Energy Based Economy

Transition from Rich Resource Bases to Lower Grade Resource Sources.

- Managing Scarcity -

Energy Return on Energy InvestmentEROI (eroei)

19001920

19401960

19802000

20202040

20602080

21000

20

40

60

80

100

120

Energy Output Return on investment

Energy Output Return on investment

Resource Richness

19001920

19401960

19802000

20202040

20602080

21000

1

2

3

4

5

6

7

8

9

10

Mining - Output/Unit of EnergyAgricultureFishingForestry

Energy and Resources Combined

1910

19301950

19701990

20102030

20502070

20900

100

200

300

400

500

600

700

Energy Return on In-vestmentEROI x Resource Richness

Adjustment

• We have to face a future in which we will be applying harder to get energy against less rich and more scarce resources

• This applies in gross terms and even more so in per capita terms for the period in which population continues to grow.

Real Inflation ChartEffort per Output

19001920

19401960

19802000

20202040

20602080

21000

0.0050.01

0.0150.02

0.0250.03

0.0350.04

0.0450.05

Energy Cost per Unit

Energy Cost per Unit

Currency Viability ChartUnits Time in Use Intrinsic Scientifically Portability Scalability Widely Defined Long Term

Value Definable Valued Redemption Stablility Score

Knife Blades * Tens of ‘000s high high good fair yes yes yes

Arrow Heads Of years 8 8 7 3 8 10 10 54

Cowrie Shells ‘000s of years low low high high yes no medium

2 4 8 8 8 2 7 39

Gold ‘000s of years low high high high yes no medium

4 9 10 10 9 2 8 52

Seal Oil * 1-2 ‘000 years high high high high yes yes yes

10 9 9 9 10 10 10 67

Wheat * 1-2 ‘000 years high high medium high yes yes yes

10 9 8 9 10 10 10 66

Cattle * ‘000s of years high medium fair poor yes yes yes

10 7 5 3 8 10 10 53

Tobacco * 1-2 ‘000 years medium medium yes yes medium yes yes

5 7 7 8 6 8 8 49

Printed Money 1000 years none no yes yes medium no poor

0 0 10 10 8 0 4 32

Commodity ** ‘000s of years high high high poor yes yes yes

Certificates 10 9 10 4 9 10 8 60

* - real goods

** - real goods . based

Future Currency ViabilityUnits Time in Use Intrinsic Scientifically Portability Scalability Widely Defined Long Term

Value Definable Valued Redemption Stablility ScoreEnergy in 2012 *

Just beginning high high high high yes yes yes

10 10 11 10 10 10 10 71Commodity ** 000s of years high high high poor moderate yes yes

Certificates 10 9 10 4 5 10 9 57

Wheat * 1-2 thousand years high high medium low moderate yes yes

10 9 4 3 4 10 10 50

Gold ‘000s of years low high moderate high yes no medium

4 9 5 10 9 2 8 47

Cattle * ‘000s of years high medium fair poor moderate yes yes

10 7 4 1 4 10 10 46

Seal Oil * 1-2,000 years high high high low no yes time is past

10 9 8 1 1 10 2 41Printed Money < 1000 years none no yes yes medium no poor

0 0 12 10 8 0 4 34Knife Blades * Tens of 000s low high fair poor no yes

not any longer

Razor Blades years 1 8 3 1 1 10 2 26

Cowrie Shellsthousands of years low low moderate low no no cowrie what?

2 4 5 2 1 2 1 17

* - real goods** - real goods based Susceptibility to fraud???????? Ie debasement

Energy Reserve Currency ImpactsIf the international currency reserve system were based on energy certificates, it would have the following impacts:

• - National currencies would not cross borders nor would any bond or certificate based on them. • - speculation would disappear from international finance. • - Effectively, energy based reserve certificates would remove the parasitic overhead from international transactions and

would leave them without hidden and long lasting obligations. They would be clear cut and short lived.

• - competitive devaluation of currencies would be eliminated • - Dutch disease, wherein one strong sector of a nation’s economy damages other sectors by inflating the value of its

currency, would be eliminated • - the disconnect between the consumption and real goods production level of nations fostered by fiat currency valuation

illusions would be eliminated. Nations would have to produce as much as they consume. • - the problem of distorted exchange rates causing a competitive mismatch would be eliminated ie a producer with high

material inputs and lower labour efficiency underselling another producer in another country because of exchange rate anomalies would no longer be possible.

Trend of Currency Systems• Barter – (pre-history to current)• Commodity based exchange (pre-history to 1800s)• Wheat currency (2000bc – 100bc)• Rare and precious artifacts – gold, cowrie shells (4000bc –

1974)• Coinage - based usually on precious metals (3000bc – current)• Commodity based certificates (6000bc - current)• Printed money (1000ad – current)• Energy Certificate based International Reserve Currency• Energy based national currencies• Direct energy exchange

19471949

19511953

19551957

19591961

19631965

19671969

19711973

19751977

19791981

19831985

19871989

19911993

19951997

19992001

20032005

20072009

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

Canadian Energy Returnon Investment

Conventional Oil and GasOil Sands

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 21000

1

2

3

4

5

6

7

8

9

10

Output per Energy Input

Mining AgricultureFishingForestry

19001920

19401960

19802000

20202040

20602080

21000

0.01

0.02

0.03

0.04

0.05

0.06

0.07

Energy Cost per UnitOutput/Unit of Energy Input