Repost: “The Decline of Available Energy to Society”

Posted: January 4, 2011 in Energy Resources, Finance, Economics, Money
Tags: , , , ,

Gregor MacDonald, once again does a great job illuminating the centrality of energy in the global economic situation.   In this post, he focuses on a chart snagged from The Oil Drum’s 2010 Chart of the Year post.  The chart provides a clear perspective on the total energy expenditures of the US.  Because data on the energy costs of energy extraction are slim-to-none, it’s easier to estimate this cost using inflation-adjusted dollars.  Having done this, it is clear to see that energy costs during the 2000-2008 period were much higher than those in the decade preceding it.  Even with rising energy prices, total energy supply (in Quads) wasn’t able to increase – a clear indication of an energy limit of some kind.


The Decline of Available Energy to Society

Over the New Year’s Day weekend The Oil Drum put out a call to its community of analysts for chart submissions. What’s been created there over the past 72 hours is a kind of museum of data covering population, energy, growth, and the economy. Do check out the post, Chart of the Year, which is still expanding. Amongst all the various entries, I found this following nugget from a paper by Alan Dechert:

Quantification of the decline of available energy, which results from the increased cost of energy extraction, is difficult. Instead of trying to quantify EROEI (energy return on energy invested) Dechert uses the proxy of inflation-adjusted dollars to obtain his result. I think the answer is valuable, and his graphic here is a more complete look at energy expenditures in the US than my own chart from late last year. What I like about the Dechert chart is that he tracks BTU consumption and shows that this levels off as the cost of that consumption soars. This may appear obvious, but the decline of energy available to society–the energy available after one has spent energy to obtain it–has a forceful and direct impact on the economy. What’s anomalous is that in our age of trailing fossil fuel wealth, we simply don’t recognize the transition. In Dechert’s chart, however, you can very clearly see that we have crossed a threshold.


Graphic: Safe Energy Association: from What’s It Going to Be Like on the Downside of the Curve?, page 21, Dechert.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s