When it comes to stock or retirement accounts, most of us are familiar with ‘return on investment.’ It’s a measure that expresses the rate of return per dollar invested, and helps us decide which investments are performing well.
There is a similar measure that helps us evaluate energy. Energy Return on Investment accounts for the amount of energy expended to obtain a usable energy resource. For petroleum, this could be expressed as barrels of oil used to deliver a new barrel of oil to market.
Energy Return on Investment has declined enormously since the early 1900s, when shallow wells in East Texas sent gushers of oil to the surface. By some accounts, in those days the Energy Return on Investment was more than 100:1. Now, for the typical oil well, it’s about 10:1.
With the exception of coal, which has a 50:1 return, the days of big energy payoffs are over. Some widely touted sources of new and renewable energy—biofuels and tar sands—actually have a negative return. They remain in the market place only because we value the form of energy—liquid—over its net energy content.
All this means that the inexpensive liquid energy that built modern western society is in short supply. We will have petroleum, but we are entering an era when energy will get very expensive. And no president, oil company executive, or a commodity trader on Wall Street will have been responsible.
Most folks don’t like change, particularly big change, but that’s what’s in stock for how we use energy in daily society.
Photo, taken on August 2, 2007, courtesy of Tsuda via Flickr.