Exhausted: The Real Fossil Future
In Fossil Future, Alex Epstein argues for the fundamental importance of energy to the modern economy, and to the future of human civilization on this planet. In this, he is correct. All economic activity depends on the oft-ignored assumption of available energy, specifically fossil energy. Mr. Epstein writes a paean to fossil fuels based on this fact, but his book demonstrates no specific knowledge of different fossil fuel products, nor their extraction, processing, characteristics, and uses. Remaining reserves are depleted, and the fossil products they contain lack the qualities that made conventional oil the engine of the global economy. These oversights cannot be reconciled with Mr. Epstein’s thesis that the fossil fuels of the future will power exponential growth.
Our oil dependencies are deep, but we cannot continue to rely on fossil fuels, and they will not power Mr. Epstein’s utopian “Fossil Future.”
What Mr. Epstein Gets Right: (Fossil) Energy is Life
Energy is the master resource, and it is essential to human life on this planet. Everything in our world requires fossil energy, from electric vehicles to supermarket produce.
A single Tesla EV requires the extraction, processing, and distribution of 225,000 tons of earth material. Every step of this supply chain depends on diesel or other fossil inputs. Charging infrastructure for the expected EV fleet demands unprecedented quantities of cement, steel, plastics, and copper, all of which have direct and indirect fossil inputs. The clementine I’m eating is riddled with fossil fuels, from the oil-based fertilizers that form its caloric content to the diesel that delivered it. Without these fertilizers, there simply would not be enough nitrogen in the soil to maintain adequate food production. At least four billion people would be put on a countdown of a few short years [1].
I hate to break it to the green energy folks, but fossil fuels are not easily replaced, either. A full accounting of this claim is far beyond the scope of this article (but a deep dive is forthcoming). For now, you should know that eighty per-cent of our energy consumption is in the form of liquid fuels, and in many cases “renewable” electricity simply could not do the job [1]. Human economic activity has little relation to available solar radiation, nor wind patterns. The ability to burn fossil fuels for on-demand energy is indispensable for maintaining the global supply chains that underpin modern life. Oil is the key ingredient in a variety of critical materials, as well, from steel to ammonia. You can’t make liquid fertilizer out of a wind turbine.
Mr. Epstein expresses the impact of fossil fuels in four charts [2]. The flat line represents 1,800 years of energy from humans, animals, and wood-burning. It extends to the beginning of human history, some 10,000 years ago. The j-curve is fossil energy.
This relationship is perhaps most visible when we compare energy consumption and GDP per capita at the national level. The correlation is nearly perfect, demonstrating that high standards of living depend on high energy consumption [3] [4]:
World economies: Energy use and GDP per capita
All economic growth in the last 150 years is built atop this unbelievable bolus of fossil energy. The relationship is so profound that during his employ at Shell Oil Company, American history’s preeminent geoscientist M. “King” Hubbert recommended that the government reformulate the dollar to represent units of energy, and price everything in the market according to its energy costs alone [5]. That is the value of energy to the modern economy.
According to Mr. Epstein, there’s no reason this should end. He claims that fossil fuels will be able to satisfy the energy needs of a growing world population, increased energy appetites in the global south, and ever higher standards of living in the west [2]. But according to his own logic, this “Fossil Future” is mathematically impossible.
Since energy powers all economic activity, it follows that this exponential growth has necessitated a similarly exponential expansion of energy consumption [6]:
Future growth will be no different [7]:
The problem with Mr. Epstein’s utopia is that exponential growth is notoriously hard to maintain. And sustaining exponential energy production is harder than just about anything else.
Swimming Upstream
All the energy we produce requires existing sources of energy to bring it to market. How much energy is leftover for the economy after we account for the energy required to get it out of the ground to consumers? That’s the concept behind Energy Returned on Energy Invested (EROEI, pronounced “ee-roy”).*
*You might see the acronym EROI elsewhere: Energy Return on Investment. This refers to the DOLLAR AMOUNT needed to bring the energy to market, which is a far less useful figure than how much ENERGY it took.
Previously I said that energy powers the economy, but it would be more precise to say that surplus energy powers the economy [8]. Any energy spent getting new energy can’t be put to use propelling streams of cargo ships across the Pacific, making petabytes of data available on the cloud, or refrigerating food at homes, restaurants, and grocery stores. Human prosperity is therefore a function of the total energy we can produce, minus the energy cost to get it [9].
As the costs of harvesting energy rise, it will become increasingly difficult to power exponential growth due to the shrinking surplus. We’re swimming upstream, and the current will get faster every year for the rest of our lives.
Conventional crude is the greatest energy source of all time by a wide margin, with historical EROEI as high as 100:1. It is no exaggeration to say that most of the economic growth of the past century was powered by this fabulous surplus. But such oil fields are rare, and depleted. Estimates for crude oil’s EROEI range as high as 25:1 today [10] [13]. This is still much higher than the alternatives, and is sufficient to power modern civilization, but the decline is a considerable force behind inflation, volatility, fragility, and other economic ailments of the modern era.
Energy costs have a way of creeping up over time. Naturally, oil companies exploited the most cost-efficient deposits first. Remaining deposits are deeper and smaller. The oil itself is thicker, and resists extraction like the bottom of a Slushie. More infrastructure needs to be constructed at more sites, using more energy to get less oil, which will need more processing to be usable [10]. This dynamic is visualized here:
All of this contributes to rising energy prices, which reduces the value margin for every transaction, every balance sheet, and every investment. Less available energy powers less growth.
Fossil optimists like Mr. Epsein assume that advances in technology will make things more efficient over time, but technology can’t make oil wells larger, nearer to the surface, more concentrated, or closer to industrial hubs. At this point, for conventional oil, EROEI ratios only move in one direction (way down).
Researchers at the University of Leeds calculated energy returns for fossil fuels over 16 years. They found persistent declines in EROEI over time, in addition to oversights by earlier studies that vastly overestimated the energy returns from fossil fuels generally [10]:
Oil, coal and gas are typically calculated to have ratios above 25:1 … one barrel of oil … yields 25 barrels to put back into the energy economy. Renewable energy sources often have much lower estimated ratios, below 10:1.
However, these fossil fuel ratios are measured at the extraction stage … when oil, coal, or gas is removed from the ground. These [calculations] did not take into account the energy required to transform [them] into finished fuels such as [gasoline] for cars, or electricity in households.
A new study … has calculated [energy returns] for fossil fuels over a 16 year period and found that at the finished fuel stage, the ratios are … roughly 6:1. The average energy return on investment for all fossil fuels … declined by roughly 23% in the 16 year period we considered. (emphasis mine)
The ratios will only continue to decline because we are swiftly reaching the point where all the easily-accessible fossil fuel sources are becoming exhausted.
This is not a surprising finding. It’s perfectly in line with the concept of EROEI, and the data are unmistakable. Here, data from the International Energy Agency (IEA) show that “conventional” oil sources (blue) substantially declined after 1985 [11]:
The trend took longer to emerge globally, but the plummet in conventional oil around 2006 is just as striking [18]. Mr. Epstein likes to blame lower production on “anti-fossil politicians,” but it is hard to imagine how US policymakers caused a global collapse in conventional oil production over 15 years and four administrations. EREOI is a much more plausible culprit.
Global Oil Production by Type
What does this mean? The energy source that built and sustains the modern world will be less available and more expensive for the rest of our lives.
In an email, Mr. Epstein told me he “does not believe [EROEI] is as fundamental” as I do. He did not elaborate, but this is an extraordinary statement, because EROEI has already written the history of modern energy. It will continue to author our energy future. As the surplus energy from conventional oil operations declined, markets were forced to grab onto supplementary energy sources to maintain growth. These are the basic mechanisms of diminishing EROEI. I say “forced” because Natural Gas Liquids and “tight oil” are categorically inferior products. Natural gas is well-suited to heating and electricity, but otherwise these fuels have substantially lower energy density, quality, and versatility than conventional crude oil.
So, to summarize: our best energy source is depleted, we’re using inferior alternatives, and they’re approaching their peaks as well. As we’ll soon see, all fossil fuels are not created equal, and that’s a big problem. This is what EROEI looks like in action.
Exhausted: The Real Fossil Future
Imagine: Our economy is swimming furiously upstream, straining to sustain exponential population growth and soaring standards of living globally. We’re fighting an accelerating current of rising energy costs, and it’s getting hard to keep up. Then, at the worst possible moment, we run out of the good, calorie-dense food that keeps our arms and legs kicking. The current’s getting faster, and we’re running on empty.
The next chart is the fossil fuel equivalent of that story, showing real and projected production for liquid fuels globally. It starts with conventional oil only, and layers on alternative fuels to show their impact on the total energy supply over time [12].
Solid lines are existing data, dotted lines are forecasts
The Purple line in the middle represents conventional oil only. It has been in plateau for five years, and is on the back side of the bell curve
The Blue line above adds “light and tight oil” from (mostly) US shale
The Green line adds “extra heavy oil” from Canadian tar sands
The Red line adds Natural Gas Liquids and other lower-quality fuels
With conventional oil in steep decline, we must rely on “light and tight” shale oil, “extra heavy” tar sands oil, and Natural Gas Liquids instead. As a reminder, today’s conventional oil gets energy returns between 6:1 and 25:1. Here’s how the others stack up.
Shale oil gets energy returns at a rate between 2:1 and 4:1 [14]. It is such an inefficient means to energy production that this “cost-effective fossil fuel” only became profitable after the COVID pandemic, when surging demand and changing market dynamics (often due to EROEI) spiked the price of crude as high as $115 per barrel [16]. Worse, the composition of “light oil” from shale makes it undesirable for many commercial and industrial applications. We export most of it to heat Europe because it makes poor fuel for vehicles, heavy machinery, and advanced manufacturing, which is what we do in America [15] [17]. Harvesting oil from shale produces four times the methane and carbon emissions of conventional oil, and waste disposal is an ongoing challenge with alarming ecological risks [14].
Our “light and tight” oil goes out to Europe, and the “extra heavy” oil comes in from Canadian tar sands. This is a better product for our needs, but the ideal use-case for this viscous black substance is asphalt and shingling, not powering a globalized economy. It requires two tons of tar sands to produce one barrel of oil (about 1/8 of a ton), which must then be enriched to achieve a comparable quality to conventional oil. The final product fetches energy returns between 3:1 and 5:1 [14].
Natural Gas Liquids (NGL) are the weakest of the bunch despite their prominence on the chart. They are primarily composed of ethane, which contains less than half the energy content of crude oil. For this reason, fully 55% of the NGLs on that bright red line are used to make plastic bags. They could be made into liquid fuel if necessary, but it would be very low quality and unusable for larger vehicles [14].
Two details are worth emphasizing. The first is that the energy returns from these fuel types are shockingly low relative to conventional oil, and they are rapidly declining. Just look at the chart. Even with these inferior fuels padding the total, oil production is projected to peak between 2025 and 2040 as EREOEI falls. The second is that the IEA data represented in this chart makes no distinctions between these varying fuel types. Therefore, products that are primarily used to make plastic bags are included in the sum total of liquid fuels (red line), yet the forecast calculations do not incorporate their vastly inferior energy density and quality. In short, this is a very generous assessment.
We are swimming upstream against constantly accelerating energy costs, and the economy will be powered by substances best suited for making plastic bags. The fossil products of the future are weaker, and cost an enormous amount of energy to extract, process, and distribute. Falling EROEI will cut ever deeper into the surplus energy that powers human prosperity.
These are the conditions that Mr. Epstein thinks will power exponential growth and prosperity. The fourth chapter of Fossil Future is a compelling fantasy of “human flourishing… innovation… fulfilling leisure time,” and more. Its author claims all of this will be powered by “the unique and expanding cost-effectiveness of fossil fuels” [2]. But this key assumption is contradicted by all of the available data. The cost-effectiveness of fossil fuels is rapidly contracting, along with the many improbabilities that Mr. Epstein promises in Fossil Future.
You cannot power exponential growth when the master resource that makes it all possible is rapidly diminishing in volume, accessibility, and quality. You just can’t.
Future Critiques of Fossil Future
Clearly brevity was an overriding and urgent priority for this assignment, forcing me to neglect other fallacies that Mr. Epstein promotes in Fossil Future, as well as a few genuinely interesting energy tangents. Possible topics for future articles include:
The secondary thesis that fossil-fueled climate mitigation technologies can outpace ecological destruction from fossil fuels
How a century of cheap energy created colossal debt obligations that add even more drag to our upstream swimming misadventure
The impossible challenge of replacing fossil fuels with “renewable” electrical energy
A mixed-fuels future that acknowledges biophysical limits and ideal use-cases for different energy sources
But, for now, I will eat my snacks and try not to think about how much diesel is in them. Until next time.
References
[1] Smil, Vaclav. How the world really works: The science behind how we got here, and where we’re going. 2022.
[2] Epstein, Alex. Fossil future: Why global human flourishing requires more oil, coal, and natural gas--not less. 2022.
[3] European Energy Agency. Correlation of energy consumption and GDP per person. 2016. https://www.eea.europa.eu/data-and-maps/figures/correlation-of-per-capita-energy.
[4] Tsafos, Nikos. Energy and growth: Exploring a nuanced relationship. 2018. Center for Strategic and International Studies.
[5] Mann, Charles. Peak oil fantasy. Orion Magazine. https://orionmagazine.org/article/peak-oil-fantasy/.
[6] Our World in Data. Global direct primary energy consumption, 1800 - 2021. https://ourworldindata.org/grapher/global-primary-energy.
[7] Berman, Art. For Alex Epstein to be right, everyone else has to be wrong. 2023. The Petroleum Truth Report. https://www.artberman.com/2023/03/10/for-alex-epstein-to-be-right-everyone-else-has-to-be-wrong/.
[8] Morgan, Tim. The surplus energy economy, part 2. Surplus Energy Economics. 2023. https://surplusenergyeconomics.wordpress.com/2023/02/02/247-the-surplus-energy-economy-part-two/.
[9] Morgan, Tim. The surplus energy economy, part 1. Surplus Energy Economics. 2023. https://surplusenergyeconomics.wordpress.com/2023/01/26/246-the-surplus-energy-economy-part-1/.
[10] University of Leeds. Fossil fuels increasingly offer a poor return on energy investment. 2019. ScienceDaily. www.sciencedaily.com/releases/2019/07/190711114846.htm.
[11] Tverberg, Gail. IEA Oil Forecast Unrealistically High; Misses Diminishing Returns. 2012. Our Finite World. https://ourfiniteworld.com/2012/11/13/iea-oil-forecast-unrealistically-high-misses-diminishing-returns/.
[12] Hall, Charles; Laherrère, Jean; and Bentley, Roger. How much oil remains for the world to produce? Comparing assessment methods, and separating fact from fiction. 2022. Current Research in Environmental Sustainability, vol. 4, via ScienceDirect. https://www.sciencedirect.com/science/article/pii/S2666049022000524.
[13] Hall, Charles; Lambert, Jessica; Balogh, Stephen. EROI of different fuels and the implications for society. 2014. Energy Policy, vol. 64, via Elsevier. https://reader.elsevier.com/reader/sd/pii/S0301421513003856.
[14] Hagens, Nate. Unconventional oil: Tar sands and shale oil. The Oil Drum. 2008. http://theoildrum.com/node/3839.
[15] Berman, Art; Hagens, Nate. Peak Oil - The Hedonic Adjustment. 2023. https://www.youtube.com/ watch?v=CDBJdQnjE2o.
[16] OilPrice.com. Brent Crude. https://oilprice.com/oil-price-charts/#Brent-Crude.
[17] Kelley, Sharon. Low Octane: The Surprising Reason Shale Oil Makes a Poor Fuel for High-Tech Cars and Trucks. 2018. https://www.desmog.com/2018/04/24/octane-surprising-reason-shale-oil-makes-poor-fuel-high-tech-cars-and-trucks/.
[18] Andrew, Robbie & Rutledge, Daniel. 2011. Kapiti Coast District Council Human Carrying Capacity Stage 2: Application of Concept to Kapiti Coast District. https://www.researchgate.net/figure/nternational-Energy-Agency-projections-for-production-of-all-types-of-oil-in-their-New_fig4_319059734