I thought this was worth a post since once you understand this, it makes it a lot easier to understand the global economic situation we are living through right now:
Energy returned on energy invested is the ratio of the amount of usable energy acquired from a particular energy resource to the amount of energy expended to obtain that energy resource. When the EROEI of a resource is less than or equal to one, that energy source becomes an “energy sink”, and can no longer be used as a primary source of energy.
A society will generally exploit the highest available EROEI energy sources first, as these provide the most energy for the least effort. With non-renewable sources, progressively lower EROEI sources are then used as the higher-quality ones are exhausted.
For example, when oil was originally discovered, it took on average one barrel of oil to find, extract, and process about 100 barrels of oil. That ratio has declined steadily over the last century to about three barrels gained for one barrel used up in the U.S. (and about ten for one in Saudi Arabia)
Since the discovery of fire, humans have increasingly used exogenous sources of energy to multiply human muscle-power and improve living standards. Some historians have attributed our improved quality of life since then largely to more easily exploited (i.e. higher EROEI) energy sources.
(ED NOTE: declining EROEI therefore can go some way to explain our current economic situation)
Thomas Homer-Dixon demonstrates that a falling EROEI in the Later Roman Empire was one of the reasons for the collapse of the Western Empire in the fifth century CE. In “The Upside of Down” he suggests that EROEI analysis provides a basis for the analysis of the rise and fall of civilisations.
Evidence also fits the cycle of Mayan and Cambodian collapse too. Joseph Tainter suggests that diminishing returns of the EROEI is a chief cause of the collapse of complex societies. Falling EROEI due to depletion of non-renewable resources also poses a difficult challenge for industrial economies. (ED NOTE: somewhat of an understatement)
You can read more about EROI here.
Post inspired by BikerMetric.