Industrial Civilization a Pyramid scheme? Ponzi and EROI

Energy Return On energy Invested…EROI. When some one compares the EROIs of renewable fuels to fossil fuels are the talking about they same thing? …No.

The ERIO of renewable fuels is positive and the true physics based energy balance is positive. The EROI of fossil fuels is positive, for the present time, while the true physics based energy balance has always been negative. Unfortunately, the EROI number is nothing but a construct of economics, and the oil companies have been using it to fool people for a very long time.

What does this mean?... positive EROI and a negative physics energy balance? They are treating capital, our oil reserves, as current income. Treating capital influx as income is foolish. Any company that cashes out its capital and treats the result as income is going to go broke. The EROI of gasoline has gone from 100:1 to about 5:1 today. The whole fossil fuel system is nothing but a hundred year pyramid scam.

However, renewables will supply the same EROI as long as the sun is shinning. The energy return on investment (EROI) for a commercial wood chipping operation has determined to be 27.6 to 1

So, when someone is comparing the EROIs of fossil and renewable fuels, as if they are the same thing, they are in fact trying to run a scam on you.

A good place to start would be basic economics then a little natural resource economics.

Concentrate on theories of property rights, the functions they serve, and how costs and benefits are distributed through society. A key component of understanding is proper categorization of the components of a problem to be analyzed. You focus overly on comparing and contrasting fossil fuels and renewables. That's yesterday's battle. Today the topic is renewable to renewable. You say "the EROI number is nothing but a construct of economics", as if that has some negative connotation.
Absolutely EROI is a creation of economic thinking. Do you even know what that means? Take a look:

ec·o·nom·ics n
1. the study of the production, distribution, and consumption of goods and services (takes a singular verb)
2. the financial element of something (takes a plural verb)

Encarta® World English Dictionary © 1999 Microsoft Corporation. All rights reserved. Developed for Microsoft by Bloomsbury Publishing Plc.

The study of the production, distribution and consumption of goods.

That is what we're talking about here isn't it, the way we interact with the world around us? Why if the hell would you sneer at the best tool we have for opening that process up for examination, analysis and eventually, understanding? I mean, you clearly don't understand it enough to judge it, so why are you playing the game that got Bush elected? The right has been pushing the meme for the past 30 years that you can't trust anyone. Over and over and over and over they've pushed that thought into the heads of people in this country. We've totally lost the capacity to understand the line between what we know and and what we need the help of experts to understand.

The anti-intellectualism on this forum is staggering. I've been arguing nose to nose with right wingers ever since Bush decided to take us to war. I spent 8 years in the Air Force and it enraged me that Bush sent our troops into the shitstorm that he did. I'd never been much of one to care about politics until then, but I started plaguing the local wingnut websites to try and talk some sense into the those who supported Bush and his war.

I'd just been luring once or twice a day; passing through to pick up tidbits to take to the wingnuts and beat them about the head with. I finally got to the point though, where I couldn't take the thickheaded morons anymore and started posting here instead.

Now let me be crystal clear here: No one is as willfully blind and and deliberately ignorant as I found the wingers to be. BUT, there is one shared trait. As I mentioned, the people on the left have largely been as stripped of their ability to trust authority as have the people on the right. Think about the effect that has over a long term.

You don't trust the people in government, you don't trust the people in industry, you don't trust academics; but you do trust sources you find on the internet that explain things to you in a way that makes sense to you.

But what happens when what makes sense to you is totally wrong? When does it go from being an experience in learning and become an echo chamber where people who are as limited in understanding as you are take the same set of limited facts that you see and put them together in a way that mirrors what you've already basically decided or at least suspected?

Do you really learn that way? Or is it a form of validation for extremely bad ideas and sloppy thinking?

I mean, WHY WOULD YOU REJECT WHAT IS PROBABLY THE BEST, VALUES FREE TOOL HUMANS HAVE EVER DEVELOPED FOR UNDERSTANDING THE WAY WE INTERACT WITH EACH OTHER AND OUR ENVIRONMENT?

I understand dismissing the output of a particular economic analysis because the analyst is predictably biased.
I understand rejecting a given assumption or set of assumptions that an analysis is based on.
I understand rejecting an analysis because of methodological flaws.

But I don't understand this deeper mistrust that encompasses whole fields of learning in favor of prejudices.

However, the EROI of fossil fuels and the EROI of renewable fuels are, at their cores, completely different.

Fossil fuels are cashing out our capital stock and treating the result as income, and is going broke. The EROI of gasoline was around 100:1 but now it has sunk to 5:1. It's only a fluke in the EROI economics mathematics that gives fossil fuel's EROI a positive number...Or trickery as I call it.

Renewable fuels run on our current solar income rather than by drawing down the planetary stock of capital. As long as the sun is shinning. renewables will always be positive. What ever your favorite renewable source, solar PV, solar thermal, wind, wave, and biomass they are all driven by the sun.

Robert Rapier and his disciple's are full of crap.

http://en.wikipedia.org/wiki/Ponzi_scheme

Then neoclassical economics- particularly macroeconomic concepts like the "circular flow" are poor models to look to.

My suggestion would be to look instead toward the systems sciences, like say, ecological economics- which tales a broader look and does, in fact, make accounting distinctions between natural capital and "man made" forms of capital.

Herman Daly's writings and books (especially his textbook) explain quite clearly why many "traditional" economic assumptions are indeed a farce.

http://www.amazon.com/Ecological-Economics-Applications-Joshua-Farley/dp/1559633123/ref=pd_lpo_k2_dp_k2a_2_txt?pf_rd_p=304485601&pf_rd_s=lpo-top-stripe-2&pf_rd_t=201&pf_rd_i=0807047090&pf_rd_m=ATVPDKIKX0DER&pf_rd_r=06VTE3PQF7VX4F2DFRJ7

http://www.amazon.com/Beyond-Growth-Economics-Sustainable-Development/dp/0807047090

I said basic economics and natural resource economics - to which you should add environmental economics.
I said a "values free" tool.

Think about it.

it's largely concerned with mitigating externalities, rather than reshaping irrational economic concepts to fit the natural world and its limitations.

Ecological economics is known as a transdiscipline- it's not a subset of the prevailing neoclassic economic paradigm. It's involves a BASIC rethinking, from the ground up, of many of the core concepts people are taught at university.

As such, its fairly straightforward reading; I'd have no qualms about assigning either of the two books I cited to undergrads. Indeed, that's who SHOULD be reading them. Call it econ 103.

As to the microeconomic/macroeconomic distinctions, one can look at that as the difference between, say Newtonian physics (laws of motion, etc.) that work on quite well within their limited parameters, and relativity, which is a larger, more synthesized view of "how things work."

Microeconomic concepts like elasticity of demand, substitution, marginal utility, etc., can also be transposed to say, predator prey relationships. The Kaibab Deer is a classic example: http://www.biologycorner.com/worksheets/kaibab.html

You can get can get some nice clean graphs, but they don't come close to accurately describing the dynamics within the larger ecosystem which in turn, leads to deleterious management practices and policies (even when well intentioned).

http://depts.alverno.edu/nsmt/youngcc/research/kaibab/story1.html

It was prompted by the post labeling fossil fuels as capital. Although I understand the point that was trying to be made, the evident confusion behind it isn't easily addressed.

I said we mostly agree. There is, as I said, a need for basic concepts. And since the predominant topic here is the human use of energy, I don't see where the gaining a fundamental understanding of the way raw materials are extracted, processed, used, and returned to the environment goes wrong. The concepts and tools themselves are values free and can be applied with whatever value set you wish to employ. I don't have to accept Kaldor-Hicks to accept that under a given set of circumstances a preferred disappearing finite resource will give way to a substitute.

So, perhaps because I'm not an economist myself, I don't at all see environmental, micro, or natural resource economics as lacking usefulness in "reshaping irrational economic concepts to fit the natural world and its limitations." To me, that is a pretty powerful statement of values and beliefs on your part. When you are dealing with social and cultural systems, there are, to my way of thinking, few truly irrational large-scale modes of behavior. We may not recognize the rationality, but I believe that is more because of limits to understanding than the absence of some level of reasoning.

What I like about economics is the descriptive ability it endows us with. What I dislike about it is that it is too easily woven into a not so apparent set of values.

What I find bizarre, is some people think the EROI economic energy balance is the same thing as a physics/thermodynamic energy balance. Some people just can’t or won’t understand that fossil fuels have, in the real world, a negative energy balance.

When we use fossil fuels we are spending down our capital and changing the climate.

trying to force people to change the definition of EROI (a fight you will not win) why not simply couch the argument in terms of natural capital? If you had done that when we first started going around about this, you'd have gotten no disagreement from me at all.

It's obvious to most people that fossil fuels are natural capital -- they are a stock, while solar-derived energy is a flow (at least on human time scales). This is utterly non-controversial -- the two are as different as an inheritance and an interest payment. But trying to get people to change the definition of EROI to reflect that fact is a losing battle. Even people like me who understand that fossil fuel is a stock of capital will cling to the EROI definition as a means of differentiating the quality of various forms of that capital. It's a useful concept, so unless you can champion something equally useful to replace it, your objections will fall on deaf ears.

Perhaps what you need to do is clarify your distinction between stocks and flows, capital and interest, and ignore EROI discussions altogether.

I want people to understand what it means. That's why I posted this article.

The GREET model show us the real truth. Gasoline is a net looser at .8 While the poorest performing ethanol feed stock will return 1.3. With EROI and GREET you see the real picture. The EROI of sugarcane ethanol is 8 and gasoline is currently at 5 and going down. The GREET model for sugarcane ethanol is about 8 and gasoline is .8

Apparently, there are some people out there who don't want others to see the truth. They purposely confuse a thermodynamic energy balance with an economic energy balance.

The EROI of fossil fuels and the EROI of renewable fuels are, at their cores, completely different.

Anybody that claims they are the same is delusional.

This is not the i-r-squared blog. No one is going to delete posts and fabricate debates here.

I've little experience with the differentiation that you are trying to show me, but what I've heard elsewhere and from you leads me to thing that this is a distinction without a difference for non-economists. You take the same tools and apply them with fundamentally different goals. My conclusion to date has been that this doesn't change the tools, although it certainly will affect the goals.

For example, if I'm a cultural anthropologist using the tools of economics, am I doing work that is neoclassical or ecological?

Is that a debate that is even relevant to me?

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It takes substantial inputs of fossil fuels to produce them. Calling them "renewable" is a misuse of the English language. They are not renewable in any sense of the word. Your statement that "renewables will supply the same EROI as long as the sun is shinning." is false, and would still be false if you knew how to spell. Agro-fuels are not renewable; they are just another way of making fuel from oil, and they will crash when the oil crashes.

Sugarcane ethanol is about 8:1 and wood chips are about 24:1 and none of them are going down.

However, gasoline has gone from 100:1 to about 5:1. Why, because oil has been nothing but a hundred year pyramid scam.

when they look at their grocery bills. You should really be ashamed of yourself for pimping a scheme like this...

And you?