[A-List] Declining Energy Quality ...

Tony B. tal1 at cogeco.ca
Mon Dec 6 18:46:40 MST 2010

I agree....that is I don't believe 'peak oil' is the root cause of the present global economic 'meltdown'; it's structural, i.e. based on the nature of modern capitalism and its blind drive for immediate profit over any sort of rational ordering of the global socio-political economy. Energy constraints will undoubtedly play more of a role in the future, but to place the blame on these purely 'technical' considerations is entirely reductionistic.

  ----- Original Message ----- 
  From: Todd Boyle 
  To: The A-List 
  Sent: Sunday, December 05, 2010 4:06 PM
  Subject: Re: [A-List] Declining Energy Quality ...

  To the contrary, the oil price spike is already well recognized by 
  economists as the trigger for the recession.   The speculative
  bubble and debt pyramid were routine features of a capitalist
  economy certainly since 1945 and arguably, the past 200 years. 

  What is less recognized as cause of the recession is the
  Global capital has obviously found cheaper labor in other
  places, for a long time.   What this really means is, more compliant
  labor, with characteristics of willingness to work long and hard
  without complaining that their bosses are stealing their pay,
  taking 1000 times more money.

  The cause of the recession in the U.S is the breakdown
  in cooperation, in the broader social contract.  We have apparently
  some sort of tipping point.  And it's not "peak oil".  It is a 
  social disintegration.    There are several well-known pathologies
  running their course thru American society-- the rich are looting
  the country, for example.  The media system has collapsed into
  a fatal corruption, this is universally recognized by professional journalists.
  Education is in disastrous decline.  Finally, you have the war-- the
  outright, savage killing of 100s of thousands of people in Iraq and
  Afghanistan.   Kids understand these things and draw conclusions
  about what kind of world they live in.  These conclusions are toxic,
  and you end up with a different sort of population --one that lies,
  steals, borrows more than it can repay, etc. and rapes, and kills. 

  The recession?  It's the result of broad social trends, and
  predatory and unfit leaders.  Until workers in China stand up,
  things will continue to deteriorate in the US. We are an undeveloping country,


  At 03:37 PM 12/4/2010, Bill Totten wrote:

    ... Could Be Root Cause of Current Recession, Expert Suggests

    ScienceDaily (December 02 2010)

    An overlooked cause of the economic recession in the US is a decade long
    decline in the quality of the nation's energy supply, often measured as
    the amount of energy we get out for a given energy input, says energy
    expert Carey King of The University of Texas at Austin.

    The worst recessions of the last 65 years were preceded by declines in
    energy quality for oil, natural gas, and coal. Energy quality is plotted
    using the energy intensity ratio (EIR) for each fuel. Recessions are
    indicated by gray bars. In layman's terms, EIR measures how much profit is
    obtained by energy consumers relative to energy producers. The higher the
    EIR, the more economic value consumers (including businesses, governments
    and people) get from their energy. (Credit: Carey King)


    Many economists have pointed to a bursting real estate bubble as the
    initial trigger for the current recession, which in turn caused global
    investments in US real estate to turn sour and drag down the global
    economy. King suggests the real estate bubble burst because individuals
    were forced to pay a higher and higher percentage of their income for
    energy - including electricity, gasoline and heating oil - leaving less
    money for their home mortgages.

    In economic terms, the quality of the nation's energy supply is referred
    to as Energy Return on Energy Investment (EROI). For example, if an oil
    company uses a tenth of a barrel of oil to drill, pump, transport and
    refine one barrel of oil, the EROI for the refined fuel is ten.

    "Many economists don't think of energy as being a limiting factor to
    economic growth", says King, a research associate in the university's
    Center for International Energy and Environmental Policy. "They think
    continual improvements in technology and efficiency have completely
    decoupled the two factors. My research is part of a growing body of
    evidence that says that's just not true. Energy still plays a big role."

    In a paper published this November in the journal Environmental Research
    Letters, King introduced a new way to measure energy quality, the Energy
    Intensity Ratio (EIR), that is easier to calculate, highly correlated to
    EROI and in some ways more powerful than EROI. EIR measures how much
    profit is obtained by energy consumers relative to energy producers. The
    higher the EIR, the more economic value consumers (including businesses,
    governments and people) get from their energy.

    When King plots EIR for various fuels every year since World War Two, the
    graphs indicate two large declines, one before the recessions of the
    mid-1970s and early 1980s and the other during the 2000s, leading up to
    the current economic recession. There have been other recessions in the US
    since World War Two, but the longest and deepest were preceded by
    sustained declines in EIR for all fossil fuels.

    EIR is proportional to EROI, meaning they rise and fall together, but the
    basic data behind the EIR calculations come out annually as opposed to
    every five years for EROI. EIR also gives insight into different parts of
    the supply chain such as at the refinery or at the gas pump, which are
    harder to study with EROI.

    King's analysis suggests if EIR falls below a certain threshold, the
    economy stops growing. For example, in 1972, EIR for gasoline was 5.9 and
    in 2008 it was 5.5. During times of robust economic growth, such as the
    1990s, EIR for gasoline was well over eight. Compare that to some
    estimates of EROI and EIR for corn ethanol of around one, and it's clear
    why corn ethanol has been widely criticized as a low quality energy source.

    To get the US economy growing again, King says Americans will have to
    produce and use energy more efficiently. That's essentially what the US
    did after the last energy crisis by raising fuel efficiency standards for
    cars, increasing use of natural gas for electric power generation and
    developing new technologies such as Enhanced Oil Recovery to coax more oil
    out of the ground.

    "If we aren't fundamentally changing the way we produce or consume energy
    now, don't expect the economy to grow as much as the past two decades", he


    Disclaimer: Views expressed in this article do not necessarily reflect
    those of ScienceDaily or its staff.

    Story Source: The above story is reprinted (with editorial adaptations by
    ScienceDaily staff) from materials provided by University of Texas at
    Austin, via EurekAlert!, a service of AAAS.

    Journal Reference: C W King. Energy intensity ratios as net energy
    measures of United States energy production and expenditures.
    Environmental Research Letters, 2010; 5 (4): 044006 DOI:


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