The Energy Secret

By Julian Darley
December 1, 2008 | Comments: 27

A Deeper Question

Few people on the planet cannot now feel the vibrations. At first they were superficial. Now they're subterranean. Even as China, Silicon Valley, and oil producers considered themselves immune, now they feel the seismic movements of a vast economy grinding into recession -- and taking the rest of the world with it.

Whether we are in economic recession is no longer the issue. Will the situation become a depression? Where is the epicenter? How deep is our mess? What are the causes, and when will our remedies work? Are we missing critical information? Is this an isolated earthquake or a tectonic shift which may subduct or replace entire continents?

If the answer to the critical questions is anywhere close to yes, then we are failing to understand the deepest causes of our crisis, and it is not only possible, but highly likely, that even if the proposed financial remedies do start to work, any beneficial effects will be short-lived and in the longer run will make matters worse.

We are beginning to understand that already we have multiple problems coming to a head at the same time, so that our paths of action must take account of and not worsen climate change, a host of environmental problems, droughts and food shortages, not to mention a broad array of social problems.

Surely we are looking hard for economic and financial causes of the crisis and trying for pecuniary remedies that will reach and quell the epicenter. First a little consumer stimulus was applied, then some bigger bank bailouts, then a $700 billion injection for Wall Street, of which everyone would like a cut. Bloomberg News now suggests the rescue package may cost 7.7 trillion dollars, yet so far nothing seems to be working.

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Is the epicenter really 700 billion or 7 trillion dollars or euros or rubles? Is this perhaps some other kind of problem masquerading as a financial disaster? I believe yes -- this is really an energy crisis.

The Energy Secret

It is generally accepted that money makes the world go around, that our economic systems depend on the flow of money. Superficially this seems undeniable, but underneath, energy moves everything. Energy makes the planet and everything on it live. Energy is the real flow of the economy; money is merely a clever way of controlling that energy.

This is the Energy Secret. It is blindingly obvious, but somehow our economic systems ignore our total dependence on energy and its flow, treating energy as just another commodity and hoping that the market will solve any shortage. However, the market is a blind watchmaker, and now we need to see clearly. As long as we don't understand that energy is the real cause of life -- the nearest thing to an 'unmoved mover' -- and that energy is the real cause of economic activity or lack of it, we'll keep misunderstanding the plight we are now in. We'll do the wrong things and apply the wrong remedies, wasting precious time and resources and risking rising social unrest and planetary breakdown.

Because of the complex systems we have built, the energy secret has many aspects that need deep and careful analysis. The problems exposed will in turn need careful strategic and infrastructural change -- most of our transport, food, and communications systems depend entirely on fossil fuels, oil in particular. In total this transformation will take many minds many years to achieve, starting with the most immediately pressing part of the energy secret, namely the need to publicize and understand the implications of peak oil.

Peak Oil

Peak oil is a term used to describe what happens when the rate of oil production depletion overtakes the rate of new production, first leading to a peak and bumpy plateau of oil supply followed by an undulating terminal decline.

Increasing evidence suggests that we may well have just entered that terminal decline phase. Declining oil supplies will change how everything in modern industrial life is done, and will be compounded by the eventual decline of the other fossil fuels.

It has taken decades for climate change to be accepted by world leaders and still we are arguing about what to do about it, with most proposals being hopelessly pusillanimous and procrastinating. But at least the climate secret is out and we are talking about it in public places. Peak oil is still not generally known, discussed, or understood in any high level policy arena. The mainstream media remains steadfastly silent about it. This is all part of the energy secret which includes and perhaps stems from a poor understanding of science and how things really work.

One of the earliest and most important fruits of understanding the energy secret could be policy changes and technological and social developments that could address both climate change and the decline of oil, to the great betterment of a sustainable economy, society, and planet.

I will in the coming weeks explore the many seams of the energy secret in depth, but ultimately the aim is to expose the real importance of energy and bring a much deeper understanding into the discussion of our economic plight so that we turn this unfortunate time into an extraordinary opportunity to rebuild systems that will be truly sustainable. It is clear that, though we shall have to abandon some obsolete technologies and practices, we must vigorously help and incubate the green and clean technologies even as we rethink some key aspects of society, culture and economics.

Ultimately seismic activity helps keep the earth alive by bringing new land to the surface, but another of the energy secrets is to know which plate is rising and which is falling so that we choose the right path.

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I totally agree about the connection between economy and energy, but doesn't it seem like in addition to finding cleaner paths we also need to look at learning to get over our energy addiction? We are the only species that really leaches energy from the environment. Plants have been evolving way longer than we have, and they put energy into the earth--more than they take. Maybe they're onto something.

At this point, it feels a little like asking people to seriously cut back their energy use would be like asking them to abstain from sex, but I think it's really where we need to be looking.

An excellent point and one that can't be emphasized enough, yet is rarely mentioned. I've been banging on about it for years, including just last week as I discussed how a lack of investment due to the current credit crisis is setting us up for an "air pocket" in energy supply somewhere around 2010: Why Oil Prices Are Bad.

Only when oil prices blew past $120 this year did the science on peak oil (as opposed to mistaken and conspiracist characterizations) and those who study it get any real air time. Now, with oil prices dragging well below the trendline, our looming supply problem is no longer in focus at all, even as it quietly becomes more urgent. Nothing to see here, people, move along...

The past will be no help to us as a guide to the future, but we are all acting as though it's gospel. New and unforseen events like peak oil are never "priced in."

In a recent interview with PBS, Nassim Taleb (author of The Black Swan) noted that it only took a very small excess of demand over supply in oil and agricultural commodities to send prices skyrocketing this year, yet few seem to understand the how these relationships work.

He put it simply: "We live in a world that is way too complicated for our traditional economic structure. It's not as resilient as it used to be; we don't have slack; it's over-optimized."

Few seem to understand the deeply interwoven relationship between oil prices, oil supply, the value of the US dollar, and the health of the banking system and the broader markets. What we do in energy has indirect but enormously important impacts on the financial markets, and vice versa. Monetary policy has a huge but delayed effect on energy prices. Eventually, I think it is inevitable that the massive creation of money in response to the current credit crisis will result in oil prices spiking again. Producers will once again be in the money at the same time that no amount of money will be able to increase the global production rate due to simple depletion.

By focusing on the financial markets without seeing their connection to everything else, we truly miss the point, and respond in ways that don't ultimately cure our problems at all.

Peak oil is FUD. There's loads out there albeit requiring a slightly higher price of production. The money market drives "peak oil" not the other way around.

bob - If you have been following the oil markets at all, you would know that your statement is false. Oil prices went to unprecedented heights this year, but drilling and development did not keep pace, in part because of the Law of Receding Horizons--project costs escalated right along with oil prices. Now, new unconventional oil development has all but dried up, just six months after price signals should have ensured increased supply (and haven't). When the global deleveraging is finally over, oil prices will return to their lofty heights, but supply will not recover because the EROI is too low, the costs are too high, the risk to capital is too great, and the oil quality is too low. Read my comment again. Market ideology that blindly believes that higher prices will always bring more supply is exactly what got us into the fix we're in now.

Um, Bob, your answer is about as logical as saying my credit card creates oil, because I pay my credit card bill and I can use it to fill up my car with gas.

Getting oil takes a lot of energy. Oil used to be easy to get, and we gained 100 barrels of oil for every barrel of oil in energy we spent to drill for it. Now we're about 10 to one. Soon we'll be at 3 to 1.

That's like having to drive 100 miles round trip to fill up your gas tank. Much of the remaining oil (deep off shore, oil shale, oil sands) takes more energy than it produces, meaning it's like you driving 300 miles to fill up your gas just doesn't work.

The U.S. has never produced more oil than we did in 1970 ...and it wasn't because of a lack of money, technology or access. The term "Peak Oil" simply helps describe why that was the case for the U.S., why it is already the case for about 60% of the oil producing countries in the world, and why that trend will continue.

The "peak oil is bunk" theory was promoted by the same people who brought you "deficits don't matter" and "investment banks shouldn't have leverage limits" and "credit default swaps". Thanks, but I'll stick with science.

Energy is a big issue, to be sure, but that is not the cause of this crisis.

The core of it all is fiat currency. Since people go into horribly confusing discourses on this subject, I'll keep it simple. (But still accurate.)

1. When money can be make on a whim, the people who are authorized to do so have massive power and easy money.

2. Since 1971, US politicians and their agents (the Fed) have been creating the world's money based upon nothing at all. They've thrown a hell of a party for themselves.

3. Once the Wall Street guys understood it all, they started creating "instruments" that functioned the same as money - at least within stock markets, etc. Again, a party for the ages.

4. The game reached its limit and it's time to settle-up. All that free Wall Street money has dropped in value, and the Fed is trying like hell to replace it with dollars from their printing press. It isn't working very well.

That's it. Sure, there are a thousand complications and side-issues, but you simply cannot allow politicians to create money out of thin air, and expect it to turn out well. This is the conclusion to that cycle.

Every time people try fiat currencies, this happens. Every time. The only differences are in form, not in substance.

If you want to be part of the solution, go to


I agree with PJR. I'm glad someone finally brought some sens to this conversation!

@Craig, please be very clear: are you saying that it takes more energy to produce oil from shale oil than it produces? The well-annotated Wikipedia article ( ) says no such thing.

You gave 100:1, 10:1, and 3:1 ratios. If we had a working "in situ" extraction technique, which ratio would that have?


I think it is only a matter of time; between 20-40 years from now, when kids will turn to their parents and say, "did they really burn fossil fuels and pollute the earth and warm the planet when you were young? Why didn't they use sustainable methods--hadn't they been invented yet?"

They have, of course, but without pricing the externalities of energy, without taking into consideration the true cost to our societies and the environment of burning fossil fuels, the cost differential and lack of national will to scale to alternative fuels continues to hold us back. I hear Gore says the US should be 100% renewable energy in ten years. Sounds like the best national security program I can think of. I hope Obama has the power, and will, to make this happen.

Exactly when this shift to renewables comes I can't say; I do think it will happen, along wth enormous conservation and efficiencies, prior to the oil running out. Whether it will happen prior to a global warming disaster is more of a distressing question in my mind.

Thanks for the new, thoughtful and very timely blog. I look forward to reading more soon.

PJR is right on point 3.
A pyramid scheme has been running since then. Along with massive accounting fraud - FRB. A lot of companies have been saying they are making profits based on other companies profits...
They stopped investing in wealth creation a long time ago - pyramid schemes always look better than reality - and have been plundering companies that could have created wealth.
Ever wondered why we're so much better off these days and yet both partners have to work longer hours to keep a family treading water?
Dont expect any return to the imaginary position we were in a few months ago. We were never there.
We are not moving into a recession - we've been in one for years but someone got their sums wrong and we're still making it worse!
Energy? Barely comes into it! It'll be two or three years before we know how far we are going to fall.

@Floating Bones

Excellent that you're looking at the data on shale. Note in the section on Shale economics:

"A 1984 study estimated the EROEI of the various known oil shale deposits as varying between 0.7–13.3;[65] some newer companies and processes assert an EROI between 3 and 10. Royal Dutch Shell has reported an EROEI of three to four on its in situ development, the Mahogany Research Project."

0.7 is .7 of a unit of energy out for every unit in. Shell is quoting 3-4 units out per unit in for their Colorado project. Fine...but does that include refining and transportation? Our society was built on 100:1 energy returns, not 3:1. Also note that the article mentions coal to liquids (CTL) is more energy efficient than up on CTL for the energy and environmental costs on that.

Also note that Shell is buying up all the water rights in Colorado, because it takes a tremendous amount of water to heat the shale for 3 years while encasing the outside in ice. Which do you want, water for Colorado or oil? I bet Shell will make more money from their water rights than from shale production.

The big problem for all of the alternatives such as ethanol, shale, tar sands, coal to liquids, etc, is SCALE. All the ethanol facilities ever built are less than the size of one oil refinery.

It's hard to comprehend the scale of oil we use...But it's worth it. When doing it, focus on FLOW much can be produced per day, and see what kind of infrastructure is required to make any kind of impact on the 20 million barrels per day the U.S. uses (and how long it would take to build). Then look at the decline rates of existing fields from the IEA. Then look at Net Exports of oil from Saudi Arabia, Russia, and Mexico (and the UK and Indonesia for what it looks like when a country goes from being an oil exporter to an oil importer).

You are a man of science, and you are looking for data. Very good. The numbers tell their story. Read, wikipedia for Peak Oil, read the new IEA report. For those who will be satisfied with Faith and Hope, that the magic oil genie will keep giving us all cheap, easy oil (and a perpetually rising stock market), I can only offer a quote:

"You can ignore reality, but you can't ignore the consequences of ignoring reality." -- Ayn Rand

There are things we can do to make a difference, but first we have to correctly diagnose the problem. Don't you agree, Doctor?

There's loads out there albeit requiring a slightly higher price of production. The money market drives "peak oil" not the other way around.

@Craig: Please compare the water required for creating a gallon of gasoline from shale oil vs. a gallon of ethanol from corn. It's my understanding that ethanol manufacture consumes vastly more water than the "in situ" oil shale processing. Agreed?

AFAICT, the water argument is rather specious: I've never heard any objections to the water usage for creating ethanol, but protests abound for using far less water for oil shale extraction.

BTW: what do your numbers tell you about the yield efficiency for using corn to make ethanol in general? Does it really make any sense at all to grow corn to fuel our machines?

It certainly does take time to ramp up any technology. But we can't even start the clock unless congress allows it to proceed. Right now, Senator Ken Salazar is stopping that initiative.

I'm for exploring/expanding all available options. The oil companies are willing to fund development projects today -- if the government will get out of the way.

If you think something is going to come down the pike with higher energy yields and negligible side effects, that's fine. If it is more cost-effective than things like oil shale processing, then the oil companies will shut their projects down.

Thank you to everyone who has commented here so far - I really appreciate the civility and tone of the discussion here.

One of the several interesting issues that has arisen in this comment stream is the matter of the EROEI of shale oil. Seeing this, I asked three colleagues who have all been working professionally on energy matters for over forty years for some email comments on shale oil, with particular reference to the Wikipedia entry ( I have posted below each comment separately, with attributions.

These energy depletion matters are very complex with high stakes. They are matters wherein science, technology, society, culture, government, environment and economics intersect and interplay in often unpredictable ways.

Part of my motivation for developing the larger issue of what I have called The Energy Secret is to help in the process of energy literacy. I believe the shale oil comments will be of interest to anyone seeking to understand why the existence of a large resource of hydrocarbon molecules in the ground does not mean one can necessarily produce a viable flow of oil (or natural gas).

Remarks via email to author from Chris Skrebowski, Director Peak Oil Consulting Limited (UK)

As far as I can see the Wikipedia entry is accurate but it steadfastly manages to ignore the Elephant in the corner or the 800-pound gorilla or whatever you like to call it.

This is the simple fact that shale on heating swells, increasing in volume and becoming an ever better insulator (rather like loft insulation).

This simple fact has been the death knell of all in-situ projects at greater than laboratory bench scale.
However, if you dig up the shale and crush it you expend prodigious amounts of energy and have a huge ash/residue disposal problem. Scottish shales were very rich so everything added up. Estonian shales were rich but not as good as the Scottish.
The Estonians were burning the shale directly in power station boilers producing huge quantities of ash. As the process wasn't very efficient they abandoned it along with communism and as far as I know haven't restarted mining or use.
Both the Jordanians and the Australians looked closely at shale oil and came to the conclusion it didn't work. The Australian's took a shale oil project all the way before abandoning it as uneconomic.
The Chinese also looked but as far as I know are not progressing it.
The US is interesting. The sheer volume of oil shales appears a challenge and an insult to them and hundreds of millions of dollars have been expended re-establishing 'the simple fact'. Now maybe hope springs eternal, maybe physics teaching is poor, maybe American exceptionalism will triumph where others have failed. Maybe.
For me shale oil is an interesting geological curiousity but I will take some convincing that it is an energy resource.

I know Charlie Hall would berate me for such a simplification but a satisfactory EROI leads to a profitable project. Every time we have a go at unsatisfactory EROIs we find, after a little time and much denial, that the resource is uneconomic. Think bioethanol from corn/wheat/potatoes. Biodiesel from non tropical oilseeds. And most of all Canadian tar sands. In the short run you can beat the EROI problem by subsidy, ignoring certain costs or just heroic optimism. However, economics is a dismal science. It soon catches up with you and if the EROI isn't well over 5 then it's uneconomic.

Remarks via email to author from Jean Laherrere, geologist-geophysicist, formerly with Total

(Jean wrote a major review of oil shale here:
-Laherrère J.H. 2005

3 Dec 2008:
- It is what is claimed by Shell in their in-situ experiment but only for pyrolysis of 3 or 4 years after recovering about 1500 barrels for the total, but without taking into account the frozen wall not yet measured and Shell says that they will decide not before 2012 if they start a commercial pilot. It is obvious that they do not know
- An oil shale EROI of 3 should be better than tarsands if you take Charlie Hall estimate for tarsands for mining and retorting
- Nobody has given EROI and the only present plant in Brazil and China are not growing despite the increase of price

Peak oil review 081020
Shell has failed to find viable oil shale reserves in Jilin province in northeastern China after three years of exploration and may be withdrawing from the project. (10/16, #10)

The Salt Lake Tribune Article Last Updated: 09/06/2008 07:01:37 AM MDT
"The BLM itself has said that we are still years away from even knowing whether oil-shale development will be possible on a commercial scale," Salazar said in a statement. "They also report that they have no idea how much power would be required or what effect commercial oil-shale development would have on Western water supplies."
Shell Oil Company is experimenting with technology that heats the ground to 700 degrees for several years so that oil shale can be extracted similar to conventional drilling. Whether that process works, company officials say, won't be known for years
denver & the west
Shell shelves oil-shale application to refine its research
By Nancy Lofholm Denver Post Staff Writer
Article Last Updated: 06/16/2007 10:28:57 AM MDT
Shell spokeswoman Jill Davis said the withdrawal of a permit on one of its three oil-shale research and demonstration leases was done for economic reasons: Costs for building an underground wall of frozen water to contain melted shale have "significantly escalated."
"We are being more cautious and more prudent," Davis said. "Because of the nature of research you have challenges. With that in mind, it is taking a little longer to build a freeze wall than we planned."
Davis stressed that the withdrawal of the mining permit does not lessen Shell's commitment to continuing research at its Mahogany Research Project between Rangely and Meeker and eventually building demonstration projects on its federal leases.
"There is a very active program up there, and that will continue," Davis said.
The delaying of the freeze-wall test means a plan to hire 600 new workers and build temporary housing for them will be on hold. The more than 40 Shell workers and 150 contractors working on the Mahogany project will not be affected.
Shell has been researching heating methods on its property in the Piceance Basin for several years and is now in the process of freezing a test wall. Research on that wall will continue.
Davis said the freeze-wall test should be completed by 2009 or 2010.

World oil August 2008 = good review of present projects
Shale oil pilot projects proliferate

In situ technology offers hope for better economic and environmental performance. High oil prices and government programs help.

Perry A. Fischer , Editor

On its private property, Shell is currently conducting the Freeze Wall Test, an environmental study to mature the technology designed to keep groundwater out of subsurface production areas using a frozen, underground barrier, Fig. 10. On only a 30 × 40-ft testing area, Shell successfully recovered 1,700 bbl of high-quality light oil plus associated gas from a short interval of shallow oil shale layers, with less-than-optimal kerogen content, thus determining their technological design works.

Any future Shell commercial development in Colorado will depend on the economic viability and environmental sustainability of its ICP. Shell hopes to make a decision on a commercial project in the next decade.

In Club de Nice Novembre 2008 Russian academician E. Volkov claimed that they have a cheap way to produce oil shale and that Jordan is interested but I could not get more details. Russians are looking after funds, they are broke!

To conclude: there is not any good study of EROE on oil production in conventional fields and it is obvious that it is impossible to get an EROI on oil shale from present projects because none is working and shale oil plants are just keeping production on old plants without any growth in Brazil and China. Estonia is just burning oil shale and has agreed to stop soon production when coming into EU because of pollution.

Remarks via email to author from an energy researcher with over thirty years experience)

I've done a few sums on the heat required to cook the rock, and I think that 3 or 4 to 1 should be feasible at least with the better shale. (Say for yields of 30 US gal/short ton and up). That's for the stuff you can dig up and process. I would say forget about the in-situ for the reason Chris mentioned and the fact that they seem to be proposing mostly electricity-based methods down there these days - there's no future in that.

The Wikipedia article looks OK. This seems about right:

"A critical measure of the viability of oil shale as an energy source lies in the ratio of the energy produced by the shale to the energy used in its mining and processing, a ratio known as "Energy Returned on Energy Invested" (EROEI). A 1984 study estimated the EROEI of the various known oil shale deposits as varying between 0.7–13.3; some newer companies and processes assert an EROI between 3 and 10. Royal Dutch Shell has reported an EROEI of three to four on its in situ development, the Mahogany Research Project. The water needed in the extraction process offers an additional economic consideration: this may pose a problem in areas with water scarcity."

I remember that the Parachute Creek plant had all sorts of operational problems, but that's the sort of thing that gets fixed with experience.

Not sure this "everything comes down to one cause" approach does the situation justice. There seem to me to be several crises at the moment. The energy one is, indeed, the top of the list. Ranked by "how long will the crisis last?" I see:

Financial crisis: 2-10 years (business adjustments)

Medical care/cost crises: 20-100 years (a generation or two; population adjustments)

Global warming: 10-20 thousand years (based, e.g., on ice-age cycles)

Peak Oil: For. Ever.

Why is it that thinking people can CLEARLY see that biological creationism is nonsense, and yet every leftist is a market creationist? My conclusion: leftists don't think. They feel. And they feel like markets don't produce prosperity unless somebody is controlling them.

It's seeming like the connections between humans and "Global Warming" were never really there. So it all comes down to mostly economics, right?

We have been given this incredible gift of energy (oil) which has allowed us to achieve technological heights undreamed of in previous ages. Now that we have that technological base, let's apply it to sustainable sources of energy that are not going to fall off the cliff. I agree that the most challenging problem facing us in the future is sustainable energy.

Abundant energy provides security against practically everything else. Weather changes occur regardless of our (humans) effect on the world, but we currently would not be able to withstand even a small global weather change such as the Gulf stream no longer warming Europe, many more megajoules would be required for heating, growing seasons would be shorter requiring more land or more food would need to be imported. Material resources are abundant given at times profligate use of energy.

Our overall energy requirements are going to be higher with sustainable sources due to the need to build massive batteries (dammed water, pneumatic storage) to store intermittent power sources (wave, wind, solar). We still need a portable energy source for transportation to replace oil. This will probably require using more energy to produce portable stored energy (hydrogen/propane/methane/ethanol/???). All in all, we'll have to increase our energy producing capacity to manage this shift from oil.

I am personally thankful for oil which has allowed us to live in a golden age of prosperity and technology. I see using the last of the oil to shift us to sustainable energy as the grand challenge of our age, and if we do not, it will lead to wars and economic crises not seen since at least the Dark Ages. We'll be back to an agrarian age after a significant culling of our global population. I am more afraid for my children's future due to this energy crises than ANYTHING else.

Russell Nelson on December 4, 2008 5:46 PM, you said "...they feel like markets don't produce prosperity unless somebody is controlling them."

Your missing something VERY BIG: leftists (or Modern Liberals as I like to call them) don't like prosperity or success. They want everything "equal". Their definition of success is different than normal people.

Normal people measure success when things are "better"; Modern Liberals measure success when things are "equal." There is a huge difference.

This is why after 40 years of utterly controlling the inner cities, about the only thing you can say is people are roughly "equal" - equally poor, miserable, etc. So the Modern Liberals, who have taken over the Democratic Party, are very content with what they have done. They only help in terms of applying "salves" to the side effects (hopelessness, despair and crime) of their drive to make everything "equal". Otherwise, they are quite content to ignore the hopelessness, despair and death.

Think about it: the inner cities have been messes since the Democrats/Modern Liberals started their "programs" in the 60's and the Modern Liberals ignore the problems!!!!!

As for prosperity, think about how Modern Liberals talk about the poor. They never talk about making the poor more rich. No, it's always that they work to make the rich more poor and then say the poor are victims of the rich.

The key thing is Modern Liberals have a different (and terribly destructive) belief system. They don't like prosperity. They don't like success. They dislike the American Dream, etc. Too bad so many people voted this whole mindset into office!

The best explanation I have seen for Modern Liberals is a video by a guy named Evan Sayet, who used to write for Bill Maher. It's aptly called "How Modern Liberals Think" and it explains this whole mindset that leads them down their strange path. It's very, very good. Make sure you see the Q&A at the end too.

As I said, it's very, very good.

What I can't reconcile from the statements of the oil shale experts: why is it that the oil companies are still willing to invest in this technology?

If the technology is bankrupt, why is our Colorado Senator working to block further development? Why not just let "big oil" fall flat on its face?

In the US, it's clear we're in a state of Politically-Mandated Peak Oil. I'm skeptical whether we're actually in a state of Peak Oil.

@Craig: I'm still trying to reconcile the arguments about water usage for Oil Shale with water usage for corn-based ethanol. From all I've heard, Corn-based ethanol takes a much larger amount of water. Agreed?

Ignoring its massive water usage, is there agreement here that corn-based ethanol industry would not exist without its subsidies? Are we actually getting more energy out of this whole system than we're putting into it?

1) Peak Oil: even if I hadn't:

- spent a lot of time helping supercomputers (probably $500M worth in the 1990s) to petroleum companies worldwide, and talking to their geophysicists

- been reading TheOilDrum, or books by Strahan, Deffeyes, Simmons, etc,

I also have two smart friends who have *zero* doubts about the nearness of Peak Oil. One used to be Chairman of Shell Oil, and the other was Vice-Chairman of Chevron.

If someone wants to be skeptical of Peak Oil, please explain why you know more than all these guys.

2) Water: ethanol vs oil shale & tar sands
[This is not to praise corn ethanol... but water sources, output conditions, and sinks *matter*, not just how much water is "used".]

Corn ethanol, at least in Iowa, for example, comes from rainfed corn, and the resulting water ends up in the normal river systems, albeit with more nitrogen, pesticide than one might like. Of course, Ogallala-fed corn is worse.

The output water from Athabasca tar sands ends up in giant "tailings ponds". Via GoogleEarth, you can *see* what they look like: search for:
muskeg river mine alberta canada
which is located near a river ...but the water goes instead into separate tailings ponds... I wonder why? :-)

US tar sands are located in Colorado, Utah and Wyoming, generally around the Green River, which feeds into the Colorado.

This is not exactly a high-rainfall area, and of course, downstream, the Colorado River is already over-subscribed, and if you're unfamiliar with the US West, Google: water wars us west.

The chances that there will be massive mining of shale oil, consuming Green River water, seriously polluting it, and then putting the result back into the Colorado ... seem rather low.

3) ERO(E)I: finally, Charlie Hall guesses that for industrial civilization, you need EROI at 5 or more, because it isn't just energy cost.

People generally accept lower EROI's (even lower than 1) in special cases, like:

- For Athabasca, some of the energy used comes from "stranded" natural gas, which can be used to free oil, for which there is pipeline capacity.

[Note: if you read the fine print, Sarah Palin's gas pipeline would supposedly go from Alaska to Athabasca, but Athabasca to lower-48 would be "in a future release".]

- Sometimes one accepts very low EROI to create liquid fuel, as in German use of coal-to-liquid processes during WW II, since tanks and planes don't run well on coal.


Corn ethanol, at least in Iowa, for example, comes from rainfed corn, and the resulting water ends up in the normal river systems, albeit with more nitrogen, pesticide than one might like. Of course, Ogallala-fed corn is worse.

I've never studied such things as an adult, but that doesn't gibe with my recollection from HS science classes about how crops used water. My understanding is that plants absorb water through their roots, pull it up into the green parts of the plant, and use the water to make simple sugars with photosynthesis. Water not consumed with photosynthesis would exit the plant as water vapor, not as liquid runoff. Right?

The only water that actually "results" itself back in the normal river systems was never used by the plants in the first place. A well-managed farm would have a negligible amount of its irrigation water go to runoff.

@John, I don't see anyone claiming to know more than the oil executives. What I don't understand is that the oil companies are interested in ramping up oil shale operations in the US, and federal legislative actions are blocking those efforts. That's why I am skeptical.

What exactly is the EROI of ethanol created from corn? If we're basing our fuel decisions on the EROIs, should we stop making fuel this way?

I like to read more about the real cause of financial crisis, not just those fake causes that you can find in media.

what's your opinion about this?

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