts as energy returned since that determines the amount of actual economic work that is done.
In other words, we are probably vastly overstating the EROEI with regard to actual economic work since no form of energy comes to us from a raw source. One problem is that at each node in the above web there is a periodic building of new machinery that, on the face of it, might reduce the energy consumed to accomplish the intermediate work (e.g. the gasoline delivery truck can deliver more gas per unit of diesel fuel used), but requires considerably more investment energy to build out. In truth we don't actually know if the newer equipment's higher efficiency offsets the consumption of investment energy so that there is a net energy gain to society. The reason we don't know this is that we don't do energy accounting and under the conditions of constantly increasing availability of energy (as more oil was pumped per unit time) the effects of declining return on investment could easily be masked by the volume effects (we lose $0.02 on every transaction but we make it up on volume!)
This is what concerns me the most about the current state of energy analysis. We are acting too much like the drunk who looks for his keys under the street lamp even though he lost his keys down the street: there is more light under the lamp. Thorough EROI analysis is next to impossible to perform for the reasons just mentioned, no data. So we really don't know how much actual exergy we are supplying to the economy to do our economic work. Hall, Balogh, and Murphy did tackle the problem to estimate total net energy that is needed to support just the transportation system (which is why I chose this example - see ”What is the Minimum EROI that a Sustainable Society Must Have?“, Energies 2009, 2, 25-47; doi:10.3390/en20100025). However, they limited their boundary to just the energy used up in the transformation and did not consider energy consumed by other operating factors (e.g. labor) or capital investments in infrastructure. This might suffice as a second-order approximation that would likely not be substantially changed by adding in amortized investment costs, but in truth we just do not know. We won't know until someone tackles this very hard problem. I just hope we don't get an unpleasant surprise in the answer.
Exergy is the net energy that goes into economic work processes to accomplish that work. Net energy is the difference between gross or raw energy in the extracted fossil fuels and the exergy supplied to the prime movers/heaters, etc. We can estimate the first-order net energy as the number of barrels of oil (or joule contents of a barrel of benchmark oil) less the number of equivalent barrels it took to get it out of the ground and to the refinery, and maybe through the refinery as Hall, et al did. But for non-transportation sectors like manufacturing, households, and services the situation is much less clear. In the above diagram I showed electricity as another form of exergy produced by the energy contained in the water behind the dam. This is what complicates the analysis so much, the mix of energy forms that have to be taken into account working backward from the point of use in economic work to the raw sources.
Money and Wealth
Howard Odum noted that money flows in the direction opposite the flow of energy through the economic system (see: 2007, Environment, Power and Society for the Twenty-First Century: The Hierarchy of Energy, with Mark T. Brown, Columbia University Press.)
Figure 3 captures this in an ‘idealized’ and ‘simplified’ economic system. In this figure there are five kinds of energy flows. We start with ‘raw’ but high potential energy from a suitable source (e.g. fossil fuels — ancient solar energy). This energy is captured by special equipment (or by crops on the farm) that extracts the exergy that the economy needs. This is distributed to all work processes, including the extraction processes (internal exergy within the energy extraction process is not shown). Consumption of food provides the labor pool with energy that is returned to the work processes. The fourth kind of energy is embodied in the material flow that ends up in consumption. Finally, all energies are consumed in one way or another and all work processes produce low grade or waste heat that must be carried away in the atmosphere and eventually radiated to deep space.
Raw material resources are extracted from nature and worked upon to produce intermediate products, the parts that will be used to construct a final product (or service). The materials contain some emergy from the Earth's natural energy flows that produced, for example, high grade (low entropy) ores (the black straight arrows surrounded by white outlines). The intermediate products (grey straight arrows with white outlines) represent more embodied energy as work was accomplished to make the raw materials useful in production. The final product goes to the consumption process, where end consumers are people. In turn, people form the labor pool and supply human energy back to the various work processes. The ultimate fate of all materials (over sufficiently long time scales) is as waste that is essentially dumped back into the environment as high entropy by products of economic activity.
Figure 3. The economy is viewed as a set of flows of material, energy, and information. The physical resources flow from left to right. Every process requires specific exergy to perform its work. That energy is consumed and dissipates as waste heat (red curvy arrows). Eventually the consumption process produces waste materials (actually the work process and extraction processes do also, but it is not shown to keep the diagram simple). Consumption helps to produce labor energy (grey curvy arrows) which is fed back into the extraction and production processes. Money (dark, thin, curvy arrows) flows in the opposite direction of exergy and embodied energy (emergy) flows. Money is used to purchase labor energy which is how money gets recycled even while all energies flow in only one direction, out to the environment as waste heat.
In this view of an economy each downstream process must signal the providers of materials and exergy of their needs/desires. They do this by using a very abstract message token called ‘money’. When anyone buys a product or service they are signaling the producer that there is a continuing demand for that product or service. The producer then signals his suppliers by buying the goods and services he needs to produce his output. The flow of money, represented in the figure by thin black curvy arrows, runs exactly counter to the flow of exergy and emergy, including labor energy (which we might label lexergy). Since people provide the lexergy in the system, money then recycles through the economy.
What should we count as wealth in this picture? Currently economists count wealth as being the sum of all money transactions (purchases). As long as the monetary form being used (such as a fiat currency) actually was used as shown in Figure 3 then this would be a correct approach since all money would represent the actual work being accomplished in all forms. Typically this will boil down to the production of goods and services that are deemed economically useful. But, unfortunately, we people have gotten into some very bad habits that cause a major distortion in this measure of wealth. And those distortions have a positive feedback effect on those bad habits. The distortions make it look like we are producing more wealth as measured by that summation of transactions (the Gross Domestic Product, GDP) than there actually is physical wealth in the system. This leads to doing the things that caused the distortions in the first place and making us feel good about how much supposed wealth we have made.
Finance
The bad habits I refer to have to do with the false creation of more money that is not represented by an equivalent amount of exergy. The bad habits are actually venerated today. They are collectively called ‘financing’! Some time back I wrote more about this insidious practice that evolved out of our historical and very reasonable practice of borrowing from past savings to stimulate some new economic activity. Bankers are to blame for stepping onto the slippery slope first. Fractional reserve banking originated as a means to provide loaned money to people who were going to do something new and useful economically. As long as the bankers maintained a reasonable reserve as backup against too many savers wanting their funds this was an effective way to take advantage of opportunities to create new wealth. For a short period of time it looked like there was a bit more money than there really was, because savers assumed that their savings were in tact or could be made whole again in a reasonable amount of time. But the bankers were not satisfied with the marginal profits they made by managing this process. How to make more profits? Lend more money and keep fewer reserves! What made this work was that most people had become relatively comfortable leaving their savings where they were safe (until they weren't!). As time went on, and except for a few business cycle-caused hiccups, the practice of keeping smaller and smaller reserves seemed like a good idea to even conservative bankers and regulators. But what they didn't grasp, mostly because they had long since forgotten that money = ability to do work, is that this trick only worked as long as the supply of exergy was on the increase. Financing in this manner, and other more sophisticated forms of borrowing from the future, depends entirely on economic growth.
Economic growth can only take place as long as there is growth in the availability of exergy. It's that simple. For all those years we have been increasing the production of fossil fuels, even with declining EROEIs, there has been an increase in exergy year over year. This is what has ‘financed’ growth in the economy and the seeming effect of a rising tide raising all boats. I've written about this as well (see also: this earlier piece).
Financing based on betting on the future was not a completely unreasonable approach while the whole system expanded. But it did create a false impression of the availability of exergy. It began to be treated as a foregone conclusion that there would always be more wealth created in the future and that that wealth would more than compensate for the ‘risk’ of being caught with our pants down if it didn't happen. In other words, it didn't seem all that risky. So the practice was expanded, especially in the past few decades, with all kinds of creative ways to make more money than was warranted on energy standards alone. The stock and bond markets and various derivatives. the housing market with rising prices, the cheaper goods coming from overseas manufacturing (where the energy demands of the workers is far greater than in the OECD countries), and many other false signals simply provided a kind of reward feedback that just kept us inventing more ways to fool ourselves into thinking we were producing massive wealth.
But reality is starting to bite. Starting back in the 1970s the flow rates of exergy began to slack off, even as the flow of raw energy, mostly oil and gas, were increasing dramatically. This was due to the negative impact of diminishing EROEI. By the 1990s the flows were probably past the peak and starting to actually decline. That is when there was a tremendous explosion of new tricks in finance that were meant to maintain the illusion of wealth creation.
As things currently stand the economists, politicians, talking heads, and pundits all believe that the problem with the economy is that we are simply not spending enough money, thereby increasing the GDP and causing jobs to be created. They are universally calling for a return to growth. The politicos scrambled to save the financial system because they knew it was the ‘engine’ of creating new money. And the new money always made it look like GDP was growing. By inference, then, the economy must be healthy when the GDP is growing. Except, of course, it isn't. Only the growth of exergy can support a growth of real wealth. Money has no causative power whatever, except perhaps to drive men mad. It certainly seems to be doing so today.
Fixing Things
This isn't really a part of the tutorial, but I am asked so often why I don't try to get important people to listen to these ideas. So I want to say a few things about fixing the system.
To be blunt about it, there is nothing that can be done. The ideas of neoclassical economics are so ingrained in the minds of all the “important” people that presenting any of them with the above just causes them to look glassy-eyed at me and wonder what I am even talking about. To them, I am the mad man.
I know. I've tried for years to communicate some of this information to “important” people through backdoor channels. Not even the media is interested. And, of course, talking about this at length gets one labeled as a doomer. Well, OK, point well taken. But being a doomer doesn't mean I'm wrong! Some paranoid people actually do have enemies. What I have is physics, biology, and evidence on my side. What do the “important” people have? Beliefs and ideologies, and that is it.
Nothing will be done to fix things because none of the people in “important” positions can even grasp or imagine the above story. And not being “important” myself, I certainly can't do much. So instead of doing anything to mitigate the effects of energy decline, our “important” people will not do what would be needed and then it will be too late (if it isn't already). I'm sorry to sound so cynical but there it is.
I write this blog simply as a means of getting these things off my chest and out of my mind into a medium to preserve them. It seems harmless enough and I don't feel bad because some important person has just dismissed me out of hand. You, dear readers, can decide how you want to treat it. And you can share comments; I don't mind if you diss me or my ideas (though it would be courteous to only diss my ideas!) I don't imagine any “important” people are reading this anyway (I do hope you note the scare quotes around important).
Excellent article, thank you. There are very few people in the world that really understand how economic growth, our monetary system, and energy consumption are inter-related. You are one of them.
Now perhaps you could take the next step and connect the dots with climate change. Since CO2 is proportional to energy use which is proportional to wealth creation, and the desire for wealth drives everything, I conclude that we will never voluntarily address climate change.
I do wonder if a peak oil induced permanent depression might be enough to drop CO2 below the required 350 ppm. On the other hand, a quick economic crash might push the climate past a tipping point due to reduced aerosol cooling.
Your opinion?
Posted by: RobM | October 03, 2010 at 10:43 PM
The "fixing things" section should not be about whether or not power listens to you but what could be done if you had power.
Posted by: francis | October 04, 2010 at 04:23 AM
I share your "cynism". Homo S "Sapiens" won't listen, except for few precious exceptions - and these are worth the effort. Let the mad men go walk over the cliff or bump into the wall. Leave them alone and have a good laugh when they hit the fan. -- Alas it isn't that simple, we're all sitting in one boat (planet).
----------
RobM,
CO2 is here to stay for centuries. The level will not drop quickly. Plus, it looks we are meanwhile entering a phase where CO2 begets more CO2 by natural feedbacks. (E.g. Ocean phytoplankton decline, global net plant productivity decline, arctic summer ice albedo decline, forests burning off, fertile lands washed away, permafrost thaw, etc. etc. Luckily this is still slow feedbacks. The monsters of apocalypse are still in slumber, but one day they inevitably wake up and will quickly ravage the planet.) One such feedback could well be us hominids while frantically fighting our demise, caught in a spiral of death, destruction and delusion -- just like today's important economists...
So, hominids need to actively pull out the CO2. But forget geoengineering. There's one technique known since stone age: char coal agriculture (google "terra preta" and "biochar"). Char coal is fixated carbon won out of CO2 transformed by plant photosynthesis. No glitzy high tech needed - to the insult of the late Homo Colossus... Alas it need be done at large scale: About the equivalent of global forestry output needs to be charred for many decades - plus, drastic emission cuts. (Optimist/simplified math done e.g. here.)
The good thing is, char coal benefits soil (if done right) in many ways. So, when the s*** hits the fan people might be eager to employ it. Another plus, you get energy and chemicals (wood gas, oils, tars) when producing char.
--------
Ceterum censeo: Not carbon negative, no Bodhisattva. Not carbon negative, no permaculture.
Posted by: Florifulgurator | October 04, 2010 at 06:00 AM
Hi George,
I think your postings are spot on. The fact that powerful people have only a partial overlap with the real world means that in the long run they will either lean more about the real world or the systems they direct will perform subpar or worse.
I think that once we get to an accurate number for GDP (that takes into account losses in the system) then we should only increase net new credit when and if the GDP grows. This implies 100%, not fractional (or hyper leveraged), banking reserves.
For at least the last 40 years debt has increasing faster than GDP of the USA.
In the long run massive debts will defualt either via inflation or insolvency. Inflation levels over the interest rate is not condusive to savings. Negative real rates on savings most likely increase the average discount rate of a society. This lowers sapience.
One question, is emergy the same as EROEI?
Thanks
Posted by: Larry Shultz | October 04, 2010 at 10:52 AM
"Look on my works ye Mighty and despair..." but of course the current ignorant Mighty will NOT look on your works, and as a consequence, we must ALL despair as we will ALL be caught in the consequences of their willful ignorance. Thanks for your excellent explanation of the inherent complexities of the EROI conundrum. EROI I'd heard of, but the inherent complexities of actually calculating the return on investment I'd never sat down and thought about.
And you can be SURE, as, alas, you are, that the Mighty will choose the comfort of faith and certainty over Questioning Everything....or ANYTHING, actually.
I've long felt that a planned economy was the only RATIONAL response to the actual limitations of a finite system. How ANYONE can believe that personal greed is good and universally beneficial and that infinite growth in a finite system is logically possible is quite simply BEYOND me. I quite realize that planned economies have not been all THAT successful (tho alas, history will demonstrate that so-called "free" economies were not very successful, ultimately also). Historically so-called "free" economies - simple agriculture and/or hunting and gathering - A. were not all THAT free, as they were bound by natural necessities - eating, the limitations of the surrounding natural processes and systems,etc., and B. they "worked" because the Bitch Goddess, old Mom Nature, took care of the sometimes hurtful work of keeping everything more or less in balance.
Of course the current economy isn't really "free' for every one now. It is only sorta free for the "Mighty Haves," who can always eat whatever they want, live how and wherever they want, etc., etc..... But they too will be bound by the natural realities around them
Planned economies had most of their problems because there was no practical way or will to come to common agreement about the priorities of what the economy should produce, and there was no way to manage all the information necessary to input and to manipulate in order for those societies to function smoothly and efficiently.
I see the problems of agreeing on the priorities of an economy as now the most difficult part of establishing a planned economy. We actually have folks like you who can sort out the complexities of the systems that will need to be in place, and we have the information management systems (computers) necessary to manage the horrific complexities of the necessary inputs of all the information needed to insure the efficiency of the system.
But of course what we lack is both the will to move in that direction and the understanding of why, in the end, it would/may be more humane for us to manage our economies rather than allowing the Bitch Goddess to retain ALL the power, tho of course in the end she will still have all the power. But we MIGHT be able to postpone The End with the judicious application of a little rational analysis and a rational application of the consequences of that analysis!
I firmly believe that we lack the will because we are too lazy to make the difficult effort required to understand why change is necessary, and we realize that at some level, many of us will have to "LOSE" something IF we, as a society, agree that the priority of ANY economy SHOULD be to ensure that ALL have three hots and a covered cot, access to health care and basic physical security. There are simply too many of us on the poor planet to enable folks like me - a retired teacher who is NOT one of the obscenely rich - to live with my husband in a two bedroom house with two vehicles, a lawn, a flower garden, a boat, etc. etc. etc. If ALL are to be enabled to have the basic necessities of life, universal down-scaling will be necessary, and given the prevailing mythology that MORE IS ALWAYS BETTER AND POSSIBLE, the necessary realizations and adaptions are simply NOT gonna occur. Alas.
Posted by: Molly Radke | October 04, 2010 at 12:56 PM
Nice post Molly. You might be interested in Jay Hanson's America 2.0.
http://jayhanson.us/america.htm
You may find him a little harsh but he is intelligent, well studied, and correct in my opinion.
Posted by: RobM | October 04, 2010 at 01:37 PM
RobM,
I have actually written about this in the past. In fact I started my quest for understanding what we were doing to our world in the realm of climate change. But I soon realized that while that would be the most major challenge to the long-term survival of a hominid species with some intelligence, it would not be the immediate cause of collapse. Rather I suspect now that the decline of fossil fuel energies without the adequate substitution of renewables will be the downfall of civilization.
The key question for me is: Can a remnant of humanity survive what I imagine will be a bottleneck, and can that remnant take forward mental characteristics (specifically sapience) that would make it better suited to adapt to the environment resulting from unpredictable climate changes?
My focus on energy and economics is more geared toward preparing for collapse than climate change per se. But that preparation includes situating a group of highly sapient individuals to survive the bottleneck and be capable of the necessary adaptations.
I don't really have an opinion about the feedback effects of a collapse on CO2 emissions and resulting climate impacts. I agree with Flori that positive feedbacks have already likely set our course for bad stuff. I do not think that a rapid drop in the use of fossil fuels will help drop the ppm of CO2 down much any time soon enough to make a difference simply because of its residence time in the atmosphere and oceans, and the kinds of effects Flori mentioned.
I just want to assure that the survivors of collapse pass on genes to improve the capacity for wisdom that will be needed by future generations to use their knowledge wisely, something we have failed to do.
George
Posted by: George Mobus | October 04, 2010 at 02:17 PM
francis,
How, exactly, could I (or anyone who knew what to do) get that kind of power? My own view is that real power needs to be ceded to leaders by people who recognize the need to do so. Thus it still comes down to people understanding.
George
Posted by: George Mobus | October 04, 2010 at 02:20 PM
Flori,
In order for biochar to work, don't you think there would have to be far fewer people putting demands on the environment first?
George
Posted by: George Mobus | October 04, 2010 at 02:22 PM
Hi Larry,
Emergy is the measure of the energy that was consumed in doing work. Odum called it energy memory. Others call it embedded energy. A printout of a computer program is just a piece of paper, but it represents quite a lot of energy that was consumed in building the computer and supporting the life of the programmer. So even though there isn't any potential energy to speak of in the paper itself, it carries a fairly high emergy value.
There are really two kinds of emergy depending on your point of view and values. Solar emergy is literally the total amount of raw (solar) energy that had to be transformed into exergy in order to accomplish the work. So, for example, the raw energy in barrels of oil would count as solar emergy. The other kind is direct emergy which is just the exergy value after it has been expended. People who are trying to account for environmental externalities will generally choose solar emergy as the basis for costing. Direct emergy is easier to measure and then use estimating techniques to work backward to get solar emergy.
EROI is related to exergy in that it is the cost, in energy, that must be paid to obtain a given unit of exergy. So it determines net energy (e.g. it took electricity to run the pumps of an oil well) or exergy which is effectively the same thing (perhaps ignoring some transportation/transmission losses).
Hope this helps.
George
Posted by: George Mobus | October 04, 2010 at 02:33 PM
Molly,
Thanks for the kind words and the good summary. You might be interested to know that I've gotten a few e-mails asking if they could write in my name on the 2012 ballot for president! I told them sure, but they would be throwing away their vote.
I don't think there is anything a president or even quite possibly a dictator (benevolent of course) could do to change things substantially. As I currently see it the most a president could do is tell the American people and the world the truth and then wait to get shot. Not a very happy prospect.
Bottleneck is the solution to Earth's problems, but obviously not good for the human population as it stands.
George
Posted by: George Mobus | October 04, 2010 at 02:40 PM
George,
Indeed, obviously. Still, biochar can help enhance and stabilize soil (e.g. water retention capacity - think drought) at risk due to climate change. So it is good medicine at least locally. Global climate medicine needs more work and sapience, of course. But methinks it's time to start acting at least symbolic. Thus my ceterum censeo.
Posted by: Florifulgurator | October 04, 2010 at 02:54 PM
Thanks for the response. The person I respect and trust most on climate change science is James Hansen. I highly recommend his book "Storms of My Grandchildren". He seems to believe we can get back below the maximum safe 350 ppm by stopping use of coal and heavy oil plus stopping deforestation. I don't think this will happen for reasons that are obvious. The point is that he believes 350 ppm is possible if we dramatically drop CO2 emissions. Hence my question about the possibility of an economic collapse saving us.
Posted by: RobM | October 04, 2010 at 03:11 PM
Hmm, good article.
You're definetly on to something, but I do not think this is the entire truth.
First of all - to avoid being a "doomist" - solutions, or at least what one or many persons can do to soften the "blow" is a good thing to think about. For instance more rapidly adapting society to non-oil dependant energy sources, starting to pay back on loans (individual and national) and making an effort into not expanding the "loan politics" even more could be a start...
Then I do not see a necessary connection 1-1 of oil vs economic growth, or rather, there is more ways to expand GDP than just oil...
For instance we can get energy from other means than oil. Here in Sweden for instance we get about 70% of our energy consumption from other means than fossile fuels.
Not to say that we are not depending oil, because we are, way too heavily, but it is a lot of other means such as hydrogen, wind and nuclear (out of which a small part of course depends on transportation and refinement of nuclear fuels - which is today probably made with oil)...
Also one could do a lot of thinking without oil - and thinking can lead to making processes more efficient, which can lead to a bump in GDP (i.e. producing more from less and more efficiently)
But in all, a good eye-opener, as you said: The right persons needs to be made aware of it though...
/K
Posted by: Klas2k | October 05, 2010 at 06:22 AM
George,
This was an excellent post and one that deserves wide attention, so I was glad to see it on TOD.
As for wasting votes, I wasted my last one on Obama, so why not waste my next one on you?
Growthmania (a term coined, I think, by Edward Abbey) will be with us until something drastic happens. Oil production has been pretty flat for five years now, so drastic may come soon if global demand for oil starts to pick up and oil prices once again spike.
In the meantime Obama and his "team" continue to talk about "growing the economy," just as Bush and Clinton before him did. The only thing growing right now are the assets of the banksters that conned Obama into saving their sorry asses. Everyone else is left to fend for himself or herself.
Posted by: Gary Peters | October 05, 2010 at 08:50 PM
Thank you Mr. Mobus,
After a 30 year career in the physical sciences and a stint in the financial sector following a second degree in IT I understand what you are saying and concur. I continually seek to find a succinct and clear exposition of the relationship of energy and economic growth because I cannot create it myself. Your synthesis of this economic conundrum is valuable in that it can be shared with others by those of us who believe "you get it" and can explain it with clarity. I thank you for that. Unfortunately I share your belief that unequivocal recognition of these logical axioms will not allow a benevolent leadership to convince a self-serving democratic society. I am convinced that Pogo understood it best when he said "Yep, son, we have met the enemy and he is us".
Posted by: Thais's Papito | October 05, 2010 at 10:07 PM
I understand, and believe in what you are writing. Is is so obvious when you think about it.
Is is not only the "important" people that do not get it. I have tried for years to explain PO to friends to no avail(exept for one intelligent person). Now i have quit trying, and are only preparing me and my wife for what is coming. Many of the others are doomed in one way or another.
By the way, as i see it everyone cannot bee saved anyway when collapse comes, We are simply hopelessly overpopulated on this planet.
Reader from Sweden
Posted by: K Hagesten | October 06, 2010 at 08:56 AM
Flori,
Agreed! That is what this blog is - symbolic!
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RobM,
Hansen's book is on my to-read list, but there are several above it in the queue!
BTW: if Gary and the others vote for me and I win I would definitely have Jim as my secretary of the interior (if he wanted the job).
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Hi Klas2k,
Thanks for the comment. You are right it isn't just about oil. It is about total energy. Over 80% of the world's energy comes from fossil fuels, however, so that is what needs to be replaced by alternatives. That is a tall order.
Oil is considered a 'king pin' in the energy arena (from the game of bowling). If it peaks and declines it will make getting the other fossil fuels extracted and to market given the current infrastructure, esp. transportation. For example diesel is a major input to coal mining so if diesel gets much more expensive (due to peak oil) then the costs will impact coal too. That is why there is such a focus on oil.
As far as thinking goes the brain uses up 1/3 of your energy balance when at rest (thinking, presumably). It takes a lot of calories and for the most part those come from food production that is very fossil fuel intensive. Ergo, lower the fossil fuel inputs and, using the current state-of-the-art in agribusiness a lot less food gets produced to support thinking broadly. If Flori's suggestion were followed, or my own suggestion to rebuild soils in the US as part of a jobs program, then we might be able to one day rely less on oil, but as things stand now and for the foreseeable future we need fossil fuels to think too!
As for efficiency, there are a couple of subtle gotchas there. See Jevons Paradox for one of them. The other one I alluded to in the piece. We appear to be reaching the point of diminishing returns on innovation and efficiency gains! Many of our prime movers are very close to their practical Carnot maximum and so investments in increasing efficiency are having less and less payoff.
Regards
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Gary,
If nominated I will not run, if elected... thanks for the confidence though!
You know I take some solace in knowing that the assets the banksters are accumulating are made of the same paper that they are creating. They believe the money in their bank accounts is real too! I'm betting a lot of them have mortgages on homes more expensive than they could pay cash for. So when the SHTF they go down with the rest of us. But, they may have it worse off since everyone will know that they caused this fiasco (at least the financial bubble fiasco). As they say, you can't eat gold.
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Thais's Papito,
Thanks for the comment and welcome to QE. You are dead on target about democracy as it has evolved here in the US (and probably elsewhere in the OECDs). Eventually I can't help but feel we will get a dictatorship once bullets start flying (at the banksters!) We'd be very lucky if s/he were benevolent.
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K Hagesten,
Greetings. If you hadn't seen it, you may be interested in my review of William Catton's book, Bottleneck: Humanity's Impending Impasse.
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Regards all
George
Posted by: George Mobus | October 06, 2010 at 01:22 PM
Nice article, thanks for sharing.
Posted by: sewa mobil | October 07, 2010 at 02:50 AM
George, What I am equally puzzled by, in addition to people do not realizing the importance of energy to the economy, is not realizing the the importance of money is as our means of directing all the physical choices involved.
It's sort of a double mind separation, that we see neither how physical processes are connected to the money, partly because we don't see we are directing the physical processes with our use of the money. Money gives you the right to request one or another highly complex physical process be done for you. The minute one realizes that, it seems to me, it's obvious what the problem with endless multiplying money is...
Posted by: Phil Henshaw | October 08, 2010 at 08:45 PM