Third Energy Challenge

The previous analyses concerning the First and Second Energy Challenges lead us now to expand on the Third, that is, the economic and financial implications of EROI trends. In this respect, the triple failure of BAU goes well beyond analyses of the global financial and debt crisis carried out exclusively in financial terms. This triple failure has not yet been recognised or acknowledged beyond a restricted circle of energy specialists and neither have its drastic consequences concerning the global monetary system, global finances, the global drive towards sustainable prosperity, and related decision-making.

In our post-modern world most people have come to take energy for granted to the point that they have become blind to its fundamental role in wealth creation and as anchor for the value of any currency. Hence we must stress again what we pointed out while examining the links between EROI and GDP, that is, while labour can be substituted with capital, oil with coal or gas, or even solar resources, the energy at the heart of these resources that is vital for the involvement of both capital and labour in wealth creation, this energy is the only resource that cannot be replaced by anything else. Put in other words, energy is not a commodity that can be exchanged indifferently with any other goods and services. It only superficially seemed so to non-energy analysts while fossil fuels were abundant and cheap, which is clearly no longer the case.

Now “the energy wild cat has begun to wreak havoc among the finance pigeons.” In the next series of postings we will explore what this means:

• 30:1, the EROI threshold we must raise above in order to ensure a sustainable, prosperous life;

• The links between energy and gold;

• The necessary end of thinking in terms of myths as a prerequisite to getting out of trouble; and

• The present global energy insolvency as a kind of debt roulette.

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