One of the the most key concepts to understand in discussing oil and energy is what is called Net Energy. It's a simple concept which expresses the amount of energy gained when producing energy. In others words, it is the difference between the energy gained and the energy consumed to produce a fuel. For example, if it takes 1 barrel of oil to produce 100 barrels of oil, the Net Energy is 100 to 1 or 100:1.
When we think of oil, we think oil is oil. We don't make distinctions where it was produced, whether in Saudi Arabia or Texas, or what it is produced from. But where, and more importantly from what, oil is produced is a critical matter. The reason is oil has varying Net Energy depending on where it is produced and from what it is produced. For example, oil produced in Saudi Arabia has a higher Net Energy than oil produced in the Gulf of Mexico. Oil produced from a Texas oil well -- what is called Conventional Oil -- will have a much higher Net Energy than oil produced from the Canadian Oil Sands, which is considered Unconventional Oil.
As the world has consumed more and more oil, the Net Energy of the oil produced has declined over time. For example, at the turn of the 20th century, oil produced in the USA had a Net Energy of 100:1. Today it is about 30:1. The Net Energy has declined because it takes more resources to extract one barrel of oil. This is true not only in the USA but globally.
The oil we have been historically accustomed to is what is called Conventional Oil. This is oil that is more or less in liquid form in the ground and relatively easy to extract. Unconventional Oil is oil contained in another substance, such as shale or sand, and therefore requires different and much more costly methods to extract. Because of this difficulty in extracting Unconventional Oil, its Net Energy is significantly lower than Conventional Oil's Net Energy.
So, it can be said the world's Net Energy is declining over time because 1. the Net Energy of oil is declining; and 2. other fuels have significantly lower Net Energy than oil. |
