July 24, 2014

Growing a Greener GOP From the Ground Up

Debt and Fossil Fuels

For the economists and policy wonks out there, a challenging point of view from Business Insider.

“We are now at the edge of a very different scenario. We are reaching debt default limits because we have extracted the easy to extract oil. Additional extraction can only be more expensive and thus push us further into Stage 3 of the production function, or more toward financial collapse. As the economy naturally shrinks, there is no longer a way that more debt can re-inflate the system. Instead, the use of debt must reach a new, much lower equilibrium. Because of debt’s tie to banks, pension funds, insurance companies, and the rest of the financial system, this is a huge problem.”

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Comments

  1. Jeff Green says:

    EROEI = energy returned on energy invested

    100 years ago we used get an EROEI of 100 to 1 on oil. About one barrel of oil of energy would get 100 barrels out of the ground. Not bad. Today the world average is about 20 to 1. Tar sands depending on the method used could be 5 to 1 with shovel and truck mining method. If it is SAGD steam assisted gravity drainage, it is reduced down to aprox 1 to 1 or 1.6 to 1. SO far the reason it can work is that the energy used to generate the steam is with natural gas which is cheap. If it were the tar sand bitumen itself, it is barely above break even.

    One the reasons I bring this up is that our incomes have been dependent on cheap energy. As energy gets more expensive, it takes a bigger bite out of our incomes. This is where debt payback becomes more difficult for the lower income people. As the price of energy increases due to energy returns, the rest of the products that require energy to made also increase unless we work at energy efficiency to offset this change.

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