If exploring, producing, transporting, refining and again transporting the petroleum was quite difficult, such that it took 125,000 BTUs of energy to get it out of the ground, refined, and to the petrol station, then the energy returned by the gasoline (also 125,000 BTUs) is exactly equal to the energy invested, a ratio of 1:1. If on the other hand someone poked a stick in his front yard and petroleum started squirting out, so you built a little refinery on the spot and sold gasoline out of a drum in the driveway, you might (hypothetically) invest only 1000 BTUs in producing it. You would now have an energy return on the energy invested per gallon of 125:1. People in the energy world have formalized this measure of energy return on energy invested with an acronym, EROEI. So the EROEI of the gasoline made from the oil squirting out of the ground in the front yard is 125:1.
Thus, EROEI turns out to be one of the most important measurements in the history of humanity.
In physics, energy economics and ecological energetics, EROEI (Energy Returned on Energy Invested), ERoEI, or EROI (Energy Return On Investment), is the ratio of the amount of usable energy acquired from a particular energy resource to the amount of energy expended to obtain that energy resource. When the EROEI of a resource is equal to or lower than 1, that energy source becomes an "energy sink", and can no longer be used as a primary source of energy.
The natural or original sources of energy are not usually included in the calculation of energy invested, only the human-applied sources. For example in the case of biofuels, the solar insolation driving photosynthesis is not included. The energy returned includes any usable energy and not wasted heat for example.
This is a simple concept which is rather alien to current policymakers, economists, and even many scientists. Geology and thermodynamics are much more fundamental to the world than economics. Anything which consumes more energy to obtain than it provides is not a practical energy source. In terms of abundance of elements, hydrogen is by far the most common in the universe, but that doesn't mean that hydrogen in Jupiter's atmosphere is an energy resource for humanity. More down to earth, it doesn't matter to human society how much oil is underground, it matters how much can be raised to the surface with a EROEI above one. At the point it takes more than a barrel of oil to raise a barrel of oil to the surface and refine it, EROEI becomes less than one. If oil was the only energy source, then even if the price rises to a billion dollars per barrel, it would not be economical to continue. EROEI is slowly becoming recognized as the ratio which underlies the very possibility of maintaining a civilization or a life form.
High per-capita energy use is considered desirable as it is associated with a high standard of living based on energy-intensive machines. A society will generally exploit the highest available EROEI energy sources first, as these provide the most energy for the least effort and then progressively lower EROEI sources are used as the higher-quality ones are exhausted. For example, when oil was originally discovered, it took on average one barrel of oil to find, extract, and process about 100 barrels of oil. That ratio has declined steadily over the last century to about three barrels gained for one barrel used up in the U.S. (and about ten for one in Saudi Arabia).
Although many qualities of an energy source matter (for example oil is energy-dense and transportable while wind is variable), when the EROEI of the main sources of energy for an economy fall, energy becomes more difficult to obtain and its value rises relative to other resources and goods. Therefore, the EROEI gains importance when comparing energy alternatives. Since expenditure of energy to obtain energy requires productive effort, as the EROEI falls, an increasing proportion of the economy has to be devoted to obtaining the same amount of net energy.
Since the discovery of fire, humans have increasingly used exogenous sources of energy to multiply human muscle-power and improve living standards. Some historians have attributed our improved quality of life since then largely to more easily exploited (i.e. higher EROEI) energy sources, which is related to the concept of energy slaves. Thomas Homer-Dixon demonstrates that a falling EROI in the Later Roman Empire was one of the reasons for the collapse of the empire. In "The Upside of Down" he suggests that EROEI analysis provides a basis for the analysis of the rise and fall of civilisations. Falling EROEI due to depletion of non-renewable resources also poses a difficult challenge for industrial economies.
Measuring the EROEI of a single physical process is unambiguous, but there is no agreed standard on which activities should be included in measuring the EROEI of an economic process. In addition, the form of energy of the input can be completely different from the output. For example, energy in the form of coal could be used in the production of ethanol. This might have an EROEI of less than one, but could still be desirable due to the benefits of liquid fuels.
How deep should the probing in the supply chain of the tools being used to generate energy go? For example, if steel is being used to drill for oil or construct a nuclear power plant, should the energy input of the steel be taken into account, should the energy input into building the factory being used to construct the steel be taken into account and amortized? Should the energy input of the roads which are used to ferry the goods be taken into account? What about the energy used to cook the steel-worker's breakfasts? These are complex questions evading simple answers. A full accounting would require considerations of opportunity costs and comparing total energy expenditures in the presence and absence of this economic activity. EROEI is only one consideration and may not be the most important one in energy policy. Energy independence (reducing international competition for limited natural resources), freedom from pollution (including carbon dioxide and other green house gases), and affordability could be more important, particularly when considering secondary energy sources.
There are two ways to measure the value of any particular fuel. One is its monetary value, which changes almost daily. The second way is to base it on the actual physical energy content of the substance in question. Regular gasoline, for example, contains about 125,000 BTUs of energy per gallon (one BTU is the amount of energy needed to raise one pound of water one degree Fahrenheit). There is no connection between price and energy content. There is also a factor in calculating the energy content of any fuel that is hidden from the eyes, and that is the amount of energy that went into obtaining it. In the case of gasoline that would include prospecting for oil, drilling, pumping, transporting, and refining that oil, and then transporting and storing the resulting fuel.
The EROEI for oil from the 1950s, when it was very easy to find, pump and refine, was as high as 100:1. The tremendous energy return of early oil partly explains why it was possible to rebuild Europe and Japan so quickly after World War II. It also explains why the global population has leapt from about 1.5 billion people when the first oil well was drilled in the United States in 1859, to 6.5 billion today. The high EROEI of petroleum has made it possible to grow enormous amounts of food, transport raw materials and goods all over the world, and create dense urban communities across the globe.
For better and for worse, the EROEI for fuels in the future will not be as high as it has been in the past. The liquid petroleum that we been pumping from the ground now for 150 years (one trillion barrels has been pumped, one trillion barrels remains; we are half-way through the original supply) was a one-time inheritance of concentrated energy; when it is gone it is gone forever. In fact the EROEI for gasoline has already dropped precipitously, from the previously mentioned initial high of 100:1. It fell to 25:1 by 1970, and stands at about 10:1 today. This is because the size of the oil fields is shrinking, the depth at which oil is being found is growing deeper, and the quality of the oil that is being pumped is decreasing. Not only are we at the halfway point in the consumption of the earth’s liquid petroleum reserves, but in addition the second half of the petroleum produced will not return as much energy profit.
The measurement of EROEI is a valuable tool for assessing the potential of other types of fuel to replace our diminishing energy supplies. The table below shows the EROEI value for many of the energy sources and fuels currently used or being considered for the future:
Energy Source-------------EROEI
Bio-diesel---------------------3:1
Coal----------------------------1:1 to 10:1
Ethanol------------------------1.2:1
Natural Gas------------------1:1 to 10:1
Hydropower------------------10:1
Hydrogen----------------------0.5:1
Nuclear------------------------4:1
Oil-------------------------------1:1 to 100:1
Oil Sands----------------------2:1
Solar PV-----------------------1:1 to 10:1
Wind----------------------------3:1 to 20:1
The first thing that must be said about these energy-return ratios is that they are rough estimates. There are many variables involved in producing any energy product. In addition, even the scientific studies done on EROEI for specific energy sources vary widely in their results. But the imprecision notwithstanding, the general ratios are highly informative. For example, the energy return for hydrogen is negative, less than one. Hydrogen is not an energy source; it is an energy sink, a carrier, like a battery. It takes more energy to produce and store free hydrogen than one gets back when it is utilized as a fuel. Also consider bio-diesel and ethanol; their energy profit ratios are very low. In spite of this you will hear everyone touting them as the fuels of the future. It will not be possible to run society as we know it today, which is driven by the very high energy profit ratio of petroleum, on the low EROEI offered by bio-diesel and ethanol. Not that these fuels might not be useful, but they will be useful only to a society that has adapted to living on a lower energy budget.
The fact that the monetary value placed on energy resources bears little or no relationship to the net-energy content of a given resource shows how perverse modern economics has become. Energy writer Hazel Henderson has called modern economics as form of brain disease, because it is completely disconnected from the physical realities of the earth. Wind and solar power have the potential to offer respectable EROEI ratios and should be very helpful in our energy transition.
