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An extremely small fraction of the output of our economies is consumed by the construction of power plants, or railroads for that matter.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Jul 25th, 2013 at 09:21:57 AM EST
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And that fraction is decreasing? Well. we are just catabolizing the 20th century infrastructure. Hardly anyone is preparing for the enegy-interesting future, as if that is not worth it.
by das monde on Thu Jul 25th, 2013 at 09:47:41 AM EST
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Look, the required investments are huge. But the size of our economies are absolutely immense. Spending as little as 1% of GDP extra on these kinds of investments for a decade or two will make extremely large headway.

Indeed, if politicians started studying macroeconomics they might understand that we could get these investments for free as long as we're struggling to get out of the liquidity trap.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Thu Jul 25th, 2013 at 10:03:44 AM EST
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So we will wait till the politicians start to educate themselves (and their PR departments). After 2-3 decades of de-education.
by das monde on Thu Jul 25th, 2013 at 10:14:31 AM EST
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Better that than not building useful things because they have low EROI, or builing useless things because they have high EROI (hello breeders).

And I hardly think it will take as long as 2-3 decades, unless energy prices stay very low. But if they do that, the problem has kind of solved itself.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Thu Jul 25th, 2013 at 10:18:54 AM EST
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Better waiting than not building...??

The political economy cardinally changed. Before the 80s-90s, the states were silently building infrastructure for marginal financial returns - that equates to "useless" by today's paradigms, I guess. Now we pretend that anything "useful" and essential can be build by commercial transactions without any coordination by social interest, with handy profits to investors foremost. The problems will kind of solve themselves indeed.

by das monde on Thu Jul 25th, 2013 at 10:44:41 AM EST
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This is a problem - but a problem which has little to do with my criticism of EROI theory.

I don't know much about the situation in Germany, but in Sweden the state still spends considerable amounts of tax money on infrastructure (even if we have had a few notorious run-ins with public-private partnerships). The vast majority of these resources are spent on projects which are not profitable from a strict corporate point of view, but which are profitable when the external effects on society as a whole are taken into account (defined as "samhällsekonomisk lönsamhet", literally "societal economic profitablity").

Ironically, this is pretty close (even if not identical) to my argument that it's far better to internalise externalities and then look at costs and profits (which comes pretty close to the defintion of "samhällsekonomisk lönsamhet"), than to look at EROI.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Thu Jul 25th, 2013 at 11:51:01 AM EST
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... the decisions made that determine whether or not a given ROI calculation comes up build or not build.

Markets, despite the assumptions of many mainstream economists, are not natural systems, they are social institutions, and the specific market rules and the decision of which decisions are left to private actors looking to market gain and which decisions are made under other instititutions can easily flip one decision from built to no-build, and another from no-build to build.

You cannot ask the question what institutions should we have based on any ROI figure, since ROI figures depend fundamentally on what institutions we have.

While EROI can only aid in addressing the question of what instititions we should have, since no complex system can be encapsulated in any single index number without discarding relevant information, that still makes it useful in a way that ROI can never be when talking about choice of institutions, since EROI is exogonous to the choice of institution and ROI is endogenous to the choice of institution.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Jul 25th, 2013 at 02:53:52 PM EST
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This industrial civilization did not directly deal with the limits of growth, industrialization, population yet - except perhaps around the World Wars. The WWI marked the transition from coal to oil, as we know.

My guess is that institutions of a more mature civilization will consider EROI very seriously, if only because the ratios won't be 40:1 broadly.

by das monde on Thu Jul 25th, 2013 at 04:55:44 PM EST
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This industrial civilization has never had to ... as the piece argues, there is little substantial difference in Net Energy Yield between an EROI of 20 and an EROI of 100, and this industrial civilization gone from the 8+ EROI of coal from the Industrial Revolution of access to newly productive coal mines once mechanized water pumping was established, through to the 80-100 EROI of the big oil fields discovered in the 1920's-1950's.

Except in wartime, its not been presented with the fundamental challenge, and since institutions are past-bound, of course it doesn't have institutions developed to cope with the challenge.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Fri Jul 26th, 2013 at 12:12:22 PM EST
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Reading a sentence that starts "if politicians realized" does not require presuming them coming to that realization on their own. Typically politicians realize those things by people building movements that understand those kinds of things and then some entrepreneurial politicians decide to act as if they understand those things in order to attract the support of those movements.

It was, after all, the intellectual ferment in the progressive, populist and granger movements that provided the actual policy content for "FDR's New Deal" ... FDR provided the political skill that built the political coalition that was the natural governing coalition in the United States from the 30's through the 60's. Even opponents of pushing the New Deal coalition agenda forward, like Eisenhower, did not see any point in wasting their political capital in fighting with the New Deal defenders in Congress over dismantling what they had already won.
 

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Fri Jul 26th, 2013 at 12:07:12 PM EST
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