When should we expect the energy payback of new oil production to be 1.0?

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  • Mon, Apr 14, 2014 - 04:32am

    #11

    Dave Kimble

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    You can’t do that

You can't do that mathematically, as "looks exponential" doesn't mean it IS exponential. The basic data is only very rough guesswork at best, and there are only 4 data points, so projecting the data forward 37 years is invalid.

 

Despite tight (shale) oil not being profitable according to Exxon, Chevron and Shell, if you can get a loan to get started drilling, you can produce oil. It follows that banks, who are shrewd investors, certainly know it is not going to be profitable in the long run, but lend anyway. Why? Because the USG and the Fed are encouraging them to. They (including the drillers) all know it won't make money in the long run, but they can avoid having to admit Peak Oil is real for another year or two, and that's enough to justify throwing some more confetti down the toilet.

 

Although financial profit is not strictly the same thing as energy payback, the same logic applies to both. So oil production won't necessarily stop when energy payback = 1.0 .

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