DECLINE OF U.S. EMPIRE: Due To Worst Oil Productivity On Earth

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from SRS Rocco:


The U.S. Empire continues to disintegrate from within due to the worst oil productivity in the world.  This collapse is due to a falling EROIEnergy Returned On Invested.  While this has been a long and ongoing process, the rate of decline is speeding up as the U.S. Shale Oil Industry is in deep trouble.

Unfortunately, most investors are clueless to the falling EROI and its impact on the U.S. and Global economies.  The (EROI) Energy Returned On Invested is the fundamental driving force behind the world’s financial and economic system.  However, you won’t find one word about it from any economist, analyst or MSM talking head on CNBC, Bloomberg or Fox Business.

The basics of the EROI are easy to understand.  It takes energy to produce energy.  If the energy cost to produce energy is very low, then we have a HIGH EROI.  This was true in the United States during the early 1930’s.  The U.S. oil and gas industry had an EROI of 100/1.  Thus, 100 barrels of oil were produced for market from the cost of only one barrel of energy.

Then by 1970, the U.S. oil and gas EROI fell to 30/1, and at last study was about 10/1.  Now, some readers may think this huge fall in the U.S. Energy EROI was due to the collapse in value of the Dollar.  While this seems like a valid assumption at face value, the collapse in the Dollar’s value did not cause the huge decline in the U.S. energy EROI.

It just takes more energy today to produce energy… especially in the United States.  It took a barrel worth of energy to produce 100 U.S. oil barrels in the 1930’s and today we only get 10 barrels of oil.  And it’s even worse than that.  The typical Shale Oil Well has an EROI of 5/1.  No one in their right mind would produce North Dakota (ND) Bakken shale oil in the 1930’s….even if the technology was available.  Why would a company produce 5 barrels of oil for the cost of one barrel of energy in the ND Bakken when they could produce 100 barrels in such states such as Texas, Oklahoma and California?

Lakeview GusherFor example, the Lakeview Gusher in 1910, had an estimated EROI of 35,000 to 1.  The Kern County, California Lakeview Gusher produced 18,000 barrels per day initially with a peak of 100,000 barrels per day.  Unfortunately 9 million barrels of oil escaped on the ground before the well was brought under control  Only half of that oil was saved for market (Wikipedia).  According to Adam Brandt, Professor at the Department of Energy Resources at Standford, he said the following in a comment at the TheOilDrum:

Early oilfields had EROIs in the 100s to 1000s. For example, the Lakeview Gusher had an EROI of at least 35,000 (calculation I did with Charlie Hall for the Discovery Channel but did not publish yet).

With the easy to get oil now gone forever, the world has gone on a drilling frenzy to continue producing oil.  Ron Patterson, who has the website, discussed this in his recent article, Worldwide Drilling Productivity Report.  I highly recommend taking a look at the article as the evidence is clear that the EROI of the world’s oil production continues to decline.

Ron, was nice enough to email me his excel data and charts in which I made some changes.  I have included some of his charts below.

The United States Has The Worst Oil Productivity In The World

This is the chart that should wake up the LIVING DEAD.  As we can see, the U.S. has the lowest oil production to drilling rig ratio on the planet.  Using Ron’s data taken from the EIA – U.S. Energy Information Agency website, the U.S. produced an average of 4,577 barrels a day (bd) per drilling rig compared to nearly 60,000 bd for the Middle East:

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