Milking Blood to Keep from Running Out
Industrialized humanity’s slapdash response (so far) with regard to fossil fuel depletion...
Our principal constraints are cultural. During the last two centuries, we have known nothing but exponential growth and in parallel, we have evolved what amounts to an exponential-growth culture, a culture so heavily dependent upon the continuance of exponential growth for its stability that it is incapable of reckoning with problems of non-growth.
— M. King Hubbert, "Exponential Growth as a Transient Phenomenon in Human History"
What? It’s Just Outside the Door, Standing on Our Porch?
The concept of “peak oil” is likely already familiar to most readers. You may therefore recall that after studying the annual petroleum production histories of various American oil fields, M. King Hubbert predicted in 1956 that onshore conventional oil and gas production within the US per se would peak sometime between 1965 and 1970.1 His estimate turned out to be quite accurate, as the graph below shows.
Since Hubbert, people in and out of the international petroleum industry have been waiting for world petroleum production to crest – an event that apparently has yet to happen. Nevertheless, there are several inarguable economic indicators that the petroleum industry’s early days of milk and honey have already drawn to an end. These economic data turn out to very readily explain most of the economic ailments in Western-style countries that have developed since the 1970-1980s.
Some Leading Indicators that Global Peak Oil Is Drawing Near Faster and Faster
Of course, the absolutely necessary role of the fossil fuels in the lives of modern humans living in Western-style industrialized societies derives from the fact that the large amounts of stored energy contained in these substances are used to carry out nearly all of the work necessary to support and maintain all aspects of most modern human life.2 In the much leaner years of the human past, high energy density fossil fuel energy did not play such an important part in human lives. Instead, sunlight energy, especially that recently embodied in lower energy density concentrations of the standing crop of plants and animals (including ourselves and our children), as well as sunlight-driven air and water movement, were all we had to work with.
One way to understand why fossil fuels became so dominant in the modern conduct of human lives is to examine the amount of usable surplus energy that is gained relative to the amount of applied energy required to gather, extract, release, and apply that fossil energy to human uses. The more surplus energy remaining in any given energy source after all its extraction, beneficiation, and transportation energy costs have been paid, the more energy available for the maintenance and growth of human systems requiring such energy inputs. It is the ready availability and use of such surplus energy that accounts for economic and population growth both.
The dimensionless ratio, Energy Return on Investment (“EROI”) — or its equivalent label, Energy Return on Energy Invested (“EROEI”) — was coined by an ecologist-cum-economist, Charles Hall, to compare the amount of energy gained for human use to the amount initially needed to make this energy available to human use. For example, an EROI (or EROEI) of 50:1 denotes an energy source (or the multiple aggregated sources fueling a particular biological system) that provides 50 surplus energy units for the initial cost of 1 energy unit. Like hydroelectricity to this date, some of the very earliest oil and coal deposits developed by humanity are believed to have had EROIs between 100:1 to 50:1. These ratios are sometimes also denoted as percentages of surplus energy returned; i.e., 100:1 = 99%; 50:1 = 98%; or 10:1 = 90%.
In yet even another commonly used variation of the same concept (see Morgan 2024), the relative energy output of a given fuel source (or system of sources) can be indicated as the inverse of EROI, a number that denotes the relative energy cost of energy (ECOE). A very rich, easily produced high energy density energy source with an EROI of 100:1 has an energy cost of energy (ECOE) of only 1%, for example, while a lower density and/or perhaps just a more difficultly-producible one with an EROI of 10:1 has a much higher upfront energy cost of energy of 10%.
During his work within the petroleum industry, the geologist/geochemist Eun Mearns developed (2008) a simple analytical tool, the net energy (or surplus energy) cliff diagram that helps put current, past, and future (expected) EROEI and net or surplus energy values into a useful graph form that lends itself handily to energy-related planning, decision-making, and forecasting.
The levels of surplus energy generated by the various energy-yielding technologies and fuel sources of the current time are denoted below in just such an energy cliff diagram. ‘Plateau area’ energy sources – those on the high EROEI left half of the diagram -- cost relatively little to produce in energy terms and therefore provide abundant surplus energy once produced. ‘Cliff shoulder’ energy sources – those of lower EROEI on the right half of the diagram -- require the expenditure of much more energy to produce them, leaving relatively little energy surplus for human use. Except for hydroelectricity, plateau area energy sources – those present most saliently from the early 1900s through the 1970s during the bonanza years of the petroleum industry – are now gone, and the average Western-style industrialized society is now on the energy cliff shoulder, scrambling to keep from tumbling on down to the bottom of the energy cliff.
Energy sources with EROEIs on the order of 10:1 to 15:1 are believed (Lambert et al., 2014) to be the minimum required to maintain modern Western-style economic systems. As can be seen in the cliff diagram above, current global petroleum reserves and resources (including shale oil-and-gas and tar sands), solar photovoltaic cells, wind turbine systems, and sugar cane and corn ethanols, all unfortunately have poor, low value EROEIs well below this minimum.
So, the cliff diagram data above clearly indicate that in the present only hydroelectric, coal, and natural gas possess EROEI’s large enough to maintain and perhaps grow the current versions of Western-style industrial economic and political systems. Nuclear power is currently a marginal potential energy source for those purposes, with an EROEI of about 10.
Recent EROEI historical changes, past EROEI conditions of human life, and where we are and where we are currently headed, are all mapped out on the second energy cliff diagram below. On this second cliff diagram, dated red dots on the graph represent Morgan’s 2024 opaque3 calculations of world average fossil fuels EROEI for those labelled years. Black dots are average EROEI’s for petroleum deposits found in the US over the same general period of time (Guilford et al., 2011).
Ramifications of Depletion-Caused Increased Energy Costs of Energy (ECOE)
Taken together, the above data and observations clearly demonstrate that the remaining global average liquid and bitumen petroleum resource now requires too much upfront energy cost to independently support continued Western-style industrial economic system growth and repair. This situation explains, among other things, the primary cause of decreasing average real incomes, decaying infrastructure, failing healthcare and educational systems, falling birthrates, and increasing debt and bankruptcy rates currently being commonly experienced in all Western-style economies.
A secondary cause – junior to resource depletion and the increasing energy cost of energy that depletion causes -- of the increasing economic and social problems now ailing Western-style societies is the coincident fashionable promotion of, and fascination with, alternative, non-CO2 emitting energy sources with EROEIs much too low to stop, much less reverse, the decay processes affecting Western-style industrial societies. Got to watch those opportunity costs.
Given the global average fossil fuel EROEI of slightly less than 10 for 2023 shown above, it is not surprising at all that the educational, health care, and arts institutions and systems of the average Western-style industrialized nation are now under severe stress and disarray. It is fortunate, of course, that for the time being average fossil fuel EROEIs are large enough to support the average family, grow food, and provide transportation. However, Morgan’s EROEI data (2024, ibid.) indicate that unless things change in the meantime with regard to energy use and source, the average Western-style industrial society family will begin undergoing severe general distress somewhere between 2029 and 2034 as average global fossil fuel EROEI descends below the family-supporting minimum 7 to 8 range. Similarly, his energy cost accounting projections suggest that food production for Western-style industrial societies will become extremely problematic in only 20 more years, around 2043 when average global fossil fuel EROEI, all other things being equal, is expected to fall down below the EROEI 5 minimum level necessary for food production.
Triage? Some Possible Work-Arounds?
It seems reasonable, given the conditions pressing Western-style industrial societies, to begin more seriously and earnestly viewing fossil fuels as limited venture capital and make the best of it while it still exists. This, of course, means avoiding further obvious decision-making errors like committing additional major energy source mal-investments; e.g., producing corn alcohol for vehicle use, carelessly destroying hydroelectric installations, pursuing extremely low EROEI shale gas and oil, and unnecessarily wasting electrical energy on unproductive AI and bitcoin server centers.
One extremely serious consequence of not rationally and seriously working to meeting the fossil energy depletion problem is graphed below. Keep in mind that capital that could be put to use by individuals and businesses seeking to establish solutions to the problems raised by fossil fuel depletion is scarcer when government spending is also in the competition for the same funding.
Given the relatively high EROEI values of nuclear power, wind energy, and tar sands, it also seems reasonable to selectively improve and then further deploy these three technologies rather than over-enthusiastically pursue shale gas, solar photovoltaic, and biomass fermentation technologies with their much lower EROEI values.
And, of course, given the sufficiently-still-high EROEIs of coal and natural gas, favoring their use as basal load energy sources would seem to be the best approach to maintaining the health of industrialized nations while otherwise working assiduously to solve the long-run problems caused by fossil fuels depletion.
Lastly, the diagram below points to yet another generally applicable workaround to the fossil fuels depletion problem.
Note that there is an energy cost (loss) at each stage of the exampled oil production process illustrated above. If any or all of these losses could somehow be avoided or reduced, then overall EROEI would be increased, thus further augmenting the amount of surplus energy available for maintenance, if not growth, of a natural system dependent on surplus energy – and decreasing ‘burn rate’ of the energy resource concerned. This same sort of step-wise process takes place in most energy-utilizing systems, human or not.
For an example of an already well-recognized application of this energy-conserving strategy in human affairs, see again the minimum required EROEI Table presented earlier within one of the cliff diagrams:
If the everyday activities of transportation, growing food, and family and working life are arranged in such a fashion within a society so as to build and maintain health while conducting these much lower energy cost everyday activities of daily living, then most, if not nearly all, very high energy cost health care expenditures might be avoided. You could view this approach to saving energy for other important uses as a returning to long-established, quite stable biophysical systems rather than gratuitously constructing and operating more unstable and energy-gobbling new (e.g., Neolithic) ones.
Related reading: A Graph Nicely Illustrating the Changes in Work-a-day Activities in the US over Time
Related reading: More Likely Knock-on Effects of the Neolithic Agricultural Revolution
Note that post-1970 US oil and gas production in excess of Hubbert’s prediction initially came from then-innovative and more expensive offshore oil and gas production and later from even more expensive and laborious production of shale oil and gas. Following the same estimation methodology Hubbert employed to predict onshore peak oil and gas, he also estimated that global oil and gas production would peak at about the turn of the 21st century.
Morgan (2016) points out that – after correcting for currency market distortions like self-serving changes in government accounting methods -- this relationship is, in fact, so very strong and so economically controlling that modern fiat money is ultimately best understood as nothing more than a proxy or shadow currency representing ownership rights to the potential energy and/or kinetic energy derived from those fossil fuels.
The proprietary opacity of Morgan’s actual ECOE and EROEI data estimation methods aside, the decline of elsewhere-published US petroleum EROEIs and Morgan’s EROEI and ECOE estimations follow each other closely through time.
"Since Hubbert, people in and out of the international petroleum industry have been waiting for world petroleum production to crest – an event that apparently has yet to happen."
Oh, it's happened, alright!
As Art Berman notes, it's been disguised.
We probably hit peak oil in 2018, but they've been "cooking the books". They've added things like "natural gas liquids", "refinery gain", and even biofuels to the official oil production numbers so they can keep propping that number up.
More importantly, "peak oil energy" if not volume, is certainly past. A barrel of oil has only about 90-95% of the energy that it had ten years ago, due to the predominance of fracked oil, which is a lighter grade. Also, the NGL that have been incorporated in production figures are very light. And "refinery gain" is also light, as it is what you get when you "crack" heavier oil into grades suitable for gasoline production.
This is bad news, because the world runs on diesel, not lighter grades. Electric cars help conserve gasoline, but not diesel, which is indispensable for mining, long-haul transportation, and agriculture.
OPEC nations are facing decline of their conventional fields. This means they're going to be holding back exports — especially of diesel — for their own use.
The next four years are going to be interesting, indeed!
First time here, followed the link from Dr. Morgan's site. Excellent summation and work. Too bad extremely few are listening.