It’s All in the Energy

From Perpetual Assets

When we dissect the fundamentals of life we have energy. Energy is the source. To have growth, you must have energy, whether a micro organism, an individual, or an economy. As energy becomes harder to extract, efficiencies fall, surpluses fall, and growth stops.

As net exporting countries become net importers of oil, growth tapers. This is the trend, Egypt and Indonesia are two examples that tipped the scales recently. This is a result of increasing consumption and decreasing production efficiency. Energy returned on invested is crucial to understand. It is costing more energy to extract the same amount of oil.

Peak oil is the notion that the world peaked in energy production. Critics of this argument can be heard citing recent oil discoveries, oil shale and natural gas. The problem lies in the cost of excreting the oil. We must spend energy to extract energy. When the sum of all the inputs becomes too great relative to the output, the jig is up.

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