Home » Posts tagged 'eroi' (Page 2)

Tag Archives: eroi

Why The Coming Oil Crunch Will Shock The World

July 7, 2018

Anton Balazh/Shutterstock

Why The Coming Oil Crunch Will Shock The World

And why we need a new energy strategy — fast.

My years working in corporate strategy taught me that every strategic framework, no matter how complex (some I worked on were hundreds of pages long), boils down to just two things:

Where do you want to go? (Vision)
How are you going to get there? (Resources)

Vision is the easier one by far. You just dream up a grand idea about where you want the company to be at some target future date, Yes, there’s work in assuring that everybody on the management team truly shares and believes in the vision, but that’s a pretty stratightforward sales job for the CEO.

By the way, this same process applies at the individual level, too, for anyone who wants to achieve a major goal by some point in the future. The easy part of the strategy is deciding you want to be thinner, healthier, richer, or more famous.

But the much harder part, for companies and individuals alike, is figuring out ‘How to get there’. There are always fewer resources than one would prefer.

Corporate strategists always wish for more employees to implement the vision, with better training with better skills. Budgets and useful data are always scarcer than desired, as well.

Similar constraints apply to us individuals. Who couldn’t use more motivation, time and money to pursue their goals?

Put together, the right Vision coupled to a reasonably mapped set of Resources can deliver amazing results. Think of the Apollo Moon missions. You have to know where you’re going and how you’re going to get there to succeed. That’s pretty straightforward, right?

…click on the above link to read the rest of the article…

Turning Trees Into Enemies. The New War on Forests

June 3, 2018

Turning Trees Into Enemies. The New War on Forests

The San Marco Square in Florence in 2017. You can see the ancient trees of the square being cut as part of a plan that involved the removal of several hundred trees in the whole city. The action was accompanied by a propaganda campaign against trees that looked curiously similar to that used to justify the invasion of Iraq, in 2003. “Trees are a threat to citizens,”, “There is no alternative,” “Killer Trees,” and the like.

The war on trees seems to be starting. I don’t know about what’s happening where you live, but here, in Italy, we see it clearly, accompanied by all the propaganda tricks normally used to start wars. So, we have seen a string of accusations in the media against “killer trees,” supposed to be a danger for the citizens because they can fall on them or on their beloved shiny cars. The image on the right, here shows the first page of an Italian newspaper in 2014 informing us there are “50,000 killer trees” in Rome. Truly an invading army to be fought with the appropriate weaponry in the form of chainsaws.

One century ago, city administrations were proud of planting trees, today they are proud of cutting them. What happened that changed their attitude so much is hard to say. Maybe it is the general degradation of the ecosystem that has turned trees into monsters, but that doesn’t explain how administrations are starting also a war on forests – surely not threatening citizens or their cars. In a previous post, I commented on a recent piece of legislation in Italy that forces land owners to cut their woods even if they don’t want to. From the comments I received to that post and from what I can read on the Web, I think I can say that the war on trees is not just an Italian phenomenon, it is worldwide.

…click on the above link to read the rest of the article…

Book Review: Energy Return on Investment by Charles A. S. Hall

April 9, 2018

Book Review: Energy Return on Investment by Charles A. S. Hall

ENERGY RETURN ON INVESTMENT: A Unifying Principle for Biology, Economics, and Sustainability

In Energy Return on Investment, systems ecologist Charles A. S. Hall argues that to truly understand most investments, one must view them in terms of energy. This is perhaps most obvious when considering the physical survival of wild animals and human hunter-gatherers. In both these instances, the food obtained through foraging or hunting must yield more energy than was required to procure it, or starvation ensues. Another way of understanding this is by applying the concept of energy return on investment (EROI). As with the more familiar metric of return on investment (ROI), EROI is a ratio of profit–in this case, energy profit–to resources expended. It is calculated by dividing the amount of energy obtained in the course of a given activity by the resources that went into recovering that energy. A positive EROI is one above the break-even point, whereas a negative EROI is one that fails to break even.

This principle extends beyond the individual sphere to encompass entire human societies. Like the lone animal or hunter-gatherer of the previous example, a civilization must maintain a positive energy balance to survive. Most ultimately fail to do so, as evidenced by the long line of failed past civilizations. Consider the ancient Easter Islanders, whose downfall was described so well in geographer Jared Diamond’s 2005 book Collapse: How Societies Choose to Fail or Succeed. Diamond recounts how the Easter Islanders relied heavily on fish, and to catch the fish they needed wooden boats. They were depleting their wood supply faster than it could regenerate, and eventually their efforts to obtain more wood no longer yielded positive energy returns in the form of food. Now fast forward to our time and reflect on what’s happened with the EROI of our primary energy source. The oil that powers modernity once came out of the ground easily, but it now requires herculean investments of both money and energy (think offshore drilling, hydraulic fracturing and horizontal drilling) to obtain.

…click on the above link to read the rest of the article…

Dr. Charles Hall: The Laws Of Nature Trump Economics

March 6, 2018

Dr. Charles Hall: The Laws Of Nature Trump Economics

It’s all about Energy Retun On Energy Invested (EROEI)

Dr. Charles Hall may not be a name you instantly recognize, but it should be.

Now a Professor Emeritus of the College of Environmental Science and Forestry, Dr. Hall is a rigorous researcher of energy, oil, biophysical economics — and was a critical early pioneer in developing the key resource metric of Energy Returned On Energy Invested (EROEI).

Here’s how Hall describes EROEI in layman’s terms:

These energy investment ideas are everywhere in nature.

Certainly business people know about investments, but you’ve got to realize that anytime that you’re investing, you investing not only money, you’re investing energy. And, in fact, we consider money to be a lien on energy, a promissory note on energy.

So, if, for example, you buy in New York City a bagel for $1, that bagel cannot possibly get there without the use of a considerable amount of energy. And that energy is, for example, energy used in Louisiana to take natural gas and turn it into nitrogen fertilizer. And then it’s put in a barge and barged up the Mississippi River to Nebraska. And then a tractor spreads in on a field. And then it plows up the field and plants wheat seeds. And then later comes along and tills the soil and maybe takes care of the weeds or whatever and certainly harvests it. And then more energy is used to take the harvested wheat and grind it up and turn it into flour. And then they put it in a sack and put it on a railroad train and ship it to New York City. And there somebody boils a pot of water to cook the bagel. Oh, and they use electricity to mix the batter. And then you have a bagel.

…click on the above link to read the rest of the article…

The Leveraged Economy BLOWS UP In 2018

January 5, 2018

The Leveraged Economy BLOWS UP In 2018

Enjoy the good times while you can because when the economy BLOWS UP this next time, there is no plan B. Sure, we could see massive monetary printing by Central Banks to continue the madness a bit longer after the market crashes, but this won’t be a long-term solution. Rather, the U.S. and global economies will contract to a level we have never experienced before. We are most certainly in unchartered territory.

Before I get into my analysis and the reasons we are heading towards the Seneca Cliff, I wanted to share the following information. I haven’t posted much material over the past week because I decided to spend a bit of quality time with family. Furthermore, a good friend of mine past away which put me in a state of reflection. This close friend was also very knowledgeable about our current economic predicament and was a big believer in owning gold and silver. So, it was a quite a shame to lose someone close by who I could chat with about these issues.

While some of my family members know about my work, I don’t really discuss it with them. If they ever have a question, I will try to answer it, but I found out years ago that it was a waste of time to try and impose my knowledge upon them. Which is the very reason I started my SRSrocco Report website… LOL. So, now I have a venue to get my analysis out to the public. I don’t care about reaching everyone, but rather to provide important information to those who are OPEN to it.

…click on the above link to read the rest of the article…

THE U.S. SHALE OIL INDUSTRY: Swindling & Stealing Energy To Stay Alive

December 27, 2017

THE U.S. SHALE OIL INDUSTRY: Swindling & Stealing Energy To Stay Alive

While the U.S. Shale Energy Industry continues to borrow money to produce uneconomical oil and gas, there is another important phenomenon that is not understood by the analyst community. The critical factor overlooked by the media is the fact that the U.S. shale industry is swindling and stealing energy from other areas to stay alive. Let me explain.

First, let’s take a look at some interesting graphs done by the Bloomberg Gadfly. The first chart below shows how the U.S. shale industry continues to burn through investor cash regardless of $100 or $50 oil prices:

The chart above shows the negative free cash flow for 33 shale-weighted E&P companies. Even at $100 oil prices in 2012 and 2013, these companies spent more money producing shale energy in the top four U.S. shale fields than they made from operations. While costs to produce shale oil and gas came down in 2015 and 2016 (due to lower energy input prices), these companies still spent more money than they made. As we can see, the Permian basin (in black) gets the first place award for losing the most money in the group.

Now, burning through investor money to produce low-quality, subpar oil is only part of the story. The shale energy companies utilized another tactic to bring in additional funds from the POOR SLOBS in the retail investment community… it’s called equity issuance. This next chart reveals the annual equity issuance by the U.S. E&P companies:

According to the information in the chart, the U.S. E&P companies will have raised over $100 billion between 2012 and 2017 by issuing new stock to investors. If we add up the funds borrowed by the U.S. E&P companies (negative free cash flow), plus the stock issuance, we have the following chart:

…click on the above link to read the rest of the article…

U.S. ECONOMIC CRISIS AHEAD: Major Failure Of Analysts To Spot Danger

December 9, 2017

U.S. ECONOMIC CRISIS AHEAD: Major Failure Of Analysts To Spot Danger

The U.S. economy continues towards an epic crisis while the overwhelming majority of analysts are completely in the dark. Even though some alternative media analysts understand that our highly leveraged fiat monetary system and markets will crash, they fail to understand the underlying reasons. Thus, we are heading into a future we are not prepared because… the BLIND continues to lead the BLIND.

I don’t mean to be harsh on my fellow analysts, but the truth remains that the public is being misled due to the inability of market analysts unable to spot the real dangers. So, we continue to move step-by-step closer to the edge of the cliff while “no one seems to notice or no one seems to care” (George Carlin-comedian). I have to tell you; I miss ole George Carlin. Yes, he had a filthy mouth, but the truth in his comedic material gave me hours of much-needed laughter.

To explain what I mean about the “Major failure of analysts to spot Danger,” I am going to provide two examples and some additional information. It is crucial that the reader understand the FACTS and REAL DATA about our dire predicament and not become lost or confused in regards to lousy conspiracies or misinformation.

When I wrote the article, THE BLIND CONSPIRACY: The Gold Market Is Heading Towards A Big Fundamental Change; I thought for sure the individual and his analysis that I was calling into question would read the facts and data in my article and realize his error. However, it seems as if it provided quite the opposite reaction.

Mr. Weir spent 50 minutes of his time putting together another video about the Massive Billion Ounces of Hidden Gold in the Grand Canyon:

…click on the above link to read the rest of the article…

U.S. Deepwater Offshore Oil Industry Trainwreck Approaching

October 25, 2017

U.S. Deepwater Offshore Oil Industry Trainwreck Approaching

The U.S. Deepwater Offshore Oil Industry is a trainwreck in the making. The low oil price continues to sack an industry which was booming just a few short years ago. The days of spending billions of dollars to find and produce some of the most technically challenging deep-water oil deposits may be coming to an end sooner then the market realizes.

Drilling activity in the Gulf of Mexico hit a peak in 2013 when the price of oil was over $100 a barrel. However, the current number of rigs drilling in the Gulf of Mexico has fallen to only 37% of what it was in 2013. This is undoubtedly bad news for an industry that fetches upward of $600,000 a day for leasing these massive ultra-deepwater rigs.

One of the largest offshore drilling rig companies in the world is Transocean, headquartered in Switzerland. They lease ultra-deepwater rigs all over the globe. When the industry was still strong in 2014, nearly half of Transocean’s fleet of 27 ultra-deepwater rigs were leased in the Gulf of Mexico. Even though Transocean was quite busy that year, its ultra-deepwater rig utilization was 89% during the first half of 2014, down from an impressive 95% in 1H 2013.

The term utilization represents the total number of working rigs in the fleet. So, in 2013, Transocean had 95% of its rigs busy drilling oil wells. But if we look at the following chart, we can see the disaster that has taken place at Transocean since the oil price fell by more than 50%:

Currently, Transocean’s ultra-deepwater rig count has dropped to a low of 12 versus 27 in 2014. And it’s even worse than that. Since 2014, Transocean added three more new rigs for a total number of 30. Thus, Transocean’s ultra-deepwater rig utilization is down to a stunning 37% compared to 95% just four years ago. So, when a rig isn’t working, it’s not making revenue.

…click on the above link to read the rest of the article…

WORLD’S LARGEST OIL COMPANIES: Deep Trouble As Profits Vaporize While Debts Skyrocket

October 17, 2017

WORLD’S LARGEST OIL COMPANIES: Deep Trouble As Profits Vaporize While Debts Skyrocket

The world’s largest oil companies are in serious trouble as their balance sheets deteriorate from higher costs, falling profits and skyrocketing debt. The glory days of the highly profitable global oil companies have come to an end. All that remains now is a mere shadow of the once mighty oil industry that will be forced to continue cannibalizing itself to produce the last bit of valuable oil.

I realize my extremely unfavorable opinion of the world’s oil industry runs counter to many mainstream energy analysts, however, their belief that business, as usual, will continue for decades, is entirely unfounded. Why? Because, they do not understand the ramifications of the Falling EROI – Energy Returned On Invested, and its impact on the global economy.

For example, Chevron was able to make considerable profits in 1997 when the oil price was $19 a barrel. However, the company suffered a loss in 2016 when the price was more than double at $44 last year. And, it’s even worse than that if we compare the company’s profit to total revenues. Chevron enjoyed a $3.2 billion net income profit on revenues of $42 billion in 1997 versus a $497 million loss on total sales of $114 billion in 2016. Even though Chevron’s revenues nearly tripled in twenty years, its profit was decimated by the falling EROI.

Unfortunately, energy analysts, who are clueless to the amount of destruction taking place in the U.S. and global oil industry by the falling EROI, continue to mislead a public that is totally unprepared for what is coming. To provide a more realistic view of the disintegrating energy industry, I will provide data from seven of the largest oil companies in the world.

The World’s Major Oil Companies Debt Explode Since The 2008 Financial Crisis

…click on the above link to read the rest of the article…

Inside the new economic science of capitalism’s slow-burn energy collapse

August 22, 2017

Inside the new economic science of capitalism’s slow-burn energy collapse

And why the struggle for a new economic paradigm is about to get real

Source: art by Isaac Cordal

New scientific research is quietly rewriting the fundamentals of economics. The new economic science shows decisively that the age of endlessly growing industrial capitalism, premised on abundant fossil fuel supplies, is over.

The long-decline of capitalism-as-we-know-it, the new science shows, began some decades ago, and is on track to accelerate well before the end of the 21st century.

With capitalism-as-we-know it in inexorable decline, the urgent task ahead is to rewrite economics to fit the real-world: and, accordingly, to redesign our concepts of value and prosperity, precisely to rebuild our societies with a view of adapting to this extraordinary age of transition.

A groundbreaking study in Elsevier’s Ecological Economics journal by two French economists, for the first time proves the world has passed a point-of-no-return in its capacity to extract fossil fuel energy: with massive implications for the long-term future of global economic growth.

The study, ‘Long-Term Estimates of the Energy-Return-on-Investment (EROI) of Coal, Oil, and Gas Global Productions’, homes in on the concept of EROI, which measures the amount of energy supplied by an energy resource, compared to the quantity of energy consumed to gather that resource. In simple terms, if a single barrel of oil is used up to extract energy equivalent to 50 barrels of oil, that’s pretty good. But the less energy we’re able to extract using that single barrel, then the less efficient, and more expensive (in terms of energy and money), the whole process.

Recent studies suggest that the EROI of fossil fuels has steadily declined since the early 20th century, meaning that as we’re depleting our higher quality resources, we’re using more and more energy just to get new energy out. This means that the costs of energy production are increasing while the quality of the energy we’re producing is declining.

…click on the above link to read the rest of the article…

Which EROI do we need to collect berries?

August 16, 2017

Which EROI do we need to collect berries?

My wife, Grazia, collecting berries in the woods of Tuscany in a hot day of August. Maybe her ancestors were doing exactly the same, more or less in the same place, hundreds or thousands of years ago. Here, I present some reflections and some calculations showing that the EROI of this simple way of collecting food may be over 100, better than almost anything we have nowadays. Of course, no empire in history was based on hunting and gathering, but was that a bad thing?

The question of EROI – the energy return on energy invested – is raging nowadays, with some people insisting that a civilization cannot exist without an EROI of at least variously estimated values, at least 10 and higher (image on the right by Charles Hall). And that is said to mean we absolutely need sophisticated technologies, such as nuclear, in order to survive.

Yet, this morning I had been collecting berries in the wood with my wife and wondering: ‘what is the EROI of what we are doing?’ A reasonably good EROI, I am sure, enough for what our ancestors needed when they survived on hunting and gathering. All you have to do is to walk in the woods, find the berries and pick them up (and watch your step, you don’t want to fall into a thorn bush). If our hunter-gatherer ancestors used this method, and if we are here today – their descendants – it means it was an effective strategy for survival. Collecting what you can find is an ancient and tested strategy that goes under the name of “gleaning” and it has accompanied humankind for millennia. It is a good strategy just because it is so simple: no tools, no laws, no hierarchy. And it works.

…click on the above link to read the rest of the article…

Charlie Hall speaks about EROI (and many other things)

March 5, 2017

Charlie Hall speaks about EROI (and many other things)

A talk given by professor Charlie Hall in Princeton, last year. More than one hour of presentation to show how rich and interesting is the field of biophysical economics. And here is a comment submitted by Bepi Cima

Waiting for a more affordable digital version of Charles Hall’s Energy Return on Investment: A Unifying Principle for Biology, Economics, and Sustainability I watched a seminar on the same subject held by prof Hall less than a year ago at Princeton.

I enjoyed his talk, I believe it summarizes well the main subject of discussion of this blog: the fate of the artificial energy supply. Without it we would go hungry, 2/3 of the fertilizers today are synthetic and much more depends on it.

Many prefer reading a text rather than watching a video but, in this case, it helps to detect the author’s emotions directly from his voice. It contains a lot of well-summarized information together with strong, sometimes debatable, statements but I appreciate his spirit and courage.

I feel his frustration for still missing the perfect theoretical context where to locate the issues. As a lightning short summary for the ones who couldn’t listen to the whole talk, I propose the following images from his video.

These two images show that we need to make exceptional efforts to afford even basic “luxuries” with the exclusive use of renewables. There is a lot to disagree about quantitatively, for example in this blog look at this Hall-Bardi dialogue.

The last image hints to what’s probably the main ingredient to the “problem” solution.

The most flexible, least technologically sophisticated way of satisfying the world energy needs is most likely to reduce energy demand, the product among population density, the quality of its needs and their energy intensity.

Go Long Chain Makers

March 3, 2017

Go Long Chain Makers

Leonardo da Vinci Head of a Woman 1470s This is turning into a very rewarding series, it opens up vistas I could never have dreamed of. First, in “Not Nearly Enough Growth To Keep Growing”, I posited that peak wealth for the west, and America in particular, was sometime in the early ’70s or late ’60s of the last century.

That led to longtime Automatic Earth reader Ken Latta, who’s old enough to have been alive to see it all, writing, in “When Was America’s Peak Wealth?”, that in his view peak wealth for America was earlier, more like late ’50s to early ’60s, a carefree period for which Detroit provided the design, and the Beach Boys the soundtrack.

And I know, for those who wrote to me about this, that there’s quite a bit of myopia involved in focusing on the US, or even the western world in general, when discussing these things. But at the same time, we’re all at our best when talking about our own experiences, something this thread has made abundantly clear. That said, I would absolutely love to get a view from other parts of the world, China, Latin America, Africa, Eastern Bloc, on the same topic. I just haven’t received any yet.

What I’ve absolutely adored is how -previously- anonymous Automatic Earth readers and commenters have felt the urge to share their life experiences because of what’s been written. This happened especially after Ken’s follow-up to his initial article, “Peak American Wealth – Revisited”, which saw many of his contemporaries, as well as younger readers after I ‘poked’ them, relate their views.

Then there was distinguished emeritus professor Charles A. Hall, who took offense with neither Ken nor I including energy as an explicit factor in determining wealth. Of course he was right. I have the creeping suspicion he often is.

…click on the above link to read the rest of the article…

Bankrupting OPEC… One Million Barrels Of Oil At A Time

February 25, 2017

Bankrupting OPEC… One Million Barrels Of Oil At A Time

The world hasn’t really caught on yet, but OPEC is in serious trouble. Last year, OPEC’s net oil export revenues collapsed. How bad? Well, how about 65% since the oil price peaked in 2012. To offset falling oil prices and revenues, OPEC nations have resorted to liquidating some of their foreign exchange reserves.

The largest OPEC oil producer and exporter, Saudi Arabia, has seen its Foreign Currency reserves plummet over the past two years… and the liquidation continues. For example, Saudi Arabia’s foreign exchange reserves declined another $2 billion in December 2016 (source: Trading Economics).

Now, why would Saudi Arabia need to liquidate another $2 billion of its foreign exchange reserves after the price of a barrel of Brent crude jumped to $53.3 in December, up from $44.7 in November?? That was a 13% surge in the price of Brent crude in one month. Which means, even at $53 a barrel, Saudi Arabia is still hemorrhaging.

Before I get into how bad things are becoming in Saudi Arabia, let’s take a look at the collapse of OPEC net oil export revenues:

The mighty OPEC oil producers enjoyed a healthy $951 billion in net oil export revenues in 2012. However, this continued to decline along with the rapidly falling oil price and reached a low of $334 billion in 2016. As I mentioned before, this was a 65% collapse in OPEC oil revenues in just four years.

The last time OPEC net oil export revenues was this low was in 2004. OPEC oil revenues that year were $370 billion based on average Brent crude price of $38.3. Compare that to $334 billion in oil revenues in 2016 on an average Brent crude price of $43.5 a barrel.

This huge decline in OPEC oil revenues gutted these countries foreign exchange reserves. Which means, the falling EROI- Energy Returned On Investment is taking a toll on the OPEC oil exporting countries bottom line. A perfect example of this is taking place in Saudi Arabia.

…click on the above link to read the rest of the article…

Thermodynamic Oil Collapse Interview: Why The Global Economy Will Disintegrate Rapidly

October 23, 2016

Thermodynamic Oil Collapse Interview: Why The Global Economy Will Disintegrate Rapidly

The world is heading towards a rapid disintegration of its economic and financial system due to a “Thermodynamic oil collapse.” I spoke with Dr. Louis Arnoux of nGeni, about the details of the thermodynamics of oil depletion and its impact on the global economy.

Unfortunately, the world is completely in the dark about this energy information and its dire implications to global economic trade and finance, in a relatively short period of time. I would like to emphasize that this Thermodynamic Oil Collapse Video is the most important interview I have ever done.

During the interview, Louis Arnoux discusses the dynamics of the “Thermodynamic oil decline” using six slides, including one on his nGeni technology towards the end of the interview. The information in this interview is so important, Louis needed to take the extra time to explain these concepts in detail.

In the beginning of the interview, Louis describes the significance of the first chart showing how the world’s fuel gauge is now “Running On Empty.”

Dr. Louis Arnoux presents his views concerning the depletion of oil reserves, that is, how to best assess depletion, what stage the depletion is at and what this means in financial and economic terms. This is based on his own research and on that of Bedford Hill and his Hill’s Group team that he has scrutinised in depth. Dr Arnoux is now part of a team of researchers who have recently refined the Hill’s Group work.

They are presently preparing a paper to be published in a peer reviewed scientific journal that will present their thermodynamic analysis of the oil industry, the Hill’s Group Etp model, how this model enables assessing the depletion status of the global oil reserves, and the high fit of their analysis with empirical data.

…click on the above link to read the rest of the article…

Tag Archives: eroi

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Post Archives by Category

The long-decline of capitalism-as-we-know-it, the new science shows, began some decades ago, and is on track to accelerate well before the end of the 21st century.

With capitalism-as-we-know it in inexorable decline, the urgent task ahead is to rewrite economics to fit the real-world: and, accordingly, to redesign our concepts of value and prosperity, precisely to rebuild our societies with a view of adapting to this extraordinary age of transition.

Post navigation

Latest Posts