Why I am a double atheist

28 11 2017

For years and years – at least 15 – I argued with Dave Kimble over his notion that solar energy production was growing far too fast to be sustainable, let alone reduce greenhouse emissions.  I eventually had to relent and agree with him, he had a keener eye for numbers than me, and he was way better with spreadsheets!

The whole green technology thing has become a religion. I know, I used to have the faith too….. but now, as you might know if you’ve been ‘here’ long enough, I neither believe in god nor green tech!

This article – to which you will have to go to for the references – landed in my newsfeed…….  and lo and behold, it says exactly the same thing Dave was saying all those years ago…….:

How Sustainable is PV solar power?

How sustainable is pv solar power

Picture: Jonathan Potts.

It’s generally assumed that it only takes a few years before solar panels have generated as much energy as it took to make them, resulting in very low greenhouse gas emissions compared to conventional grid electricity.

However, a more critical analysis shows that the cumulative energy and CO2 balance of the industry is negative, meaning that solar PV has actually increased energy use and greenhouse gas emissions instead of lowering them.

The problem is that we use and produce solar panels in the wrong places. By carefully selecting the location of both manufacturing and installation, the potential of solar power could be huge.

There’s nothing but good news about solar energy these days. The average global price of PV panels has plummeted by more than 75% since 2008, and this trend is expected to continue in the coming years, though at a lower rate. [1-2] According to the 2015 solar outlook by investment bank Deutsche Bank, solar systems will be at grid parity in up to 80% of the global market by the end of 2017, meaning that PV electricity will be cost-effective compared to electricity from the grid. [3-4]

Lower costs have spurred an increase in solar PV installments. According to the Renewables 2014 Global Status Report, a record of more than 39 gigawatt (GW) of solar PV capacity was added in 2013, which brings total (peak) capacity worldwide to 139 GW at the end of 2013. While this is not even enough to generate 1% of global electricity demand, the growth is impressive. Almost half of all PV capacity in operation today was added in the past two years (2012-2013). [5] In 2014, an estimated 45 GW was added, bringing the total to 184 GW. [6] [4].

Solar PV total global capacitySolar PV total global capacity, 2004-2013. Source: Renewables 2014 Global Status Report.

Meanwhile, solar cells are becoming more energy efficient, and the same goes for the technology used to manufacture them. For example, the polysilicon content in solar cells — the most energy-intensive component — has come down to 5.5-6.0 grams per watt peak (g/wp), a number that will further decrease to 4.5-5.0 g/wp in 2017. [2] Both trends have a positive effect on the sustainability of solar PV systems. According to the latest life cycle analyses, which measure the environmental impact of solar panels from production to decommission, greenhouse gas emissions have come down to around 30 grams of CO2-equivalents per kilwatt-hour of electricity generated (gCO2e/kWh), compared to 40-50 grams of CO2-equivalents ten years ago. [7-11] [12]

According to these numbers, electricity generated by photovoltaic systems is 15 times less carbon-intensive than electricity generated by a natural gas plant (450 gCO2e/kWh), and at least 30 times less carbon-intensive than electricity generated by a coal plant (+1,000 gCO2e/kWh). The most-cited energy payback times (EPBT) for solar PV systems are between one and two years. It seems that photovoltaic power, around since the 1970s, is finally ready to take over the role of fossil fuels.

BUT the bit that caught my eye was this…..:

A life cycle analysis that takes into account the growth rate of solar PV is called a “dynamic” life cycle analysis, as opposed to a “static” LCA, which looks only at an individual solar PV system. The two factors that determine the outcome of a dynamic life cycle analysis are the growth rate on the one hand, and the embodied energy and carbon of the PV system on the other hand. If the growth rate or the embodied energy or carbon increases, so does the “erosion” or “cannibalization” of the energy and CO2 savings made due to the production of newly installed capacity. [16]

For the deployment of solar PV systems to grow while remaining net greenhouse gas mitigators, they must grow at a rate slower than the inverse of their CO2 payback time. [19] For example, if the average energy and CO2 payback times of a solar PV system are four years and the industry grows at a rate of 25%, no net energy is produced and no greenhouse gas emissions are offset. [19] If the growth rate is higher than 25%, the aggregate of solar PV systems actually becomes a net CO2 and energy sink. In this scenario, the industry expands so fast that the energy savings and GHG emissions prevented by solar PV systems are negated to fabricate the next wave of solar PV systems. [20]

Which is precisely what Dave Kimble was saying more than ten years ago.  To see his charts and download his spreadsheet, go to this post.

His conclusions are that “We have been living in an era of expanding energy availability, but Peak Oil and the constraints of Global Warming mean we are entering a new era of energy scarcity. In the past, you could always get the energy you wanted by simply paying for it. From here on, we are going to have to be very careful about how we allocate energy, because not only is it going to be very expensive, it will mean that someone else will have to do without. For the first time, ERoEI is going to be critically important to what we choose to do. If this factor is ignored, we will end up spending our fossil energy on making solar energy, which only makes Global Warming worse in the short to medium term.”



Who killed the electric car…….

28 11 2017

Anyone who’s seen the film (I still have a DVD of it lying around somewhere…) by the name “Who killed the electric car” will remember the outrage of the ‘owners’ (they were all only leasing the vehicles) when GM destroyed the cars they thought were working perfectly well.  The problem was, the EV1 was an experiment. It was an experiment in technology and economics, and by the time the leases ran out, all the batteries needed replacing, and GM weren’t about to do that, because the replacement cost was higher than the value of the vehicles. Never let economics get in the way of a good story…. nor profit!

Anyhow, here is another well researched article Alice Fridemann pointed me to regarding the senseless travesty of the big switch to EVs…..  It’s just too little too late, and we have the laws of physics to contend with.


alice_friedemannThe battery did it.  Batteries are far too expensive for the average consumer, $600-$1700 per kwh (Service). And they aren’t likely to get better any time soon.  Sorry to ruin the suspense so quickly, guess I’ll never be a mystery writer.

The big advances in battery technology happen rarely. It’s been more than 200 years and we have maybe 5 different successful rechargeable batteries,” said George Blomgren, a former senior technology researcher at Eveready (Borenstein).

And yet hope springs eternal. A better battery is always just around the corner:

  • 1901: “A large number of people … are looking forward to a revolution in the generating power of storage batteries, and it is the opinion of many that the long-looked-for, light weight, high capacity battery will soon be discovered.” (Hiscox)
  • 1901: “Demand for a proper automobile storage battery is so crying that it soon must result in the appearance of the desired accumulator [battery]. Everywhere in the history of industrial progress, invention has followed close in the wake of necessity” (Electrical Review #38. May 11, 1901. McGraw-Hill)
  • 1974: “The consensus among EV proponents and major battery manufacturers is that a high-energy, high power-density battery – a true breakthrough in electrochemistry – could be accomplished in just 5 years” (Machine Design).
  • 2014 internet search “battery breakthrough” gets 7,710,000 results, including:  Secretive Company Claims Battery Breakthrough, ‘Holy Grail’ of Battery Design Achieved, Stanford breakthrough might triple battery life, A Battery That ‘Breathes’ Could Power Next-Gen Electric Vehicles, 8 Potential EV and Hybrid Battery Breakthroughs.

So is an electric car:

  • 1911: The New York Times declares that the electric car “has long been recognized as the ideal solution” because it “is cleaner and quieter” and “much more economical.”(NYT 1911)
  • 1915: The Washington Post writes that “prices on electric cars will continue to drop until they are within reach of the average family.”(WP 1915)
  • 1959: The New York Times reports that the “Old electric may be the car of tomorrow.” The story said that electric cars were making a comeback because “gasoline is expensive today, principally because it is so heavily taxed, while electricity is far cheaper” than it was back in the 1920s (Ingraham 1959)
  • 1967: The Los Angeles Times says that American Motors Corporation is on the verge of producing an electric car, the Amitron, to be powered by lithium batteries capable of holding 330 watt-hours per kilogram. (That’s more than two times as much as the energy density of modern lithium-ion batteries.) Backers of the Amitron said, “We don’t see a major obstacle in technology. It’s just a matter of time.” (Thomas 1967)
  • 1979: The Washington Post reports that General Motors has found “a breakthrough in batteries” that “now makes electric cars commercially practical.” The new zinc-nickel oxide batteries will provide the “100-mile range that General Motors executives believe is necessary to successfully sell electric vehicles to the public.”(Knight, J. September 26, 1979. GM Unveils electric car, New battery. Washington Post, D7.
  • 1980: In an opinion piece, the Washington Post avers that “practical electric cars can be built in the near future.” By 2000, the average family would own cars, predicted the Post, “tailored for the purpose for which they are most often used.” It went on to say that “in this new kind of car fleet, the electric vehicle could pay a big role—especially as delivery trucks and two-passenger urban commuter cars. With an aggressive production effort, they might save 1 million barrels of oil a day by the turn of the century.” (WP 1980)

Lithium-ion batteries appear to be the winner for all-electric cars given Elon Musk’s new $5 billion dollar li-ion battery factory in Nevada. Yet Li-ion batteries have a very short cycling life of 5 to 10 years (depending on how the car is driven), and then they’re at just 70% of initial capacity, which is too low to drive, and if a driver persists despite the degraded performance, eventually the batteries will go down to 50% of capacity, a certain end-of-life for li-ion (ADEME).

One reason people are so keen on electric cars is because they cost less to fuel.  But if electricity were $0.10 per kWh, to fill up a 53 kWh Tesla battery takes about 4 hours and costs $5.30. 30 days times $5.30 is $159. I can fill up my gas tank in a few minutes for under $40.  I drive about 15 miles a day and can go 400 miles per fill up, so I only get gas about once a month.  I’d have to drive 60 miles a day to run the cost up to $159. If your electricity costs less than ten cents, it won’t always.  Shale gas is a one-time-only temporary boom that probably ends around 2020.  Got a dinkier battery than the Tesla but go 80 miles or less at most?  Most people won’t consider buying an electric car until they go 200 miles or more.

So why isn’t there a better battery yet?

The lead-acid battery hasn’t changed much since it was invented in 1859. It’s hard to invent new kinds of batteries or even improve existing ones, because although a battery looks simple, inside it’s a churning chaos of complex electrochemistry as the battery goes between being charged and discharged many times.

Charging and recharging are hard on a battery. Recharging is supposed to put Humpty Dumpty back together again, but over time the metals, liquids, gels, chemicals, and solids inside clog, corrode, crack, crystallize, become impure, leak, and break down.

A battery is like a football player, with increasing injuries and concussions over the season. An ideal battery would be alive, able to self-heal, secrete impurities, and recover from abuse.

The number of elements in the periodic table (118) is limited. Only a few have the best electron properties (like lithium), and others can be ruled out because they’re radioactive (39), rare earth and platinum group metals (23), inert noble gases (6), or should be ruled out: toxic (i.e. cadmium, cobalt, mercury, arsenic), hard to recycle, scarce, or expensive.

There are many properties an ideal Energy Storage device would have:

  1. Small and light-weight to give vehicles a longer range
  2. High energy density like oil (energy stored per unit of weight)
  3. Recharge fast, tolerant of overcharge, undercharging, and over-discharge
  4. Store a lot of energy
  5. High power density, deliver a lot of power quickly
  6. Be rechargeable thousands of times while retaining 80% of their storage capacity
  7. Reliable and robust
  8. A long life, at least 10 years for a vehicle battery
  9. Made from very inexpensive, common, sustainable, recyclable materials
  10. Deliver power for a long time
  11. Won’t explode or catch on fire
  12. Long shelf life for times when not being used
  13. Perform well in low and high temperatures
  14. Able to tolerate vibration, shaking, and shocks
  15. Not use toxic materials during manufacture or in the battery itself
  16. Take very little energy to make from cradle-to-grave
  17. Need minimal to no maintenance

For example, in the real world, these are the priorities for heavy-duty hybrid trucks (NRC 2008):

  1. High Volumetric Energy Density (energy per unit volume)
  2. High Gravimetric Energy Density (energy per unit of weight, Specific Energy)
  3. High Volumetric Power Density (power per unit of volume)
  4. High Gravimetric Power Density (power per unit of weight, Specific Power)
  5. Low purchase cost
  6. Low operating cost
  7. Low recycling cost
  8. Long useful life
  9. Long shelf life
  10. Minimal maintenance
  11. High level of safety in collisions and rollover accidents
  12. High level of safety during charging
  13. Ease of charging method
  14. Minimal charging time
  15. Storable and operable at normal and extreme ambient temperatures
  16. High number of charge-discharge cycles, regardless of the depth of discharge
  17. Minimal environmental concerns during manufacturing, useful life, and recycling or disposal

Pick Any Two

In the real world, you can’t have all of the above. It’s like the sign “Pick any two: Fast (expensive), Cheap (crappy), or Good (slow)”.

So many different properties are demanded that “This is like wanting a car that has the power of a Corvette, the fuel efficiency of a Chevy Malibu, and the price tag of a Chevy Spark. This is hard to do. No one battery delivers both high power and high energy, at least not very well or for very long,” according to Dr. Jud Virden at the Pacific Northwest National Laboratory (House 114-18 2015).

You always give up something. Battery chemistry is complex. Anode, cathode, electrolyte, and membrane separators materials must all work together. Tweak any one of these materials and the battery might not work anymore. You get higher energy densities from reactive, less stable chemicals that often result in non-rechargeable batteries, are susceptible to impurities, catch on fire, and so on. Storing more energy might lower the voltage, a fast recharge shorten the lifespan.

You have to optimize many different things at the same time,” says Venkat Srinivasan, a transportation battery expert at Lawrence Berkeley National Laboratory in California. “It’s a hard, hard problem” (Service).

Conflicting demands. The main job of a battery is to store energy. Trying to make them discharge a lot of power quickly may be impossible. “If you want high storage, you can’t get high power,” said M. Stanley Whittingham, director of the Northeast Center for Chemical Energy Storage. “People are expecting more than what’s possible.”

Battery testing takes time. Every time a change is made the individual cells, then modules, then overall pack is tested for one cycle and again for 50 cycles for voltage, current, cycle life (number of recharges), Ragone plot (energy and power density), charge and discharge time, self-discharge, safety (heat, vibration, external short circuit, overcharge, forced discharge, etc.) and many other parameters.

Batteries deteriorate.  The more deeply you discharge a battery, the more often you charge/recharge it (cycles), or the car is exposed to below freezing or above 77 degree temperatures, the shorter the life of the battery will be. Even doing nothing shortens battery life: Li-ion batteries lose charge when idle, so an old, unused battery will last less long than a new one.  Tesla engineers expect the power of the car’s battery pack to degrade by as much as 30% in five years (Smil). [ED. the exception of course being Nickel Iron batteries….. but they are not really suitable for EVs, even if that’s what they were originally invented for]

Batteries are limited by the physical laws of the universe.  Lithium-ion batteries are getting close to theirs.  According to materials scientist George Crabtree of Argonne National Laboratory, li-ion batteries are approaching their basic electrochemical limits of density of energy they can store. “If you really want electric cars to compete with gasoline, you’re going to need the next generation of batteries.” Rachid Yazami of Nanyang Technological University in Singapore says that this will require finding a new chemical basis for them. Although engineers have achieved a lot with lithium-ion batteries, it hasn’t been enough to charge electric cars very fast, or go 500 miles (Hodson 2015).

Be skeptical of battery breakthroughs. It takes ten years to improve an existing type of battery, and it’s expensive since you need chemists, material scientists, chemical and mechanical engineers, electrochemists, computer and nanotechnology scientists. The United States isn’t training enough engineers to support a large battery industry, and within 5 years, 40% of full-time senior engineering faculty will be eligible for retirement.

Dr. Virden says that “you see all kinds of press releases about a new anode material that’s five times better than anything out there, and it probably is, but when you put that in with an electrolyte and a cathode, and put it together and then try to scale it, all kinds of things don’t work. Materials start to fall apart, the chemistry isn’t well known, there’s side reactions, and usually what that leads to is loss of performance, loss of safety. And we as fundamental scientists don’t understand those basic mechanisms. And we do really undervalue the challenge of scale-up. In every materials process I see, in an experiment in a lab like this big, it works perfectly. Then when you want to make thousands of them-it doesn’t.” (House 114-18).

We need a revolutionary new battery that takes less than 10 years to develop

“We need to leapfrog the engineering of making of batteries,” said Lawrence Berkeley National Lab battery scientist Vince Battaglia. “We’ve got to find the next big thing.”

Dr. Virden testified at a U.S. House hearing that “despite many advances, we still have fundamental gaps in our understanding of the basic processes that influence battery operation, performance, limitations, and failures (House 114-18 2015).

But none of the 10 experts who talked to The Associated Press said they know what that big thing will be yet, or when it will come (Borenstein).

The Department of Energy (DOE) says that incremental improvements won’t electrify cars and energy storage fast enough. Scientists need to understand the laws of battery physics better. To do that, we need to be able to observe what’s going on inside the battery at an atomic scale in femtoseconds (.000000000000001 second), build nanoscale materials/tubes/wires to improve ion flow etc., and write complex models and computer programs that use this data to better predict what might happen every time some aspect of the battery is meddled with to zero in on the best materials to use.

Are you kidding? Laws of Physics? Femtoseconds? Atomic Scale? Nanoscale technology — that doesn’t exist yet?

Extremely energy-dense batteries for autos are impossible because of the laws of Physics and the “Pick any Two” problem

There’s only so much energy you can force into a black box, and it’s a lot less than the energy contained in oil – pound for pound the most energy density a battery could contain is only around 6 percent that of oil. The energy density of oil 500 times higher than a lead-acid battery (House), which is why it takes 1,200 pounds of lead-acid batteries to move a car 50 miles.

Even though an electric vehicle needs only a quarter of the energy a gasoline vehicle needs to deliver the same energy to turn the wheels, this efficiency is more than overcome by the much smaller energy density of a battery compared to the energy density of gasoline.  This can be seen in the much heavier weight and space a battery requires.  For example, the 85 kWh battery in a Tesla Model S weighs 1,500 pounds (Tesla 2014) and the gasoline containing the equivalent energy, about 9 gallons, weighs 54 pounds.  The 1500 pound weight of a Tesla battery is equal to 7 extra passengers, and reduces the acceleration and range that could otherwise be realized (NRC 2015).

Lithium batteries are more powerful, but even so, oil has 120 times the energy density of a lithium battery pack. Increased driving ranges of electric cars have come more from weight reduction, drag reduction, and decreased rolling resistance than improved battery performance.

The amount of energy that can be stored in a battery depends on the potential chemical energy due to their electron properties. The most you could ever get is 6 volts from a Lithium (highest reduction) and Fluorine (highest oxidation).  But for many reasons a lithium-fluoride or fluoride battery is not in sight and may never work out (not rechargeable, unstable, unsafe, inefficient, solvents and electrolytes don’t handle the voltages generated, lithium fluoride crystallizes and doesn’t conduct electricity, etc.).

The DOE has found that lithium-ion batteries are the only chemistry promising enough to use in electric cars. There are “several Li-ion chemistries being investigated… but none offers an ideal combination of energy density, power capability, durability, safety, and cost” (NAS 2013).

Lithium batteries can generate up to 3.8 volts but have to use non-aqueous electrolytes (because water has a 2 volt maximum) which gives a relatively high internal impedance.

They can be unsafe. A thermal runaway in one battery can explode into 932 F degrees and spread to other batteries in the cell or pack.

There are many other problems with all-electric cars

It will take decades or more to replace the existing fleet with electric cars if batteries ever do get cheap and powerful enough.  Even if all 16 million vehicles purchased every year were only electric autos, the U.S. car fleet has 250 million passenger vehicles and would take over 15 years to replace.  But only 120,000 electric cars were sold in 2014. At that rate it would take 133 years.

Electric cars are too expensive. The median household income of a an electric car buyer is $148,158 and $83,166 for a gasoline car. But the U.S. median household income was only $51,939 in 2014. The Tesla Model S tends to be bought by relatively wealthy individuals,  primarily men who have higher incomes, paid cash, and did not seriously consider purchasing another vehicle (NRC 2015).

And when gasoline prices began to drop in 2014, people stopped buying EVs and started buying gas guzzlers again.

Autos aren’t the game-changer for the climate or saving energy that they’re claimed to be.  They account for just 20% of the oil wrung out of a barrel, trucks, ships, manufacturing, rail, airplanes, and buildings use the other 80%.

And the cost of electric cars is expected to be greater than internal combustion engine and hybrid electric autos for the next two decades (NRC 2013).

The average car buyer wants a low-cost, long range vehicle. A car that gets 30 mpg would require a “prohibitively long-to-charge, expensive, heavy, and bulky” 78 kWh battery to go 300 miles, which costs about $35,000 now. Future battery costs are hard to estimate, and right now, some “battery companies sell batteries below cost to gain market share” (NAS 2013). Most new cathode materials are high-cost nickel and cobalt materials.

Rapid charging and discharging can shorten the lifetime of the cell. This is particularly important because the goal of 10 to 15 years of service for automotive applications, the average lifetime of a car. Replacing the battery would be a very expensive repair, even as costs decline (NAS 2013).

It is unclear that consumer demand will be sufficient to sustain the U.S. advanced battery industry. It takes up to $300 million to build one lithium-ion plant to supply batteries for 20,000 to 30,000 plug-in or electric vehicles (NAE 2012).

Almost all electric cars use up to 3.3 pounds of rare-earth elements in interior permanent magnet motors. China currently has a near monopoly on the production of rare-earth materials, which has led DOE to search for technologies that eliminate or reduce rare-earth magnets in motors (NAS 2013).

Natural gas generated electricity is likely to be far more expensive when the fracking boom peaks 2015-2019, and coal generated electricity after coal supplies reach their peak somewhere between now and 2030.

100 million electric cars require ninety 1,000-MWe power plants, transmission, and distribution infrastructure that would cost at least $400 billion dollars. A plant can take years to over a decade to build (NAS 2013).

By the time the electricity reaches a car, it’s lost 50% of the power because the generation plants are only 40% efficient and another 10% is lost in the power plant and over transmission lines, so 11 MWh would be required to generate enough electricity for the average car consuming 4 MWh, which is about 38 mpg — much lower than many gasoline or hybrid cars (Smil).

Two-thirds of the electricity generated comes from fossil fuels (coal 39%, natural gas 27%, and coal power continues to gain market share (Birnbaum)). Six percent of electricity is lost over transmission lines, and power plants are only 40% efficient on average – it would be more efficient for cars to burn natural gas than electricity generated by natural gas when you add in the energy loss to provide electricity to the car (proponents say electric cars are more efficient because they leave this out of the equation). Drought is reducing hydropower across the west, where most of the hydropower is, and it will take decades to scale up wind, solar, and other alternative energy resources.

The additional energy demand from 100 million PEVs in 2050 is about 286 billion kWh which would require new generating capacity of ninety 1,000 MW plants costing $360 billion, plus another $40 billion for high-voltage transmission and other additions (NAS 2013).

An even larger problem is recharge time. Unless batteries can be developed that can be recharged in 10 minutes or less, cars will be limited largely to local travel in an urban or suburban environment (NAS 2013). Long distance travel would require at least as many charging stations as gas stations (120,000).

Level 1 charging takes too long, level 2 chargers add to overall purchase costs.  Level 1 is the basic amount delivered at home.  A Tesla model S85 kWh battery that was fully discharged would take more than 61 hours to recharge, a 21 kWh Nissan Leaf battery over 17 hours.  So the total cost of electric cars should also include the cost of level 2 chargers, not just the cost itself (NRC 2015).

Fast charging is expensive, with level 3 chargers running $15,000 to $60,000.  At a recharging station, a $15,000 level 3 charger would return a profit of about $60 per year and the electricity cost higher than gasoline (Hillebrand 2012). Level 3 fast charging is bad for batteries, requires expensive infrastructure, and is likely to use peak-load electricity with higher cost, lower efficiency, and higher GHG emissions.

Battery swapping has many problems: battery packs would need to be standardized, an expensive inventory of different types and sizes of battery packs would need to be kept, the swapping station needs to start charging right away during daytime peak electricity, batteries deteriorate over time, customers won’t like older batteries not knowing how far they can go on them, and seasonal travel could empty swapping stations of batteries.

Argonne National Laboratory looked at the economics of Battery swapping  (Hillebrand 2012), which would require standardized batteries and enough light-duty vehicles to justify the infrastructure. They assumed that a current EV Battery Pack costs $12,000 to replace (a figure they considered  wildly optimistic). They assumed a $12,000 x 5% annual return on investment = $600, 3 year battery life means amortizing cost is $4000, and annual Return for each pack must surpass $4600 per year. They concluded that to make a profit in battery swapping, each car would have to drive 1300 miles per day per battery pack!  And therefore, an EV Battery is 20 times too expensive for the swap mode.

Lack of domestic supply base. To be competitive in electrified vehicles, the United States also requires a domestic supply base of key materials and components such as special motors, transmissions, brakes, chargers, conductive materials, foils, electrolytes, and so on, most of which come from China, Japan, or Europe. The supply chain adds significant costs to making batteries, but it’s not easy to shift production to America because electric and hybrid car sales are too few, and each auto maker has its own specifications (NAE 2012).

The embodied energy (oiliness, EROEI) of batteries is enormous.  The energy to make Tesla’s lithium ion energy batteries is also huge, substantially subtracting from the energy returned on invested (Batto 2017).

Ecological damage. Mining and the toxic chemicals used to make and with batteries pollute water and soil, harm health, and wildlife.

The energy required to charge them (Smil)

An electric version of a car typical of today’s typical American vehicle (a composite of passenger cars, SUVs, vans, and light trucks) would require at least 150 Wh/km; and the distance of 20,000 km driven annually by an average vehicle would translate to 3 MWh of electricity consumption. In 2010, the United States had about 245 million passenger cars, SUVs, vans, and light trucks; hence, an all-electric fleet would call for a theoretical minimum of about 750 TWh/year. This approximation allows for the rather heroic assumption that all-electric vehicles could be routinely used for long journeys, including one-way commutes of more than 100 km. And the theoretical total of 3 MWh/car (or 750 TWh/year) needs several adjustments to make it more realistic. The charging and recharging cycle of the Li-ion batteries is about 85 percent efficient, 32 and about 10 percent must be subtracted for self-discharge losses; consequently, the actual need would be close to 4 MWh/car, or about 980 TWh of electricity per year. This is a very conservative calculation, as the overall demand of a midsize electric vehicle would be more likely around 300 Wh/km or 6 MW/year. But even this conservative total would be equivalent to roughly 25% of the U.S. electricity generation in 2008, and the country’s utilities needed 15 years (1993–2008) to add this amount of new production.

The average source-to-outlet efficiency of U.S. electricity generation is about 40 percent and, adding 10 percent for internal power plant consumption and transmission losses, this means that 11 MWh (nearly 40 GJ) of primary energy would be needed to generate electricity for a car with an average annual consumption of about 4 MWh.

This would translate to 2 MJ for every kilometer of travel, a performance equivalent to about 38 mpg (6.25 L/100 km)—a rate much lower than that offered by scores of new pure gasoline-engine car models, and inferior to advanced hybrid drive designs

The latest European report on electric cars—appropriately entitled How to Avoid an Electric Shock—offers analogical conclusions. A complete shift to electric vehicles would require a 15% increase in the European Union’s electricity consumption, and electric cars would not reduce CO2 emissions unless all that new electricity came from renewable sources.

Inherently low load factors of wind or solar generation, typically around 25 percent, mean that adding nearly 1 PWh of renewable electricity generation would require installing about 450 GW in wind turbines and PV cells, an equivalent of nearly half of the total U.S. capability in 2007.

The National Research Council found that for electric vehicles to become mainstream, significant battery breakthroughs are required to lower cost, longer driving range, less refueling time, and improved safety. Battery life is not known for the first generation of PEVs.. Hybrid car batteries with performance degradation are hardly noticed since the gasoline combustion engine kicks in, but with a PEV, there is no hiding reduced performance. If this happens in less than the 15 year lifespan of a vehicle, that will be a problem. PEV vehicles already cost thousands more than an ICE vehicle. Their batteries have a limited warranty of 5-8 years. A Nissan Leaf battery replacement is $5,500 which Nissan admits to selling at a loss (NAS 2015).

Cold weather increases energy consumption

cold weather increases energy consumption

 Source: Argonne National Laboratory

On a cold day an electric car consumes its stored electric energy quickly because of the extra electricity needed to heat the car.  For example, the range of a Nissan Leaf is 84 miles on the EPA test cycle, but if the owner drives 90% of the time over 70 mph and lives in a cold climate, the range could be as low as 50 miles (NRC 2015).



ADEME. 2011. Study on the second life batteries for electric and plug-in hybrid vehicles.

Batto, A. B. 2017. The ecological challenges of Tesla’s Gigafactory and the Model 3. AmosBatto.wordpress.com

Birnbaum, M. November 23, 2015. Electric cars and the coal that runs them. Washington Post.

Borenstein, S. Jan 22, 2013. What holds energy tech back? The infernal battery. Associated Press.

Hillebrand, D. October 8, 2012. Advanced Vehicle Technologies; Outlook for Electrics, Internal Combustion, and Alternate Fuels. Argonne National Laboratory.

Hiscox, G. 1901. Horseless Vehicles, Automobiles, Motor Cycles. Norman Henley & Co.

Hodson, H. Jully 25, 2015. Power to the people. NewScientist.

House, Kurt Zenz. 20 Jan 2009. The limits of energy storage technology. Bulletin of the Atomic Scientists.

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NAS. 2015. Cost, effectiveness and deployment of fuel economy tech for Light-Duty vehicles.   National Academy of Sciences. 613 pages.

NRC. 2008. Review of the 21st Century Truck Partnership. National Research Council, National Academy of Sciences.

NRC. 2013. Overcoming Barriers to Electric-Vehicle Deployment, Interim Report. Washington, DC: National Academies Press.

NRC. 2015. Overcoming Barriers to Deployment of Plug-in Electric Vehicles. National  Research Council, National Academies Press.

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Tesla. 2014. “Increasing Energy Density Means Increasing Range.”

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Tesla semis and the laws of physics

23 11 2017


ANOTHER excellent and well researched article from Alice Friedemann. This pretty well confirms everything I told our mate Eclipse who believes in all this techno crap, because that’s all it is. I find it baffling how people get taken in by such rubbish.  Even if these trucks were going to be built, it would be a HUGE waste of Lithium batteries, because they are needed elsewhere, in things that we need to carry around for doing useful things…….

Loads of interesting links in the references at the bottom



Tesla Truck

Preface: Most people think that electric truck makers need to tell us the specs — the battery kWh, price, performance, and so on — before we can possibly know anything about their truck.

But that’s simply not true.  We know what lithium-ion batteries are capable of. And we know the kWh, size, and weight of the battery needed to move a truck of given weight a certain number of miles.  That makes it possible for scientists to work backwards and figure out how many kWh the battery would need to be to go 300 to 500 miles, what it would weigh, and the likely price for the battery needed for a truck at the maximum road limit of 80,000 pounds. [in Australia it’s 40 tonnes – our trucks have more wheels! We also have B doubles, some with 9 axles that can haul 64.5 tonnes https://www.nhvr.gov.au/files/201707-0577-common-heavy-freight-vehicles-combinations.pdf ]

S. Sripad and V. Viswanathan (2017) at Carnegie Mellon have done just that.  They published a paper in the peer-reviewed American Chemical Society Letters at the following link: Performance metrics required of next-generation batteries to make a practical electric semi truck.  Below is my review of their paper along with some additional cited observations of my own.

 — Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts: Derrick JensenPractical PreppingKunstlerCast 253KunstlerCast278Peak Prosperity , XX2 report

* * *

Authors S. Sripad and V. Viswanathan felt compelled to write their paper because there are so many guesstimates of the likely cost and performance of an electric class 8 semi-truck in the media. But these hasty calculations don’t take into account critical factors like the specific energy density of the battery pack, vehicle weight, drag, rolling resistance, battery kwH to go a given distance, and weight of the batteries given current Li-ion battery technology.

The definition of class 8 trucks is their weight of 33,000 pounds or more.  We can assume electric class 8 trucks would have the same basic truck weight, because building them with light-weight aluminum or carbon fiber is too expensive. And unlike cars, where the average income of an electric car buyer is $148,158 (NRC 2015), and the amount of aluminum needed to light-weight the car is a small fraction of what a truck would require, the trucking industry is a cut throat business with razor thin profits.  Light-weighting them is out of the question.

The maximum weight of a truck allowed on the road is 80,000 pounds, so if the body weight of the truck is the minimum 33,000 pounds, then the maximum amount of cargo that can be carried is 47,000 pounds.

The authors found that a 900 mile range [to arrive at kms, just multiply by 1.6] is simply not possible with today’s batteries, because the weight of the battery pack required is 54,000 pounds plus 33,000 pounds truck weight, which is 87,000 pounds, well over the maximum road weight limit of 80,000 pounds. And this truck that can not haul cargo will set you back $500,000 to $650,000 dollars for the battery alone.

A 600 mile range isn’t commercial either. For starters, the battery pack would cost $320,000 to $420,000 dollars, and on top of that you’ll need add another $100,000 for the body of the truck. To move a truck 600 miles requires a 36,000 pound battery + 33,000 pound truck weight and the truck can only carry 11,000 pounds, which is 36,000 pounds less than a diesel truck can carry.

Musk claims the range of the truck can be as much as 500 miles.  Based on the figures in Table 1, that means the battery would cost $267,000 to $350,000 (also add on $100,000 for the truck body), and the battery will weigh 30,000 pounds + 33,000 pound truck weight and be able to carry only 17,000 pounds of cargo, which is 30,000 fewer pounds than a diesel truck.

Even if the range is on the low end of 300 miles, the battery will still be very heavy, 18,000 pounds + 33,000 pounds truck weight and and only be able to carry 29,000 pounds of cargo, which is 18,000 pounds less than a diesel truck.

The bottom line according to the authors, is that a 600 to 900 mile range truck will use most or all of their battery power to move the battery itself, not the cargo. The cost of the battery is $160,000 to $210,000 plus $100,000 for the truck body, so overall $260,000 to $310,000, which is $140,00 to $190,000 more than a new $120,000 diesel truck — considerably more than used diesel class 8 truck, which can cost as little as $3,000.

If anyone in the trucking industry is reading this, I’d like to know if a 300 mile range with just 18,000 pounds of cargo is acceptable.  I suspect the answer is no, because the Port of Los Angeles explored the concept of using an all-electric battery drayage (short-haul) truck to transfer freight between the port and warehouses, but rejected these trucks because the 350 kWh battery weighed 7,700 pounds and reduced cargo payload too much. Nor was the 12 hours or more to recharge the battery acceptable. Ultra-fast 30 min recharging was considered too risky since this might reduce battery lifespan, and bearing the cost of replacing these expensive batteries was out of the question (Calstart 2013).

Even if a way has been found to charge a truck in half an hour without reducing battery life, the amount of power needed to do that is huge, so new transmission, voltage lines, upgrading many substations with more powerful transformers, and new natural gas generating power plants will need to be constructed.  Across the nation that’s many billion dollars.  Who will pay for that?

It shouldn’t be surprising that a truck battery would weigh so much.  Car batteries simply don’t scale up — they make trucks too heavy.  The authors calculated that a 900 mile electric class 8 truck would require a battery pack 31 times the size and weight of a 100 kWh Tesla Model S car not only because of weight, but all the other factors mentioned above (aerodynamics, rolling resistance, etc).

If the Tesla Semi or any other truck maker’s prototype performs better than this, there are additional questions to ask.  For example, new diesel trucks today get 7 miles per gallon. But the U.S. Super Truck program has built trucks that get an amazing 12 mpg. But those trucks are not being made commercially.  I don’t know why, but it could be because this achievement was done by making the prototype truck with very light weight expensive materials like carbon fiber or aluminum, costly tires with less rolling resistance, and other expensive improvements that were too expensive to be commercial.

Performance can also be gamed – a diesel truck going downhill or on level ground, with less than the maximum cargo weight, going less than 45 miles per hour with an expert driver who seldom brakes, can probably get 12 mpg even though they’re not driving a Super Truck.

Who’s going to buy the Tesla Semi, Cummins EOS, Daimler E-FUSO, or BYD all-electric semi-trucks?

Most trucking companies are very small and can’t afford to buy expensive trucks: 97% of the 1.3 million trucking companies in the U.S. own 20 trucks or less, 91% have six or fewer. They simply aren’t going to buy an electric truck that costs roughly 2.5 times more than a diesel truck, carries half the weight, just 300 miles (diesel trucks can go 1,800 miles before refueling).

Nor will larger, wealthier trucking companies be willing to invest in electric trucks until the  government pays for and builds the necessary charging stations. This is highly unlikely given there’s no infrastructure plan (Jenkins 2017), nor likely the money to execute one, given the current reverse Robin Hood “tax reform” plan. With less money to spend on infrastructure, charging stations might not even be on the list.

The big companies that have bought (hybrid) electric class 4 to 6 trucks so far only did so because local, state, and federal subsidies made up the difference between the cost of a diesel and (hybrid) electric truck.  The same will likely be true of any company that makes class 8 long-haul trucks.

I constructed Table 1 to summarize the averages of figure 2 in this paper, which has the estimated ranges of required battery pack sizes, weights, cost, and payload capacities of a 300, 600, or 900 mile truck.

Range (miles) Battery kWh required Battery Pack Cost at $160-$210 per kWh Battery Weight kg / tons Max Payload
300 1,000 $160 – 210,000   8,200 /   9 8.5
600 2,000 $320 – 420,000 16,000 / 18 5.5
900 3,100 $500 – 650,000 24,500 / 27 0

Table 1. All electric truck data from figure 2 of Sripad (2017).   A diesel truck Max payload is 23.5 tons.  The max payload (cargo weight) is derived from the max truck road weight of 40 tons, minus battery weight, minus weight of the truck (17.5 tons).

As to whether the Tesla Semi will perform as well as Elon Musk says, it is not certain he will still be in business in 2019, because Musk and other electric car makers are competing for very few potential electric car buyers and with each other as well. There will never be enough electric car buyers because of the distribution of wealth. Sixty-nine percent of the United States population has less than $1,000 in savings (McCarthy 2016). At best the top 10% can afford an electric car, but many of them don’t want an electric car, don’t have a garage, prefer Lyft or mass transit, are saving to buy a house or survive the next financial crash.  And if states or the Trump administration end subsidies that will further dent sales.

Nor will there ever be completely automated cars or trucks, because unlike airplanes, where pilots have 8 minutes of grace before the crash to go back to manual controls, there is only a second for a car or truck driver to notice that an accident is about to occur and override the system.  The better the system is automated, the less likely the driver is to even be paying attention.  So the idea that the poor bottom 90% can order an automated electric car to their doorstep isn’t going to happen.  Nor can it happen with a driver – there is simply too little time to notice and react.

Just imagine if an automatic truck were hacked or malfunctioned, it would be like an attack missile with that much weight and momentum behind it.

Even if the Tesla semis are built in 2019, we won’t know until 2024 if charging in just half an hour, cold weather, and thousands of miles driven reduces driving range and battery life, if the battery can withstand the rough ride of roads, and be certain that lithium is still cheap and easily available.

The only thing going for the Tesla Semi is that electricity is cheap, for now.  But at some point finite natural gas will begin to decline and become very expensive, even potentially unaffordable for the bottom 90%.  As gas decline exponentially continues, all the solar and wind power in the world does no good because the electric grid requires natural gas to balance their intermittent power. There is no other kind of energy storage in sight.  Utility-scale batteries are far from commercial.  Although compressed air energy storage and pumped hydro storage dams are commercial, there are so few places to put these expensive alternatives that they can make little, if any meaningful contribution, ever.

Meanwhile, this hoopla may drive Musk’s stock up and distract from his lack of meeting the Model 3 goals, but investors have limited patience, and Musk has over $5 billion in debt to pay back.  It may be that Elon Musk is banking on government subsidies, like the $9 million State of California award to the BYD company for 27 electric trucks — $333,000 per truck (ARB 2016), and the Ports of Los Angeles and San Pedro who will subsidize a zero emission truck that can go at least 200 miles.


ARB. 2016. State to award $9 million for zero-emission trucks at two rail yards, one freight transfer yard in Southern California. California Air Resources Board.

Calstart. 2013. I-710 project zero-emission truck commercialization study. Calstart for Los Angeles County Metropolitan Transportation Authority. 4.7

Jenkins, A. 2017. Will anybody actually use Tesla’s electric semi truck? Fortune.

McCarthy, N. September 23, 2016. Survey: 69% Of Americans Have Less Than $1,000 In Savings. Forbes.

NRC. 2015. Overcoming barriers to deployment of plug-in electric vehicles. Washington, DC: National Academies Press.

Sripad, S.; Viswanathan, V. 2017. Performance metrics required of next-generation batteries to make a practical electric semi truck.  ACS Energy Letters 2: 1669-1673.

Vartabedian, M. 2017. Exclusive: Tesla’s long-haul electric truck aims for 200 to 300 miles on a charge. Reuters.

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The model is broken…..

22 11 2017

This amazing article was originally published here…….


For a long time now, “sustainable development” has been the fashionable economic objective, the Holy Grail for anyone aiming to achieve economic growth without inducing catastrophic climate degradation. This has become the default position for two, very obvious reasons. First, no politician wants to tell his electorate that growth is over (even in countries where, very clearly, prosperity is now in decline). Second, policymakers prepared to invite ridicule by denying the reality of climate change are thin on the ground.

Accordingly, “sustainable development” has become a political article of faith. The approach seems to be to assume that sustainable development is achievable, and use selective data to prove it.

Where this comfortable assumption is concerned, this discussion is iconoclastic. Using the tools of Surplus Energy Economics, it concludes that the likelihood of achieving sustainable development is pretty low. Rather, it agrees with distinguished scientist James Lovelock in his observation that sustainable retreat might be the best we can expect.

This site is dedicated to the critical relationship between energy and economics, but this should never blind us to the huge threat posed by climate change. There seems no convincing reason to doubt either the reality of climate change science or the role that emissions (most obviously of CO²) are playing in this process. As well as counselling sustainable retreat, James Lovelock might be right, too, in characterising the earth as a system capable of self-regeneration so long as its regenerative capabilities are not tested too far.

False comfort

Economics is central to this debate. Here, comparing 2016 with 2001, are some of the figures involved;

Real GDP, 2016 values in PPP dollars:

2001: $73 trillion. 2016: $120tn (+65%)

Energy consumption, tonnes of oil equivalent:

2001: 9.5bn toe. 2016: 13.3bn toe (+40%)

Emissions of CO², tonnes:

2001: 24.3bn t. 2016: 33.4bn t (+37%)

If we accept these figures as accurate, each tonne of CO² emissions in 2001 was associated with $2,990 of GDP. By 2016, that number had risen to $3,595. Put another way, 17% less CO² was emitted for each $1 of GDP. By the same token, the quantity of energy required for each dollar of GDP declined by 15% over the same period.

This is the critical equation supporting the plausibility of “sustainable growth”. If we have really shown that we can deliver successive reductions in CO² emissions per dollar of GDP, we have options.

One option is to keep CO2 levels where they are now, yet still grow the economy. Another is to keep the economy where it is now and reduce CO2 emissions. A third is to seek a “goldilocks” permutation, both growing the economy and reducing emissions at the same time.

Obviously, the generosity of these choices depends on how rapidly we can continue our progress on the efficiency curve. Many policymakers, being pretty simple people, probably use the “fool’s guideline” of extrapolation – ‘if we’ve achieved 17% progress over the past fifteen years’, they conclude, ‘then we can expect a further 17% improvement over the next fifteen’.

Pretty lies

But what if the apparent ‘progress’ is illusory? The emissions numbers used as the denominator in the equation can be taken as accurate, as can the figures for energy consumption. Unfortunately, the same can’t be said of the economic numerator. As so often, we are telling ourselves comforting untruths about the way in which the world economy is behaving.

This issue is utterly critical for the cause of “sustainable development”, whose plausibility rests entirely on the numbers used to calculate recent trends.

And there are compelling reasons for suspecting the validity of GDP numbers.

For starters, apparent “growth” in economic output seems counter-intuitive. According to recorded numbers for per capita GDP, the average American was 6% better off in 2016 than in 2006, and the average Briton was 3% more prosperous. These aren’t big numbers, to be sure, but they are positive, suggesting improvement, not deterioration. Moreover, there was a pretty big slump in the early part of that decade. Adjustment for this has been used to suggest that people are growing more prosperous at rates faster than the trailing-10-year per capita GDP numbers indicate.

Yet the public don’t buy into the thesis of “you’ve never had it so good”. Indeed, it isn’t possible reconcile GDP numbers with popular perception. People feel poorer now than they did in 2006, not richer. That’s been a powerful contributing factor to Americans electing Donald Trump, and British voters opting for “Brexit”, crippling Theresa May’s administration and turning in large numbers to Jeremy Corbyn’s collectivist agenda. Much the same can be said of other developed economies, including France (where no established party made it to the second round of presidential voting) and Italy (where a referendum overwhelmingly rejected reforms proposed by the then-government).

Ground-level data suggests that the popular perception is right, and the per capita GDP figures are wrong. The cost of household essentials has outpaced both incomes and general inflation over the past decade. Levels of both household and government debt are far higher now than they were back in 2006. Perhaps worst of all – ‘though let’s not tell the voters’ – pension provision has been all but destroyed.

The pension catastrophe has been attested by a report from the World Economic Forum (WEF), and has been discussed here in a previous article. It is a topic to which we shall return in this discussion.

The mythology of “growth”

If we understand what really has been going on, we can conclude that, where prosperity is concerned, the popular perception is right, meaning that the headline GDP per capita numbers must be misleading. Here is the true story of “growth” since the turn of the century.

Between 2001 and 2016, recorded GDP grew by 65%, adding $47tn to output. Over the same period, however, and measured in constant 2016 PPP dollars, debt increased by $135tn (108%), meaning that each $1 of recorded growth came at a cost of $2.85 in net new borrowing.

This ratio has worsened successively, mainly because emerging market economies (EMEs), and most obviously China, have been borrowing at rates far larger than growth, a vice previously confined to the developed West.

This relationship between borrowing and growth makes it eminently reasonable to conclude that much of the apparent “growth” has, in reality, been nothing more substantial than the spending of borrowed money. Put another way, we have been boosting “today” by plundering “tomorrow”, hardly an encouraging practice for anyone convinced by “sustainable development” (or, for that matter, sustainable anything).

Nor is this all. Since the global financial crisis (GFC) of 2008, we have witnessed the emergence of enormous shortfalls in society’s provision for retirement. According to the WEF study of eight countries – America, Australia, Britain, Canada, China, India, Japan and the Netherlands – pension provision was deficient by $67tn in 2015, a number set to reach $428tn (at constant values) by 2050.

Though the study covers just eight countries, the latter number dwarfs current GDP for the entire world economy ($120tn PPP). The aggregate eight-country number is worsening by $28bn per day. In the United States alone, the annual deterioration is $3tn, equivalent to 16% of GDP and, incidentally, roughly five times what America spends on defence. Moreover, these ratios seem certain to worsen, for pension gaps are increasing at annual rates far in excess of actual or even conceivable economic growth.

For the world as a whole, the equivalent of the eight-country number is likely to be about $124tn. This is a huge increase since 2008, because the major cause of the pensions gap has been the returns-destroying policy of ultra-cheap money, itself introduced in 2008-09 as a response to the debt mountain which created the GFC. Finally, on the liabilities side, is interbank or ‘financial sector’ debt, not included in headline numbers for debt aggregates.

Together, then, liabilities can be estimated at $450tn – $260tn of economic debt, about $67tn of interbank indebtedness and an estimated $124tn of pension under-provision. The equivalent number for 2001 is $176tn, expressed at constant 2016 PPP values. This means that aggregate liabilities have increased by $274tn over fifteen years – a period in which GDP grew by just $47tn.

The relationship between liabilities and recorded GDP is set out in the first pair of charts, which, respectively, set GDP against debt and against broader liabilities. Incidentally, the pensions issue is, arguably, a lot more serious than debt. This is because the real value of existing debt can be “inflated away” – a form of “soft default” – by governments willing to unleash inflation. The same cannot be said of pension requirements, which are, in effect, index-linked.

113 #1jpg_Page1

Where climate change is concerned, what matters isn’t so much the debt or broader liability aggregates, or even the rate of escalation, but what they tell us about the credibility of recorded GDP and growth.

Here, to illustrate the issues involved, are comparative annual growth rates between 2001 and 2016, a period long enough to be reliably representative:

GDP: +3.4% per year

Debt: +5.0%

Pension gap and interbank debt: +9.1%

To this we can add two further, very pertinent indicators:

Energy consumption: +2.2%

CO2 emissions: +2.1%

The real story

As we have seen, growth of $47tn in recorded GDP between 2001 and 2016 was accompanied – indeed, made possible – by a vast pillaging of the balance sheet, including $135tn in additional indebtedness, and an estimated $140tn in other liabilities.

The only realistic conclusion is that the economy has been inflated by massive credit injections, and by a comparably enormous unwinding of provisions for the future. It follows that, absent these expedients, organic growth would have been nowhere near the 3.4% recorded over the period.

SEEDS – the Surplus Energy Economics Data System – has an algorithm designed to ex-out the effect of debt-funded consumption (though it does not extend this to include pension gaps or interbank debt). According to this, adjusted growth between 2001 and 2016 was only 1.55%. As this is not all that much faster than the rate at which the population has been growing, the implication is that per capita growth has been truly pedestrian, once we see behind the smoke-and-mirrors effects of gargantuan credit creation.

This isn’t the whole story. The above is a global number, which embraces faster-than-average growth in China, India and other EMEs. Constrastingly, prosperity has actually deteriorated in Britain, America and most other developed economies. Citizens of these countries, then, are not imagining the fall in prosperity which has helped fuel their discontent with incumbent governing elites. The deterioration has been all too real.

The second set of charts illustrates these points. The first shows quite how dramatically annual borrowing has dwarfed annual growth, with both expressed in constant dollars. The second sets out what GDP would have looked like, according to SEEDS, if we hadn’t been prepared to trash collective balance sheets in pursuit of phoney “growth”. You will notice that the adjusted trajectory is consistent with what was happening before we ‘unleashed the dogs of cheap and easy credit’ around the time of the millenium.

113 #2jpg_Page1

Flagging growth – the energy connection

As we have seen, then, the very strong likelihood is that real growth in global economic output over fifteen years has been less than 1.6% annually, slower than growth either in energy consumption (2.2%) or in CO² emissions(2.1%). In compound terms, growth in underlying GDP seems to have been about 26% between 2001 and 2016, appreciably less than increases in either energy consumption (+40%) or emissions (+37%).

At this point, some readers might think this conclusion counter-intuitive – after all, if technological change has boosted efficiency, shouldn’t we be using less energy per dollar of activity, not more?

There is, in fact, a perfectly logical explanation for this process. Essentially, the economy is fuelled, not by energy in the aggregate, but by surplusenergy. Whenever energy is accessed, some energy is always consumed in the access process. This is expressed here as ECoE (the energy cost of energy), a percentage of the gross quantity of energy accessed. The critical point is that ECoE is on a rising trajectory. Indeed, the rate of increase in the energy cost of energy has been rising exponentially.

As mature resources are depleted, recourse is made to successively costlier (higher ECoE) alternative sources. This depletion effect is moderated by technological progress, which lowers the cost of accessing any given form of energy. But technology cannot breach the thermodynamic parameters of the resource. It cannot, as it were, ‘trump the laws of physics’. Technology has made shale oil cheaper to extract than shale oil would have been in times past. But what it has not done is transform shales into the economic equivalent of giant, technically-straightforward conventional fields like Al Ghawar in Saudi Arabia. Any such transformation is something that the laws of physics simply do not permit.

According to estimates generated on a multi-fuel basis by SEEDS, world ECoE averaged 4.0% in 2001, but had risen to 7.5% by 2016. What that really means is that, out of any given $100 of economic output, we now have to invest $7.50, instead of $4, in accessing energy. The resources that we can use for all other purposes are correspondingly reduced.

In the third pair of charts, the left-hand figure illustrates this process. The area in blue is the net energy that fuels all activities other than the supply of energy itself. This net energy supply continues to increase. But the red bars, which are the energy cost of energy, are rising too, and at a more rapid rate. Consequently, gross energy requirements – the aggregate of the blue and the red – are rising faster than the required net energy amount. This is why, when gross energy is compared with economic output, the energy intensity of the economy deteriorates, even though the efficiency with which netenergy is used has improved.

113 #3jpg_Page1

Here’s another way to look at ECoE and the gross/net energy balance. Back in 2001, we needed to access 104.2 units of energy in order to have 100 units for our use. In 2016, we had to access 108.1 units for that same 100 units of deployable energy. This process, which elsewhere has been called “energy sprawl”, means that any given amount of economic activity is requiring the accessing of ever more gross energy in order to deliver the requisite amount of net (surplus) energy. By 2026, the ratio is likely to have risen to 112.7/100.

The companion chart shows the trajectory of CO² emissions. Since these emissions are linked directly to energy use, they can be divided into net (the pale boxes), ECoE (in dark grey) and gross (the sum of the two). Thanks to a lower-carbon energy slate, net emissions seem to be flattening out. Unfortunately, gross emissions continue to increase, because of the CO2 associated with the ECoE component of gross energy requirements.

Shot down in flames? The “evidence” for “sustainable development”

As we have seen, a claimed rate of economic growth (between 2001 and 2016) that is higher (65%) than the rate at which CO2 emissions have expanded (37%) has been used to “prove” increasing efficiency. It is entirely upon these claims that the viability of “sustainable development” is based.

But, as we have also seen, reported growth has been spurious, the product of unsustainable credit manipulation, and the unwinding of provision for the future. Real growth, adjusted to exclude this manipulation, is estimated by SEEDS at 26% over that period. Crucially, that is less than the 37% rate at which CO² emissions have grown.

On this basis, a claimed 17% “improvement” in the amount of CO2 per dollar of output reverses into a deterioration. Far from improving, the relationship between CO2 and economic output worsened by 9% between 2001 and 2016. In parallel with this, the amount of energy required for each dollar of output increased by 11% over the same period.

The final pair of charts illustrate this divergence. On the left, economic activity per tonne of CO2 is shown. The second chart re-expresses this relationship using GDP adjusted for the artificial “growth” injected by monetary manipulation. If this interpretation is correct – and despite a very gradual upturn in the red line since 2010 – the comforting case for “sustainable development” falls to pieces.

In short, if growth continues, rising ECoEs dictate that both energy needs, and associated emissions of CO2, will grow at rates exceeding that of economic output.

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We are back where many have argued that we have been all along. The pursuit of growth seems to be incompatible with averting potentially irreversible climate change.

There is a nasty sting-in-the-tail here, too. The ECoE of oil supplies is rising particularly markedly, and there seems a very real danger that this will force an increased reliance on coal, a significantly dirtier fuel. A recent study by the China University of Petroleum predicted exactly such a trend in China, already the world’s biggest producer of CO2. As domestic oil supply peaks and then declines because of higher ECoEs, the study postulates a rapid increase in coal consumption to feed the country’s voracious need for energy. This process is most unlikely to be confined to China.

Where does this leave us?

The central contention here is that the case for “sustainable development” is fatally flawed, because the divergence between gross and net energy needs is more than offsetting progress in greening our energy mix and combatting emissions of harmful gases. “Sustainable development” is a laudable aim, but may simply not be achievable within the laws of physics as they govern energy supply.

If this interpretation is correct, it means that growth in the global economy can be pursued only at grave climate risk. A (slightly) more comforting interpretation might that the super-heated rate of borrowing, and the seemingly disastrous rate at which pension capability is being destroyed, might well crash the system before our obsession with ‘growth at all costs’ can inflict irreparable damage to the environment.

Post collapse, just what will we eat…..?

21 11 2017

Further to my post where I explained how Australia’s poor soils are largely incapable of growing much more than meat, this article landed in my news feed…

Here’s a list of what Australian farmers produce:

  • Each year, on average each Australian farmer feeds 600 people.
  • Agriculture powers 1.6 million Australian jobs.
  • Australian farmers manage 48 per cent of the nation’s landmass.
  • Cattle, wheat and whole milk are our top three commodities by value.
  • More than 99% of Australia’s agricultural businesses are Australian owned.
  • Out of the $58.1 billion worth of food and fibre Australian farmers produced in 2015-16 77 per cent ($44.8 billion) was exported. 
  • 6.8 million hectares of agricultural land has been set aside by Australian farmers for conservation and protection purposes.
  • Australian farmers are among the most self-sufficient in the world, with government support for Australian farms representing just 1% of farming income. In Norway it is 62%, Korea 49%, China 21%, European Union 19% and United States 9%.

Farm facts by commodity

  • In total, Australian beef cattle farmers produce 2.5 million tonnes of beef and veal each year. Australians eat an average 26kg of beef per person, per year. 
  • Australians consume an average of 45.3kg of chicken meat per person, per year. This not only cements chicken’s position as Australian consumers’ favourite meat, but also makes Australia one of the largest consumers of chicken meat in the world!
  • In a normal year, Australia’s cotton growers produce enough cotton to clothe 500 million people.
  • Australia produces about 3 per cent of the world’s cotton but is the fifth largest exporter, behind the USA, India, Brazil, Uzbekistan.
  • Australian dairy farmers produce 9,539 million litres of whole milk per year with the farmgate value of milk production being $4.3 billion.
  • On average, each Australian eats 3.08kg of dried fruit per year. Total Australian dried fruit exports in 2015–16 totalled 5,000 tonnes and was valued at $19.4 million.
  • The Australian forestry, logging and wood manufacturing industry employs 64,300 in the forest products industry. At the end of 2010, 13,067 million tonnes of carbon was held in Australia’s forests and harvested wood products in service and in landfill. Almost all this carbon 12,841 million tonnes – 98% was stored in living forest.
  • Australia’s grains industry accounts for more than 170,000 jobs across Australia from farm to export dock. About 65% of Australia’s grain is exported, including up to 90% of that grown per annum in Western Australia and South Australia.
  • Australians consumed more than 27kg of pig meat per person in 2015–16; ranked second behind poultry.  The Australian pig herd is free from many serious viral and bacterial diseases afflicting other pork producing countries.
  •  In 2016–17 there were 772 farmers who harvested rice, a significant increase on the 347 growers from the year prior. Australian rice growers use 50% less water to grow one kilo of rice than the world average.
  • Australia is the world’s largest exporter of sheepmeat, and is the world’s third largest producer of lamb and mutton. In 2016–17, Australians, on average, ate 9.5 kg of mutton and lamb per person.
  • The sugar industry directly employs some 16,000 people. The world’s principal sugar exporters in 2015–16 were Brazil, Thailand, Australia and India.
  • Wool production for 2016–17 is forecast to increase by 4.3%, to 339 million kilograms (greasy) from the estimated 2015–16 production period. The increase is largely the result of excellent seasonal conditions in many areas resulting in higher fleece weights.

So, I ask you, WHERE do our fruit and veggies come from?

We may export 77% of what we produce, but it’s all meat, dairy, grains, and wool or cotton……  the money earned therefrom pays for the importation of fruit and veggies not farmed here. In a post oil crash, most of that stuff we export will no longer be made, because it all utterly depends on fertilisers and tractors and harvesters……. If we can’t afford to import non meat/dairy food, will we all turn into carnivores…?

These are serious questions to ponder…..

The mobile butcher came this afternoon, and cut up our two sheep, which are now in the freezer.  We won’t be starving, that’s for sure!

If you are vegan, you might also like (or not..!) to read this… https://qz.com/1131428/if-the-entire-us-went-vegan-itd-be-a-public-health-disaster/

Brace for impact….

21 11 2017

This piece is particularly interesting because it’s from someone who campaigns for the Scottish Greens. He’s also a scientist, so knows what’s going on better than most politicians.



Ian Baxter

Politics will not save us from abrupt climate change because we don’t want to be saved

By Ian Baxter

Forty years ago I was studying for a Physics degree at Edinburgh University. I chose Edinburgh because it offered a course which included Meteorology and Atmospheric Physics, interests which have stayed with me since.

When I came across articles about the Greenhouse Effect, this intrigued me as a scientist, but also worried me as a human being, and although it was only a theory at the time, I felt the implications if true were so severe that at the very least, we should adopt the precautionary principle and take immediate action to prevent it.

It was this that led me to join the Ecology Party in 1979 and since then, politics for me has always been about climate change and the need to address it before it became unstoppable. In the seventies and eighties, the threat of an impending nuclear war was on everyone’s minds, but here was another existential threat to humanity that although distant, required no less attention to defuse or at least to quantify.

Then it was a theory and if proven, we still had time to do something about it. Forty years on and the Greenhouse Effect is now known as Global Warming or Climate Change. The effects predicted are not only happening, but they are happening much faster than predicted and events over the last three years have led me to believe that this is not only irreversible, but we are now entering a period of what is known as ‘abrupt climate change’, which will lead to the breakdown of society within 30 years and near human extinction by the end of the century.

To understand how this will happen so quickly, we need to appreciate that climate change is not linear. We are on an exponential curve. The three warmest years on record globally have been 2014, 2015 and 2016 (with 2017 set to join them).  Floods, droughts, wildfires and storms are this year setting records and records are not only being broken, but they are starting to be broken by some margin. We’re on an curve where not only will events happen more often and be more severe, but the rate at which they increase will itself be increasing. That’s what exponential means.

We also need to appreciate some of the deficiencies in climate modelling. Specifically, climate scientists (in common with nearly all scientists) are experts in their own fields only. Looking at a specific aspect of science in isolation is fine if nothing else is changing, but if everything else is changing, you need to take that into account if you’re predicting what will happen in the future.

There are around 70 feedback effects now kicking in, and few if any models are taking these into account. For example, scientists studying the Arctic sea ice may take into account higher sea surface temperatures, but not the incursion of water vapour (a greenhouse gas) into the Arctic resulting from a distorted jet stream, or the impact of soot on ice albedo from increased wildfires thousands of miles away.

A recent example is the speed with which this year’s Atlantic hurricanes strengthened from tropical storms to Category 5 hurricanes due to higher sea surface temperatures. This surprised meteorologists as the computer models were only forecasting Cat 2 or 3 at most. Only now are they recognising that the models are underestimating the effect of warmer sea surfaces and the additional energy and water vapour they provide.

As Peter Wadhams writes in his recent book ‘A farewell to ice’, to reverse the effects of man made carbon dioxide in the atmosphere would demand a switch in global focus on the scale of the post war Marshall plan. We would need not only to stop producing CO2 but also turn over many of our factories to producing carbon capture and storage machines, and we would need to start right now. The cost to the world economies would be huge, possibly running to over $100 Trillion.

If, and it’s still an if, we are capable of reversing the trajectory we’re on, there are no signs of a willingness to do so – neither from politicians nor people in general. CO2 takes over a decade to become fully effective as a greenhouse gas, and lingers in the atmosphere for decades. Methane (CH4) is 130 times as effective as a greenhouse gas in the first 3 years after release and due largely to melting permafrost is starting to rise rapidly in global concentration (another feedback).

So what are we actually doing about it? ‘Emissions’ as measured by countries themselves levelled out over the past three years – but are now rising once again. Leaving aside allegations that the figures have been doctored anyway, the extra CO2 from increasing wildfires is not included (as an example, the CO2 from those in British Columbia, just one Canadian province, this year equated to the annual emissions from 40 million cars on the road). The litmus test is the actual measure of CO2 in the atmosphere – now reaching a peak of around 410 ppm and rising at a record annual rate of around 2.5 ppm per year.

In 1989, the UN issued a warning that we had only ten years to address global warming before irreversible tipping points start kicking in. That was 30 years ago. Similar warnings have appeared since, none of them heeded. Instead of issuing warnings, more and more scientists are now coming round to the view that it really is too late. What I have witnessed over the last three years has led me to believe the same. We really are too late and are now entering the sixth mass extinction.

Too many articles on climate change contain the phrase “By 2100…” or “By the end of the century…”. That really is too far away for most people to treat as urgent. While it’s difficult to make predictions, it should be made clear that the catastrophic impacts of climate change will affect us well before then.

Within five to ten years I expect to see food prices rising well above inflation – perhaps by as much as 50% to 100% with some empty shelves appearing in supermarkets as specific crops are devastated (we already had a ‘taste’ of this earlier this year with courgettes and lettuce crops hit by unusual weather in Spain; world wine production is now at a 50 year low due to extreme weather events).

Wildfires are already becoming uncontrollable. Portugal has seen six times its average this year. There have been fires in Greenland and in Australia during its winter, not to mention the devastation in California, Canada and Siberia. Hurricanes are becoming stronger and appearing in unusual places (Ophelia was the strongest on record in the east Atlantic and Greece is currently being hit by what is called a ‘Medicane’). Sea surface temperatures need to be over 28.5 C for a hurricane to strengthen. The Mediterranean off Italy’s coast reached 30 degrees this year. With the right conditions, it would only take one stray east Atlantic hurricane to head into the Med to cause widespread devastation. I can easily see this happening within ten years. Elsewhere we will see hurricanes and typhoons strong enough to flatten cities within the next decade.

The economic implications will be immense. The impact of hurricanes Harvey, Irma and Maria in the US is expected to be around $400 Billion this year, not counting the wildfires in California and drought in Montana. Over the next decade, super hurricanes, flooding and drought will cause insurance companies to collapse. Banks will follow and pension funds will start to come under pressure. With food prices increasing way ahead of wages, disposable incomes will be hit hard, leading to worldwide economic depression.

And that’s not taking into account the hundreds of millions of climate refugees (already begun in the Caribbean). With the jet stream already getting seriously messed up, or if the Hadley cells become severely disrupted, it’s not out of the question that the Indian monsoon could fail permanently and within a year we have a billion people starving.

There’s a saying that if something is unsustainable it will not be sustained. Obvious, perhaps, but we have been living well beyond the sustainability of the planet for decades and continue to believe that somehow we can do so increasingly and indefinitely. That will not be sustained.

So for forty years I tried to warn people. Now I tell them it’s too late and we’re f***ed, they say I’m being too negative need to give people a positive message. OK then, will “We’re positively f***ed” do?, because when we could save ourselves nobody listened, and even now when they think we still can, there is absolutely no will to do so.

For a long time, we have needed to change our lifestyles and that, for most people, is a red line area. There are no quick fixes. We cannot continue with mass air transport – the only non polluting alternative to fossil fuels requires huge areas of land to be removed from food production, which is already coming under pressure due to climate change and increasing population. We need to stop owning cars (not just leaving them in the driveways) – the resource requirements and human rights implications of even switching to electric cars present largely insurmountable problems. And even if these problems can be fixed, the solution needs to come first, rather than assuming as always that the next generation will somehow pick up the bill and sort out the mess we are creating by our profligate lifestyles.

And so we continue to build more runways and roads, drill for more oil, burn more forests for palm oil plantations and clear the rainforests for agriculture and logging, despite the fact that these massive environmental problems are no longer a theory but are staring us in the face. But we keep on driving and keep on flying and keep on buying things we don’t need from halfway across the globe without the slightest thought that all this will kill our children.

I was perhaps naive to believe that politics would solve the problem. If the bottom line is that people will not change their lifestyles, then they will not vote for politicians who say we need to. So politicians will not tell people the truth and tell them instead that we can get by with replacing petrol cars with electric ones by some decade well in the future and convince people we’re all ‘doing our bit’ for the planet by planting a few wind turbines. They talk vaguely about carbon capture and how air transport is important for economic growth and without that we cannot tackle climate change. As a councillor I was the only one even vaguely interested in the council’s climate change plan (including both councillors and officers).

And people believe them because they want to. I’ve long maintained that people get the politicians they deserve (good and bad) and they certainly don’t want politicians to tell them they can’t have their cheap holidays in Spain. I joined the Ecology Party (which became the Green Party) because it was, and still is, the only party to come anywhere close to telling people the truth on climate change. That people are generally not in the least interested in the environment that keeps them alive is borne out by the derisory vote Greens get – around 2% support except where they campaign strongly on non-environmental issues.

And Green Party activists have also realised this. So they focus on being more user friendly and campaigning on issues that ‘matter to people’ like independence or austerity, rather than lose votes by telling people it’s about time they faced the harsh truth.

I’ve been accused of being too Utopian, that before we address climate change we need an independent Scotland, or a Socialist Republic, or something else. And those arguments were rational thirty years ago – after all, it’s the free market Capitalist system that brought us to this position. However, thirty years ago is not now – when your house is on fire, you don’t try and get ownership of the keys, you reach for the hose. When I attend a climate rally and see it attracts less than a tenth of the numbers at a Scottish independence rally, it brings home how insane our politics has become. What planet do these people expect an independent Scotland to exist on? Venus by the look of it.

So we might be f***ed, but should we give up? No, I don’t think so. We may not be able to stop the process, but we can slow it down and offer the next generation at least some kind of palliative care. I have not flown or owned a car for around 20 years and will continue that way. Because very soon my children’s generation will become angry with mine, and will ask why, in the face of so many warnings from scientists for decades, we did nothing about it.

It will be little consolation, but at least I will be able to say I tried.

AND the shale oil rout continues unabated…….

16 11 2017

Republished from SRS Rocco Report….  for those of you who don’t know it exists!

U.S. SHALE OIL PRODUCTION UPDATE: Financial Carnage Continues To Gut Industry

As the Mainstream media reports about the next phase of the glorious U.S. Shale Oil Revolution, the financial carnage continues to gut the industry deep down inside the entrails of its horizontal laterals.  The stench of fracking fluid must be driving shale oil advocates utterly insane as they are no longer able to see financial wreckage taking place in these companies quarterly reports.

This weekend, one of my readers sent me the following Bloomberg 45 minute TV special titled, The Next Shale Revolution.  If you are in need of a good laugh, I highly recommend watching part of the video.  At the beginning of the video, it starts off with President Trump stating that the U.S. has become an energy exporter for the first time ever.  Trump goes on to say, “that powered by new innovation and technology, we are now on the cusp of a new energy revolution.”  While I have to applaud Trump’s efforts for putting out some positive and reassuring news, I wonder who is providing him with terribly inaccurate energy information.

I would kindly like to remind the reader; the United States is still a NET IMPORTER of oil.  We still import nearly six million barrels of oil per day, but we export some finished products and a percentage of our shale oil production.  Thus, we still import a net of approximately three million barrels per day of oil.

A few minutes into the Bloomberg video, both Pioneer Resources Chairman, Scott Sheffield, and Continental Resources CEO, Harold Hamm, explain how advanced technology will revolutionize the shale oil industry and bring down costs.  I find that statement quite hilarious as Continental Resources and Pioneer continue to spend more money drilling for oil and gas then they make from their operations.  As I stated in a previous article, Continental Resources long-term debt ballooned from $165 million in 2007 to $6.5 billion currently.  So, how did advanced technology lower costs when Continental now has accumulated debt up to its eyeballs?

Of course… it didn’t.  Debt increased on Continental Resources balance sheet because shale oil production wasn’t profitable… even at $100 a barrel.  So, now the investor who purchased Continental bonds and debt are the Bag Holders.

Regardless, while U.S. oil production continues to increase at a moderate pace, there are some troubling signs in one of the country’s largest shale oil fields.

Shale Oil Production At the Mighty Eagle Ford Stagnates As Companies’ Financial Losses Mount

It was just a few short years ago that the energy industry was bragging about the tremendous growth of shale oil production at the mighty  Eagle Ford Region in Texas.  At the beginning of 2015, Eagle Ford oil production peaked at a record 1.7 million barrels per day (mbd).  Currently, it is nearly 500,000 barrels per day lower.  According to the EIA – U.S Energy Information Agency’s most recently released Drilling Productivity Report, oil production in the Eagle Ford is forecasted to grow by ZERO barrels in December:

The chart above suggests that the companies drilling and producing oil in the Eagle Ford spent one hell of a lot of money, just to keep production flat.  Even though the shale oil producers were able to bring on 88,000 barrels per day of new oil, the field lost 88,000 barrels per day due to legacy declines.  We need not take out a calculator to understand production growth at the Eagle Ford is a BIG PHAT ZERO.

Here are the five largest shale oil and gas producers in the Eagle Ford where:

  1. EOG Resources
  2. ConocoPhillips
  3. BHP Billiton
  4. Chesapeake Energy
  5. Marathon Oil

The company that doesn’t quite fit in the energy group above is BHP Billiton.  BHP Billiton is one of the largest base metal mining companies in the world.  Unfortunately for BHP Billiton, the company decided to get into U.S. Shale at the worst possible time.  BHP Billiton bought shale oil properties when prices were high and eventually had to liquidate when prices were low.  A Rookie mistake made by supposed professionals.  I wrote about this in my article; DOMINOES BEGIN TO FALL: BHP Chairman Says $20 Billion Shale Investment “MISTAKE.”

I decided to take a look at the current financial reports published by the five companies listed above.  The largest player in the Eagle Ford is EOG Resources.  I went to YahooFinance and created the following Cash Flow table for EOG:

In the latest quarter (Q3 2017), EOG reported $961 million in cash from operations.  However, the company spent $1,094 million on capital (CAPEX) expenditures and another $96 million in shareholder dividends.  Applying simple arithmetic, EOG spent $229 million more on CAPEX and dividends than it made from its operations.  Maybe someone can tell me how advanced technology is bringing down the cost for EOG.

The next largest player in the Eagle Ford is ConocoPhillips.  If we look at ConocoPhillips net income at its different business segments, we can see that the company isn’t making any money producing oil and gas in the lower 48 states:

While ConocoPhillips enjoyed a $103 million profit in Alaska, it suffered a $97 million loss in the lower 48 states.  Thus, the third largest oil company in the U.S. isn’t making any money producing oil and gas in the majority of the country.  According to the data, ConocoPhillips produced twice as much oil and gas in the lower 48 states then what they reported in Alaska, but the company still lost $97 million.

The third largest company producing oil in the Eagle Ford is BHP Billiton.  Instead of providing financial results, I thought this chart on BHP Billiton’s Return On Capital Employed was a better indicator of how bad their U.S. Shale assets were performing.  If we look at the right-hand side of the chart, BHP Billiton’s shale oil resources have become one hell of a drag on the company’s asset portfolio:

While BHP Billiton is enjoying a healthy positive Return On Capital Employed on most of its assets, shale oil resources are showing a negative return.  Furthermore, the company makes a note to above stating, “Detailed plans to improve, optimize or EXIT.”  I would bet my bottom Silver Dollar that their decision will end up “EXITING” the wonderful world of shale energy, with the sale of their assets for pennies on the dollar.

Moving down the list to the next shale company, we come to Chesapeake.  While Chesapeake is the country’s second-largest natural gas producer, the company has been losing money for more than a decade.  Unfortunately, the situation hasn’t improved for Chesapeake as its current financial statement reveals the company continues to burn through cash to produce its oil and gas:

Chesapeake’s net cash provided by its operating activities equaled $273 million for the first three-quarters of 2017.  However, the company spent a whopping $1,597 million on drilling and completion costs (CAPEX).  Thus, Chesapeake spent $1.3 billion more on producing its oil and natural gas Q1-Q3 2017 than it made from its operations.  Again, how is advanced technology making shale oil and gas more profitable?

If it weren’t for the asset sale of $1,193 million, Chesapeake would have needed to borrow that money to make up the difference.  Regrettably, selling assets to fortify one’s balance sheet isn’t a long-term viable business model.  There are only so many assets one can sell, and at some point, in the future, the market will realize those assets will have turned into worthless liabilities.

Okay, we finally come to the fifth largest player in the Eagle Ford…. Marathon Oil.  The situation at Marathon isn’t any better than the other companies drilling and producing oil in the Eagle Ford.  According to the companies third-quarter report, Marathon suffered a $600 million net income loss:

Again, we have another example of an energy company losing a lot of money producing shale oil and gas.  You will notice how high Marathon’s Depreciation, depletion, and amortization are in both the third-quarter and nine months ending on Sept 30th.  While some may believe this is just a tax write off for the company… it isn’t.  Due to the massive decline rate in producing shale oil and gas, PLEASE SEE the FIRST CHART ABOVE on the EAGLE FORD GROWTH OF ZERO, these companies have to write off these assets as it represents the BURNING of CASH.

For example, Marathon reported cash from operations of $1,487 million for Q3 2017.  However, it spent $1,305 million on CAPEX and $128 million on dividends for a total of $1,433 million.  Thus, Marathon actually enjoyed a small $53 million in positive free cash flow once dividends were deducted.  But, that is only part of the story.  If we go back to 2005 when the oil price as about the same as it is today, Marathon was reporting quarterly profits, not losses.

In the first quarter of 2005, Marathon earned a positive $324 million in net income.  It also reported a $258 million net income gain in 2004, even at a much lower oil price of $38 a barrel versus the $48-$50 during Q3 2017.  So, the Falling EROI – Energy Returned On Invested is killing the profitability of shale oil and gas companies today, whereas they were making profits just a decade ago.

Now, I didn’t provide any data on the other shale oil fields in the U.S., but production continues to increase in several regions, especially in the Permian.  However, one of the largest players in the Permian, Pioneer Resources, isn’t making any money either.  If we look at their financials, we can see that Pioneer continues to spend more money on CAPEX than they are receiving from cash from operations:

In all three quarters in 2017, Pioneer spent more money on capital expenditures than it made from its operating activities.  Pioneer spent $400 million more on CAPEX spending than from its operations for the first nine months of 2017 ending on Sept 30th.  So, here is just another example of a U.S. shale oil producer who partly responsible for the rising production in the Permian, but it still isn’t making any money.

Now, some investors or readers on my blog would say that the situation will get better when the oil price continues towards $60, $70 and then $80 a barrel.  Well, that would be nice, but I believe we are heading towards one hell of a market crash.  Even though some economic indicators are looking rosy, this market is being propped up by a massive amount of debt and the largest SHORT VIX trade in history.  When the markets start to go south as the massive VIX TRADE reverses… well, watch out below.

Thus, as the markets crash, the oil price will head down with it.  Unfortunately, this will be the final blow to the U.S. Shale Oil Ponzi Scheme and with it… the notion of Energy Independence forever.