• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 8 days Does Toyota Know Something That We Don’t?
  • 2 days America should go after China but it should be done in a wise way.
  • 8 days World could get rid of Putin and Russia but nobody is bold enough
  • 10 days China is using Chinese Names of Cities on their Border with Russia.
  • 11 days Russian Officials Voice Concerns About Chinese-Funded Rail Line
  • 11 days OPINION: Putin’s Genocidal Myth A scholarly treatise on the thousands of years of Ukrainian history. RCW
  • 11 days CHINA Economy IMPLODING - Fastest Price Fall in 14 Years & Stock Market Crashes to 5 Year Low
  • 10 days CHINA Economy Disaster - Employee Shortages, Retirement Age, Birth Rate & Ageing Population
  • 12 hours Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 2 days How Far Have We Really Gotten With Alternative Energy
  • 11 days Putin and Xi Bet on the Global South
  • 11 days "(Another) Putin Critic 'Falls' Out Of Window, Dies"
Supply Chain Woes Could Derail Biden’s Electric Vehicle Agenda

Supply Chain Woes Could Derail Biden’s Electric Vehicle Agenda

The Biden administration's electric vehicle…

Iraq Moves to Take Control of Kurdistan's Finances

Iraq Moves to Take Control of Kurdistan's Finances

The Iraqi federal government is…

Brian Westenhaus

Brian Westenhaus

Brian is the editor of the popular energy technology site New Energy and Fuel. The site’s mission is to inform, stimulate, amuse and abuse the…

More Info

Premium Content

Driving Energy Costs Lower

Two articles appeared last week worth some study by everyone.  The first spotted by Geoffrey Stiles is at a Wall Street Journal energy special pull out section. There Ted Nordhaus and Michael Shellenberger co-founders of the Breakthrough Institute, a public-policy think tank in Oakland make the case that public policy through government should direct efforts to lower energy costs.

The pair explains in substantial detail and a reasoned basis that nations should focus on lowering the cost of clean energy, not raising the cost of fossil energy. The goal? Make clean energy cheap enough to become a viable option for poor as well as rich nations.  Just to add to the sense of it the pair’s premise also shows until such a change takes place, emissions will continue to rise, and no effort to regulate carbon can succeed.  More adroitly the carbon matter they raise would also preclude much of the recycling of CO2 getting humanity in with nature on the carbon cycle.

This is an important read. Here at newenergyandfuel the underlying point has always been, get to the lowest cost of powering human economy.  It’s just obvious that lower costs are going to improve living standards across all the people on earth.  Failure in that would drive societies to fight for resources.  Ah, well.  Obvious isn’t always the common sense.

Nordhaus Ideas
Some Nordhaus Shellenberger Ideas Illustrated.

While not every idea that Nordhaus and Shellenberger strike this writer as optimal, the point, drive to lower energy costs in the economy should be an obvious policy choice.  The pair’s work is at this writing is available at the Wall Street Journal without a subscription.  The link is a recommended one for passing around – particularly to those notorious elected officials.  If it happens enough, it will get read.  Moreover, the officials might realize they aren’t fooling so many people as they think.

The headings in the article start with Push For Innovation, Protect – But Share, Forget the U.N., Do The Small Stuff, and Help Emerging Countries Adapt In A Different Way.  Each section is as thorough as an article-sized piece is going to be.  One point not covered with enough verve is the getting intellectual property out into the market.  Many innovators, bless ‘em, don’t grasp that volume is where the wealth is.  Bill Gates isn’t supifyingly rich because of the (dubious) intellectual property, it’s because hundreds of millions of copies are sold.

With the Nordhaus Shellenberger position in mind a paper appeared this month in Environmental Research Letters titled Energy Intensity Ratios as Net Energy Measures of United States Energy Production and Expenditures by Carey King at the University of Texas, Austin.  It’s another free read.

King is introducing a new way to measure energy economic quality, the “Energy Intensity Ratio” or EIR, that is easier to calculate, highly correlated to EROI (Energy Return on Energy Investment) and in the important ways more powerful than EROI. EIR measures how much profit is obtained by energy consumers relative to energy producers.   The higher the EIR, the more economic value consumers (including businesses, governments and people) get from their energy.

Now EROI has been beaten to death such to become essentially useless.  As a model the concept has great value in understanding, but no company is going to be selling energy and fuel products for long if the EROI is too high anyway.  Moreover and importantly, if the EIR is too low, some competitor is going to get your customers.

Energy Ratio
Energy Intensity Ratio Graphed.

But the warning alarm in King’s work is when King plotted the EIR for various fuels for every year since World War II. The graphs indicate two large declines, one before the recessions of the mid-1970s and early 1980s and the other during the 2000s, leading up to the current economic recession. There have been other recessions in the U.S. since World War II, but the longest and deepest were preceded by sustained declines in EIR for all fossil fuels.

What that means, a critical point for everyone from basic research through producers to consumers and policy makers, is the consumer has to profit from the use of fuels and the energy used.  Come up short on that and your economy tanks.  For example, in 1972, EIR for gasoline was 5.9 and in 2008 it was 5.5. During times of robust economic growth, such as the 1990s, EIR for gasoline was well over 8.

That puts prime importance on the views of Nordhaus and Shellenberger.  Fossil alternatives are going to be essential at falling costs to consumers over time.  Thus, much of the policy choices of today are gigantic wastes, or in lesser terms, simply delays for the economy.  These issues plus innovators not grasping the scale involved in world energy use and how their ideas could get market penetration and share should clear up the mental position of a society.  Such sense would over time solve most contentious issues such as the environment, CO2 emissions, and fuel safety as well.


The cited articles are very important works.  Your attention and sharing of them would help them become watershed events in the industries of energy and fuels as well as the entire world economy and human society.

By. Brian Westenhaus

Source: There Must Be Cheaper Energy Supplies

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • Anonymous on December 11 2010 said:
    Pie in the sky, Brian. Talk. Waffle. Struggling to get corrupt and half educated people to understand serious issues at international talkathons or in op-ed presentations probably makes some kind of political sense, but (ceteris paribus) it wont help the children and grandchildren in twenty or so years.
  • Anonymous on December 13 2010 said:
    I agree with Fred. There are naive romantics who write this stuff, and equally naive romantics who believe it possible (in the best of all possible worlds...?). Unfortunately the politics of power intervene to upset all these otherwise idealistic and enlightened logics. And as the politics of power are for better or, more often, for worse, what drive our societies today, then such otherwise fine logics of energy utilisation will never see the light of day. At the beginning of the 20thC, Tesla was reputed to have demonstrably found a way to derive electricity from the atmosphere, thereby ideally and pragmatically apparently solving energy problems in one go. Both he and his inventions were buried almost without trace by the then emerging oil corporations, and related power/energy interests. If he did the same today, the same would happen to him, and anyone one else, today.

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News