In the 1930s when wildcatters in Texas were striking oil almost as quickly as they could drill, the energy cost of getting 100 barrels of oil out of the ground was just one barrel. The net energy from this oil, that is, the energy available to the non-energy sectors of society, was very high. Today, oil companies have exhausted the easy-to-get oil and are obliged to drill in such places as the Arctic and in ocean waters that are a mile or two deep before drilling another one to three miles under the seabed.
Despite the enormous technological advances which have occurred in the industry since 1930, offshore and other harsh drilling environments are so demanding that the amount of energy required to extract oil from them has increased. It is believed that the energy equivalent of one barrel of oil now yields only between 11 and 18 barrels of oil. In fact, what is called energy return on investment (EROI), essentially, the amount of energy we get back in the form of oil for every unit of energy we expend, has been dropping consistently for many years.
There are various methods for calculating EROI which is why a range of ratios is often quoted in response to a question about the EROI of any particular energy source. Regardless of method the EROI trend for fossil fuels is down. Obviously, if the EROI for any fuel were to reach 1:1 or fall below it, it would cease to be a fuel. If the EROI is greater than one, then we can say that the fuel or energy system provides net energy to society. In other words, after we subtract the energy needed to extract, transport, refine and deliver that energy to where it’s needed, we have some surplus that can actually be used.
What EROI tells us then is the proportion of the energy embodied in a fuel or energy system available to the non-energy sectors of society. What we’d like to know is the total net energy available to society expressed in some suitable physical units such as quads (quadrillion British Thermal Unit or BTUs). The net energy of any system, say, a hydroelectric dam or a wind generator, is dependent on location; water levels or average wind speeds; the intensity of (energy-consuming) maintenance; and so on. This same principle applies to fossil fuels as illustrated for oil above. This is critical since 86 percent of the world’s energy comes from fossil fuels. There is, however, no average EROI which we can calculate for all sources of one type of energy. Coal delivered to a nearby electric generating plant will have a different EROI than coal which must be transported hundreds or even thousands of miles before being burned. We can make some educated guesses about EROI for a particular type of resource, but the complete data for society as a whole are just not there.
Still, the principle is sound. Society runs on net energy. If net energy is declining for fossil fuels, that implies that even increases in total extraction may not offset the growing amount of energy needed by the energy industry. In other words rising tonnage of coal, barrels of oil or cubic feet of natural gas could be accompanied by decreases in total energy available to the non-energy producing part of the economy. Has this ever happened? Apparently, it has.
Richard Heinberg reports that coal quality (i.e., the amount of heat one can get out of a given amount of coal) has been declining in the United States since 1955. This is in part due to the depletion of high quality coal, mostly anthracite, and the reliance on lower grades of western bituminous and sub-bituminous coal. Thus, net energy from coal in the United States appears to have peaked in 1998 even as tonnage has increased in subsequent years.
We are told that new unconventional reserves of fossil fuels will pave the way to an energy future still dominated by those fuels. Even if we set aside the question of whether it is wise to burn such fuels in a world facing climate change, the fossil fuel optimists are still pretending that net energy doesn’t matter, only gross extraction rates. When confronted with this issue, they often respond that new (yet-to-be invented!) technology will increase the net energy from such unconventional reserves as tar sands, heavy oil, deepwater oil and shale gas. But this flies in the face of the general trend in fossil fuel EROI which has been declining even as advanced technologies for exploration, extraction and refining have been deployed. That would imply that geological constraints are now winning the race with technology.
Even the most sanguine fossil fuel optimists admit that all fossil fuels will eventually peak in their rate of production and then decline. It is worth remembering that the point at which society will start experiencing problems with fossil fuel supplies in not when they are exhausted, but when their rate of production begins to decline. This is true because our financial system and society are addicted to growth, and that growth depends currently on a commensurate growth in fossil fuel supplies.
By extension and using our understanding of net energy, it is possible to see that society will start experiencing problems not when fossil fuel supplies peak, but when the net energy from fossil fuels peaks. That peak logically must come before the peak in gross extractions of fossil fuels because human societies have exploited the easy-to-get fossil fuels first. The more difficult and energy-intensive resources await our exploitation, and that exploitation will become increasingly energy-intensive as we repeat the pattern of extracting the easiest-to-get portion of the difficult-to-get resources first.
So, even if one believes, for example, that the rate of oil production will not peak for another couple of decades, the peak in oil-based energy available to society, that is net energy, will come sooner, perhaps much sooner. There is no definitive way to tell when net energy from fossil fuels will peak or whether it has already peaked. Much more research needs to be done, and soon! But the logic of net energy tells us that we should view the transition away from fossil fuels to alternatives with much greater urgency even if the optimists are right.