Thermodynamic Oil Collapse Interview: Why The Global Economy Will Disintegrate Rapidly

The world is heading towards a rapid disintegration of its economic and financial system due to a “Thermodynamic oil collapse.”  I spoke with Dr. Louis Arnoux of nGeni, about the details of the thermodynamics of oil depletion and its impact on the global economy.

Unfortunately, the world is completely in the dark about this energy information and its dire implications to global economic trade and finance, in a relatively short period of time.  I would like to emphasize that this Thermodynamic Oil Collapse Video is the most important interview I have ever done.

During the interview, Louis Arnoux discusses the dynamics of the “Thermodynamic oil decline” using six slides, including one on his nGeni technology towards the end of the interview.  The information in this interview is so important, Louis needed to take the extra time to explain these concepts in detail.

Here is an MP3 of the interview:

DOWNLOAD AUDIO TRACK (right-click and Save Link As…)

In the beginning of the interview, Louis describes the significance of the first chart showing how the world’s fuel gauge is now “Running On Empty.”


Dr. Louis Arnoux presents his views concerning the depletion of oil reserves, that is, how to best assess depletion, what stage the depletion is at and what this means in financial and economic terms. This is based on his own research and on that of Bedford Hill and his Hill’s Group team that he has scrutinised in depth. Dr Arnoux is now part of a team of researchers who have recently refined the Hill’s Group work.

They are presently preparing a paper to be published in a peer reviewed scientific journal that will present their thermodynamic analysis of the oil industry, the Hill’s Group Etp model, how this model enables assessing the depletion status of the global oil reserves, and the high fit of their analysis with empirical data. In the present interview Dr Arnoux is not at liberty to discuss this work as it is not published yet. Instead he explains in lay terms the general dynamics of depletion and focuses on the economic and financial implications for the globalised industrial world of the advanced depletion status of oil reserves.

In addition, Louis also provides a chart during the interview showing just how disconnected the financial markets are compared to the reality… or the real physical economy.  He developed this chart to show how inflated the U.S. GDP (Gross Domestic Product) is compared to gold and oil:


For real GDP or wealth to be created, it must parallel the value of oil and gold.  As we can see in the chart above, it does not.  To really understand the significance of this chart, you must watch the Thermodynamic Oil Collapse video above.

I imagine there will be many questions and comments about the interview.  I plan on doing additional interviews on this subject matter with Dr. Louis Arnoux and Bedford Hill of the The Hills Group, if his schedule permits.

Lastly, during my four conversations with Louis Arnoux over the past month, I came to realize just how knowledgeable he was in many fields.  Not only is Louis an engineer and scientist, he also understand economics and the value of precious metals as real money.  He also believes that fiat money will collapse at some point and we will have to move back to a more sound monetary system including gold.

Again, we will discuss this more in upcoming interviews.  I would enjoy receiving comments on what you all thought of the information presented in the interview.

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95 Comments on "Thermodynamic Oil Collapse Interview: Why The Global Economy Will Disintegrate Rapidly"

  1. Thanks for all your time and efforts Steve. Great you could arrange this interview with Louis.

    At 26 minutes i have this question: is there a possibility of a plateau in the cost of oil extraction, or how certain is it the cost of extraction will keep rising?

    • houtskool,

      It’s according to thermodynamics. I gather I should put together a list of questions for Louis to answer. The certainty that the cost of oil (energy cost per barrel) will continue to rise is due to the 2nd law of Thermodynamics.

      Furthermore, modern societies really can’t function at a low EROI. We need something closer to 15-20/1. So, we passed that long ago in the United States


      • As disappointing as was with your interview with the channel called SGReport (completely not your fault) I was impressed with this interview. Maybe we should coin a new acronym. WAAF. We are all f$#ked. From my experience of trying to explain energy to people I can tell they think I am wearing a tin hat. Which is a big part of the problem.
        Thanks a real lot for this great interview.

    • The global economy is on the verge of a collapse of epic proportions. We are in a much worse condition then prior to the 2008 crisis. The debt has ballooned, the foundation has weakened and our politicians are happy to just plod along. It is sad how unprepared many people are.

  2. Great information. Missing one huge factor – governments do, and will continue to subsidize (heavily if necessary) oil exploration/extraction. I live in Alberta, work in finance, seen it for decades. They will be pumping long after it’s “unviable”, on low royalty rates, nonexistent taxes, and every incentive imaginable. The government will continue to pressure banks to keep extending loans to companies, and turn a blind eye to the collusion that keeps us overpaying at the pump. Even cook up an “event”, or little war that brings prices up in a hurry, if necessary.
    As in the stock market (I keep hearing about that “inevitable” crash that never happens), fundamentals have nothing to do with it.
    I eagerly await someone to find fault with my logic. Please:-)

    • Emil,

      While the Fed and Central Banks can print money and buy all the bonds and stocks or even bail out the energy industry, they can’t stop the Thermodynamic oil collapse. This is the aspect most people can’t get their mind around.

      The falling Thermodynamic oil limit impacts governments just as it does businesses and the public. The Govt will not be able to PROP up the markets beyond the Thermodynamic Oil Limit. It is that simple.


      • The penny has finally dropped for me Steve… Good interview, must admit I struggled with Louis accent to begin with and his modelling. I am not saying his modelling is wrong BUT most others if not all have been wrong in the past and present IMHO. I have a real problem with people trying to convince me CO2 is the problem BUT I am not going to get into that.

        The most interesting part (for me) was toward the end of the interview, the 88% wastage and Louis solution to this problem along with the constant supply of cheap energy. The concept is IMHO is brilliant !!! The world, for it to continue obviously needs a cheap reliable source of energy. That source needs to be in the hands of the people not TPTB.

        I must say however, I tend to agree with “Emil” TPTB will not like it one little bit and will go kicking and screaming like you wouldn’t believe. They will not give up their source of power, control and greed easily unless they find another source.

        • I’m with Graham. The discussion was captivating until the Club of Rome “global warming” narrative surfaced. Nevertheless, thanks go to Mr. St. Angelo and Mr. Arnoux for valuable, thought-provoking and well presented discussion. It will be fascinating to watch symptoms emerge more prominently over the next few years.

          Emil’s (above) supposed background in “finance” apparently has not given him the opportunity to build an informed opinion about Alberta’s oil and gas sector, else he would not post silly and counterfactual hyperbole . This evening, I’m working on a spreadsheet that calculates royalties and taxes, and can assure him that they are far from “nonexistent.” A lot of junior explorers and producers are deeply demoralized, with mounting debt in arrears, barely (hardly) surviving on a shoestring budget, made worse by the stubborn low price, and could sure use a break. The recent royalty review did not yield much needed benefits or reforms. It might behoove Emil to do some research (consider contacting the Alberta Energy Regulator and related industry associations such as the CAPL and FHOA) and exercise some common sense so as to avoid making absurd and inconsiderate statements. Thousands of good people have lost their livelihoods, with associated disruption to their homes and families.

    • Indeed, you will be missing that one huge factor. We all will.

      Welcome to the real world.

      Stocks won’t go down measured in the fog. Elected people will take care of that.

  3. The thermodynamic collapse of the oil market and its forthcoming, predicted, collapse of the system, takes the blame off the central banks and governments are for the fiasco they have created and lets them of the hook.
    The expansion of the monetary base over the last 30 years, by easy credit, has caused, nominal, bubbles in debt based, speculative markets, including oil property bonds etc..
    Investments have moved from productive energy consuming jobs to non productive less energy consuming jobs over the periods of maybe one hundred years and in some cases centuries. This change has accelerated over the last few years as interest rates have only gone one way. But the infrastructure has required high levels of oil and energy , this has been consumed in less prodictive ways.
    Therefore because the ponzi scheme is in its latter stages, less work is now being done, less oil is required to drive the contracting MIW. Recently oil prices have fallen, because of the increase of supply and the fall in demand. The EROEI has fallen because investment in higher cost new sources of oil, and falling yields of existing oil, and financing in the oil industry, using low interest rates of fiat currency, anticipating endless growth (encouraged by governments to keep the ponzi scheme running). Its greed and unpayable debt thats driven the system.
    But the economy is now in a cyclical downturn which is exaggerated because of government/central bank policy So there is a glut of oil caused by over production and the oil companies are losing a lot of dosh.
    A reset at a lower rate of production, which is closer to future MIW ‘s demands, is on the way. This will lead to energy extraction becoming more efficient, as would be expected by the division of labour, as less cash,(and less energy) is available to get less, more expensive energy. Each part of the production process will become more efficient as only the producers with the higher EROEI will produce oil cheap enough to meet the needs of a leaner MIW.
    Oil won’t suddenly stop being used, the market place is dymanic and traders work by trying to move to the markets with the biggest profit or spread, producers with lower eroei will need to charge more so the buyers will use arbitrage and get the oil from the higher eroei producers, this will force non productive sources to close and marginal producers to become more energy efficient in their methods of extraction. Those who need oil, will pay more for it because it will become rarer. The globalised world will not suddenly stop using it, even if all productive work stops.
    The oil industry will use bikes to go to work and mules to pump up the oil but there will business as usual on a reduced scale..

    • r sinclair

      I do not comply. However, your opinion isn’t that obsolete that i won’t explain.

      Our current system is very highly dependent on growth. That’s what you get with fiat ‘money’, it’s an iou. And with trillions in iou’s, looking for yield, it’s getting more complicated by the year, month, hour; to accomplish certain promises. Negative yielding gov bonds and airbag buying of stocks through CB proxies as examples.

      Let’s make it very simple. About 5 years ago, i looked around at the train station in my average 70.000 people village in the Netherlands. What i saw was about 30 to 40 traffic signs within my view, about two hundred square metres. That was my personal wtf moment. The fogs of fiat accomplished the same in our shared world of fake promises.

      Links to very interesting articles you can find down the road. Because java scripts forces me to.

  4. The video is not clear on the source of the data to support the thesis of peak-oil and there is nothing there to address the following questions:

    1: Who is controlling the data on oil availability?

    2: Is there a chance that claimed limits on hydrocarbon availability might be related to “ENERGY CONTROL” and control of the World?

    3: Is there any proof to the claim hydrocarbons are fossil fuels or even abiotic?

    4: Is there even any need to depend primarily on hydrocarbons for the world’s energy needs?

    5: Is it possible that alternative energy technologies were deliberately designed to be costly and inefficient (think 3-blade turbines and solar)?

    6: Why are energy companies not tapping directly into the vertical electric field for an endless clean and relatively inexpensive source of energy resulting from the Earth discharging the solar capacitor as the solar wind rushes past the Earth all the time?

    7: Why are scientists not acknowledging the Sun’s electric output that dwarfs the light output and is the source of weather on all the planets?

    8: Why is it that there is always a preference for central control of energy?

    9: Why is it that clean, inexpensive, efficient distributed Wing technologies based on the proven water wheel are not given a chance to see the light of day?

    10. If a clean, inexpensive, efficient, distributed system to produce energy is available, why the need for expensive, inefficient, and dangerous Nuclear energy?

    Search “McCanney WING GENERATOR Description” to find a book that answers all these questions

    • oneno,

      All your questions or objections fail to consider the 2nd law of Thermodynamics. For example, it doesn’t matter if oil is created by fossils, aboitic or cow farts. What matters is that it is taking more energy every year to produce that barrel of oil.


      • Exactly, a barrel of oil or ton of coal once burnt cannot re burnt. Other raw materials are the same but are lost in different ways. We extract ore to create steel that also consumes energy. Remelting existing steel or any metal takes less energy but we are poor at recycling so we continue to exploit energy intensive sources.

        It is unlikely that another civilisation would arise after ours collapse as we will have consumed all the accessible energy sources.

      • Not all his questions fail to consider it. Only the one you picked. The McCanney generator question is a direct consideration of energy efficiencies, for example.

        2nd law is – entropy increases. However, this applies only to closed system and Earth is not a closed system. In fact, all energy originally comes from the Sun. e.g. – if oil is abiotic and the ‘system’ holds the vast majority of oil at the earth’s core, then solar energy could move that oil reserve around. 2nd law does not apply because the system takes in energy from outside its system. (I don’t believe this theory, it’s just an example to show that the 2nd law, imo, is being misinterpreted here.)

        If earth was subjected to a rigorous 2nd law, then human life (extremely non-entropic) could not have occurred – evolution would be impossible.

        Also to note – 2nd law has been questioned in a sense, winning a Nobel Prize in physics. To wit – the universe itself (supposedly) was a mist of plasma at one time – more or less total entropy. Now it is very well-ordered, to the point that we can predict the earth’s precise position for the next 20,000 years.

        In short – we don’t really know this stuff. And often it is contradictory.

      • The 2nd Law of a Thermodynamics is a convenient cover for “control” just as “global climate change” is a cover for more draconion laws to control/(enslave) the public and especially control access to clean water.

        The controllers cannot allow runaway “over-population” as that cuts into their quality of life and increases the risk of a global rebellion. Burning oil in the last 100 years is responsible for a 50% reduction of oxygen in the atmosphere since before the industrial revolution. The plants cannot replace that oxygen at the rate that oxygen is being lost to poluting compounds as a result of burning hydrocarbons. Hence the covert de-population agenda in place since 1945 (see Kevin Galalae) and overt de-population through wars going back tens of thousands of years (see Billy Meier Contact Report 251).

        If oil was really limited as claimed via EROEI and peak production curve, then why the need for oil cartels to control production and operations research to artificially control prices for everything?

        Overt price controls would draw immediate public backlash. Covert price controls cloud-over the real reasons for pricing of necessities preventing a backlash.

        The current conflict in the Middle East is not about shortage but about who controls the flow of natural gas to Europe and total control over all Middle East resources by Western powers.

        Oil from dinosaurs and fern forests is a myth (without any proof) to cover the real sources of hydrocarbons being as the result of the Earth discharging the solar capacitor over millions of years from a comet seed and passing through the tail of planet-sized comets (Noah and Moses type events) every few thousand years (see “Planet X, Comets and Earth Changes – James McCanney”).

        • oneno,

          I understand what you are trying to say here. You believe “thermodynamics” is a convenient cover for control… as you say.

          However, let me see if I can apply another analogy to describe what you are suggesting. Basically, it is like saying the ELITE are controlling the public back in the Middle Ages to believe that the Earth was Flat as well as the center of the solar system. Of course, this was pure nonsense, but the world believed it until science was spread far and wide enough to destroy that lousy assumption.

          Thermodynamics CANNOT be controlled by the Elite, just as much as trying to control the public in the Middle Ages that the earth was flat.

          I imagine my analogy will not change your mind. However, the math, science and thermodynamics will do it over the next ten years.


          • My bad, the 2nd Law is a convenient excuse for the peak-oil narrative to control opinion that cheap energy is no more. The world is literally swimming in energy and devices need to be made to tap into that energy. The problem is the TPTB would then no longer be able to control energy production, distribution, and consumption. It would be out of their hands.

            Yes the world was said to be flat so that if the average joe decided to explore himself, he would fall off the edge and be devoured by fire breathing dragons.

            Yes, The laws of thermodynamics are absolute.

            There is not only so much energy simming around the Earth, but also so very much energy in the form of hydrocarbons trapped in the earth’s crust that is admittedly difficult to get at. But entropy will cause the wells to re-fill if the wells are allowed to rest (please do not confuse with fossil fuels or abiotic – I am talking about flowing oil that is diffult and costly to get at).

            But why cry for difficult to get at dirty and polluting oil when the technology now exists to tap into an abundant clean energy source cheaply for everyone on the planet?

            Two large Wing generators sitting atop the main supports of a suspension bridge can replace the energy produced by a nuclear reactor. (see

  5. Considering the rapid erosion of EROI, we’re heading for a conflicting situation where more dollars are needed for obtaining energy vs. the rapid depletion of the value of the fiat dollar system.

    I won’t be selling my copper pennies and nickel nickels any time soon. They’ll be grocery payments, for sure. Once the financial system goes bad, there will only be 3 ways to take possession of precious metals (real currency); Labor, theft or trade for valuable assets. The “Cash 4 Gold” stores will dry up faster than the “Payday Loan” shops.

    Of course, bullion coins will then be the primary product for the miners and their share value will increase. I’m not sure how the Industrial needs will be met. Maybe stock shares will become as bank notes to trade for bullion just as cash is used to purchase shares today. On the other hand, I’m not sure what the bullion banks will do with their stolen bullion except to use it for payments for nefarious purposes. They could flood the market with gold, depleting it’s value compared to that of very scarce silver.

    I’m hopeful that free markets will exert their forces quickly. Those energy plants will need to be flexible enough to pay their employees and suppliers in some meaningful fashion. End of rant.

  6. A few comments which were not mentioned.

    First of all oil was been found and used in Azerbyan already more then 1000 years ago that is why the call this country “land of fire” as the oil came and comes just out of the land overthere.

    Then there is big difference between on and offshore oil/gas extraction. In many places in the middle east oil is very cheap to produce compare to deep sea operations. Then there is gas which is in such a huge quantities available. Even as we speak there old technology which was invented by german engineers to convert gas into oil which is already been done and more plants like this are build.

    Another point I disagree is the forecast of oil in USD this is very tricky as we don,t know if the dollar even will be around in the futureand what the value would be.

    The way I see those countries with abundant oil and gas reservoirs which can be extracted cost effective will fare well. But those countries which have shortage and will have to adapt new technologies to sustain and find a new balance. This company as well provides very indepth info
    about various energy reserves:

    It is really good info but the world is not going to end at all. The solutions will come without any doubth
    as technology will evolve just even faster to find the needed solutions. World bank/UN/IMF are not trusted info sources as they are protecting their own agenda.

    If we are able to abandon the central banking/fractional banking and start using real money gold/silver and no more debth base we will find ways to move forward.

    Uranium/Thorium reserves are just huge globally we really will not be in the dark coming century.

    • There is no doubt technology can slow or offset negative effects. The problem is that we are pitiful at acquiring, manipulating and managing technology. This means the pace of technology adoption to solve challenges is not there. People thing technology is some pathetic software ‘app’ on their phone. There are millions of technologies and IT is one small sub-set. There is a capability that would address the above fully.

  7. This indeed was a fascinating topic/interview and revisits the energy decision made even at the natural order of living things. For example, predators in the African Serengeti: How much energy is it going to take for a cheetah to chase down that impala given a 10% chance of making a kill, 70% chance that its kill will be stolen by hyenas etc., or, how much energy does it take for a squirrel to crack open a nut to gain the food within, or with me and my decision not to eat shelled peanuts: it takes too much energy to crack them open and I seem to get more hungry as I eat them.

    Conceptually, this topic can be restated as there is simply no substitute for anything else other than a barrel of oil to get a barrel of oil out of the ground. Borrowing and paying more in fiat money, or paying in gold or food or microprocessor chips is not going to get that barrel of oil out of the ground unless you already have oil to provide the energy needed to drill for it, haul it, refine it, distribute it.

    Thus I go back to the laws of nature, and why animals (males) fight to maintain territory. They fight to the death to preserve/defend their territory…to preserve their food resources. Humans are no different and form tribes to protect their hunting grounds. Fast forward through eons, and humans (nations) in theory will eventually be fighting over resources-namely cheap EROI oil, which would explain why the elites/Deep State seem so obsessed with the Middle East.

    The fracking , solar, wind sensationalism are nothing more than distractions and serve to enrich corporations based on false promises and away from what is the ultimate prize: the remaining high EROI oil left.

  8. Some thoughts per below:
    1. I do not understand the calculation basis for the US GDP per head measured in Oil Barrels or Grams of Gold. The comments for the first peak in the GDP per head/Oil Barrel chart seem to indicate that it’s Oil Production/Supply that is being measured, while the comment for the second peak in the chart seem to indicate that it’s the Oil Price (in 2009 dollars?) that’s being measured. If the chart comments were not relevant, it’s still unclear how the two peaks were computed even if the US GDP per Head was computed using the Oil Price in 2009 dollars in 1960s/1990s respectively. Or in gold prices.
    2. If 88% of current energy usage is being wasted (which is the basis of the $5T ‘opportunity’), it would seem that a better strategy is to delay the 2020 crash date by recovering more of this energy wastage. That was how solar panels became more viable for residential from it’s early days, as the panels became more efficient.

    My key takeaway is that it’s true that increasing the price of oil will not change the conclusion that our current oil-based economic infrastructure cannot continue in its current form (as petroleum resources become too difficult to access/extract). We might be able to delay the inevitability by reducing wastage, getting more efficiency (e.g. increasing mpg vehicle engines), changing our mix (e.g. nuclear for power grid).

    • “The comments for the first peak in the GDP per head/Oil Barrel chart seem to indicate that it’s Oil Production/Supply that is being measured, while the comment for the second peak in the chart seem to indicate that it’s the Oil Price (in 2009 dollars?) that’s being measured. If the chart comments were not relevant, it’s still unclear how the two peaks were computed even if the US GDP per Head was computed using the Oil Price in 2009 dollars in 1960s/1990s respectively. Or in gold prices.”

      Yes this was confusing. Even Steve contradicted what was written with gold/per head.
      This needs clarification. And it would be better to remove the shadow behind text, it is harder to read.

  9. Andy Simpson | October 21, 2016 at 9:33 pm |

    One thing that seems missing from the analysis is the what I will call “sunk capital energy” need to build infrastructure for oil production versus the “operating energy” (meaning the energy needed to operate the infrastructure and get the product to market. How much of the energy needed to build the infrastructure is factored into the calculation of how much e energy per barrel is needed to get that barrel of oil.

    An example: let’s say that from 2005 to 2010; an oil company developed an oil producing field. Assume it took 200,000 barrels of oil energy to get that field into production. That’s the “sunk capital energy.” But, to continue producing oil from that field and get it to market, it only takes 1000 barrels of energy per year. Assume the field produces 10000 barrels per year and has a useful life until the year 2050. That oil field is going to continue to produce oil and be profitable long beyond 2030.

    Seems to me that in the oil industry, a major part of the per barrel energy “price” that is included in the average price of getting a barrel of energy out of the ground and to market is this sunken capital energy that is already invested. It will only be as new production is needed to replace current production that we really approach the red asterisk on the chart in the video. Thus, isn’t the prediction of 2030 too pessimistic?

    • Yes,
      Even if the sunk capital is debt that has to be serviced. The company could just go bankrupt and then someone buys the field for whatever they can afford.

      If fields depletes by say 5% per year, that should be the maximum depletion rate, no new fields, just keep using current ones.

      And probably a few almost bankrupt companies will be able to exaggerate potential of new fields, get capital/debt and drill these fields before bankruptcy.

      • DJ,

        I can assure you and Andy Simpson, The Hills Group and Louis Arnoux took into account all details of oil reservoir and oil field depletion in their model. I purchased the Hills Group Report and I can tell you that it contains a lot of complex thermodynamic equations most in here couldn’t even come close to understanding.

        So, some of the commenters here put out their opinions based on “invalid simplistic assumptions” that really don’t matter. So, until they understand the science, they will not be able to understand the thermodynamic oil collapse model.

        Again, it doesn’t matter if the debt is erased from the company. It doesn’t change that the energy it takes to produce a barrel of oil continues to increase every year…. with or without the debt.


        • “It doesn’t change that the energy it takes to produce a barrel of oil continues to increase every year…”

          Disregarding tar sands and shale is this really true for existing fields? When deep water rigs and pipelines and whatever is built and the oil is flowing, shouldnt more oil demand only a little energy?

          I am more open for 5% being too optimistic depletion rate and that everything would seize when production has declined 10, 20, 30% past the peak.

          • DJ,

            The critical component that you are not factoring in is the massive amount of debt in the system. This debt has brought forward future oil production. However, it will not change the thermodynamic oil limit time-frame, but rather the severity of the “Seneca Cliff.” Basically, debt has made the oil production cliff much higher if debt was not used.

            While the ancient Roman Empire collapsed due to its falling EROI, it lasted longer by debasing its currency. However, it did not have much debt. Thus, our modern world will collapse much quicker due to the debasing of pir fiat monetary system alongside the massive amount of debt.


          • Sorry, I don’t understand. If the company defaults, some other company buys the remains (seems like it could be done without even stop the pumping) and continues with less debts.

            In the other end someone loses money of course, but that is only in the virtual economy.

            You must understand that I am fully aware no new oil is found and probably only a few proved reserves are economic to drill. Where substitutes for fossil fuels even exists they are not as good and things will eventually turn bad.

            I just disagree on the time frame …

  10. I can agree with the theory which relates EROI to the economy, GNP, etc.

    But this gadget, how does it work? I mean what is it doing? How is it creating energy? What’s the basic principle? You can surely tell us something without compromising the secrecy of the project!

    I don’t believe it. No way.

    Furthermore, Global warming is a hoax. If this guy is so smart, why does he believe in Global Warming?

    Do you believe in Global Warming, Steve?

    Here’s the problem: If oil will become too expensive of too inefficient to use, why do we have to worry about global warming?

    Let’s just say hypothetically global warming were true. If the burning of oil will come to a virtual halt in 5 years (as the interview implies), we don’t have to worry about Global Warming or Climate Change. The big “villain” is burning oil. Additionally, if all transport comes to a screeching halt, then surely 75% of all human beings will perish. So why worry about “global warming”? All those “evil” carbon footprint makers will be gone.

    I live in a state where the highest temperature ever recorded occurred in 1938. We haven’t even come close since! I can’t even recall a recent summer where there has been one single day over 100. And supposedly the past 20 years have seen the hottest 10 or 15 summers since records were kept (so the MSM says).

    80% of all the fossil fuels ever burned have been burned after 1938, give or take a year or two. Plus just think of all the garbage put into the air in WWII. Just think of the billions of tons of coal that has been burned by China in the last 20 years. And yet, my state hasn’t seen the highest temperature eclipsed in all that time. 80 years!

    I can agree with the whole thermodynamic thing. But technology is not coming to the rescue, you’ve said that yourself, Steve. Not unless there is actually something big that they have already discovered but have been hiding for many years. And trying to hide that is like hiding the Yukon gold strike.

    The ppm level of CO2 in the atmosphere has only risen about 35% total in all of history, and still nothing is really happening climate-wise. We are past or closed to being past the 50% usage of all recoverable fossil fuel. Why worry? As we move down the right-hand slope of the bell curve, the burning of fossil fuel will only decrease.

    As the burning of fossil fuels plummets, sooner or later the trees and the rest of nature, which already soak up a huge amount of the yearly total of carbon dioxide produced, will catch up. Then the ppm CO2 will start moving in the other direction.

    Probably then the MSM will start screaming, like they did in 1977-79, that we are in danger of heading into another ice age.

    • Robert,

      While I don’t discuss this much on my site, I do believe in climate change. Matter-a-fact, I adhere to what is known as ABRUPT CLIMATE CHANGE. Basically, things go exponential over the next two decades. Unfortunately, it seems as if we are past the point of no return now.

      I spent a lot of time looking over the data… and no, this wasn’t by Govt sponsored Climate scientists. Anyhow, I am not here to change anyone’s mind on this. I believe the rapidly changing weather patterns and increasing climate volatlity will convince most people going forward.

      This is my opinion on the matter.


  11. Steve,

    I don’t know how you have the patience for these idiotic cornucopians?

    • Craig,

      LOL… I truly feel your pain. Unfortunately, individuals are either way behind the curve when it comes to understanding this information, or they are in complete denial.

      Those are the two issues I believe most energy cornucopians suffer from.


  12. Sorry, with these cornucopians.

  13. Tore Johansson | October 22, 2016 at 1:36 am |

    So here we have an professor presenting a urgent problem and after that allso present an solution and ask for funding to developing it. Lol

    • A magic green box.
      Just as there are crooks in the pm’s, there are crooks selling wishful world changing prototypes on disaster scenarios.

      Predicament or problem?
      At least Steve is getting us to think about the question.

  14. Steve, as a scientist I can tell you that the statement “Dr Arnoux is not at liberty to discuss this work as it is not published yet” is utter bullocks. Anyone is entirely free to discuss their work openly, UNLESS you fear you will get scooped (someone “stealing” your idea and to publish faster than you) which I highly doubt would be the case here. Now onto listening.

    • I’ll have to listen to this several times, but overall there is nothing “thermodynamic” to it IMO. In simple words you discuss the unsustainable process of the depletion of a finite resource. However, several weeks ago you claimed this was accompanied by oil prices of 15$ pb. Peak oil is inevitable (and maybe already behind us), low/affordable oil prices for the masses – I don’t think so. Scarcity of oil and monetary inflation (debt) hint to high prices, and so does WW. Once the final economic crash materializes there are simply too many variables to know what the heck will happen, though none of the scenarios seem to be “on the bright side”…

      • A comment (or rather mistake on the first graph around the 8:30 mark) – the whole yellow part of the barrel ( dollar “costs” from exploration all the way to the end product) ALSO add directly and indirectly to GDP, not just the red part ( ask “Houston…?”).

      • CHK,

        I purchased The Hills Group 67 pages report and it has a lot of thermodynamic calculations. Again, this report is not public, it is a paid report. Anyhow, you are making assumptions that are not correct. The entire ETP Oil model is based on thermodynamics.

        Anyhow, when Bedford has time after finishing working on the “thermodynamic paper” I will try and get him on to discuss in detail why his group decided to do this ETP OIL MODEL and its outcome.


        • Steve, I don’t make a lot of assumptions… But talking “thermodynamics” is not helpful here, it makes it all sound more complicated than it really is IMO. As I said before, you made a call for 15$ oil for the longterm, not me; I just don’t see that right now, and how things pan out 5 to 10 years or post collapse is a whole different bag of worms. I still think you need to come up with the a 1-paragraph core argument, else you will not reach people. I think it all comes down to what level debt-inflation will be pursued (see CFO comment below) or imposed to be able and make any price predictions… As for peak oil, I’m all with you, same goes for the metals, and even global warming… So for the most part we’re on the very same page, and I greatly appreciate your work and writings.

    • CHK,

      You are jumping to conclusions without understanding the scientific paper publishing system. Louis, Bedford and another colleague are preparing their paper for the U.K Royal Society. If their work on the thermodynamics was made public before it was sent to the U.K. Royal Society, they would not publish it. This is the protocol.

      Once the paper is submitted to the U.K. Royal Society and is accepted and published, then they can discuss the math and details behind the thermodynamics.


      • Steve, I worked long enough in academia to tell you this is wrong. One can DISCUSS their work before being published – I did not say publish their work before; then you’re in trouble indeed. So there is no reason he could NOT discuss his models in detail with you before it being published – this happens ALL the time and even for higher impact papers than RoySoc. And yes, I speak from my very own experience here. Cheers – X.

    • The syngeni box is a multi-fuel genset with some regeneration and heat-capture. It’s not really new, except for the networking/control function. EPA has done some experimental heat capture of Diesel gensets and used the heat directly to heat buildings in a cold climate and do industrial processes. The payback time makes some sense if your fuel is expensive and the interest on the money is low, but no sense if the fuel is cheap and the cost of the extra equipment high.

      No fueled genset (short of an imaginary ZPM) is going to fix our problems, like we aren’t voting our way out of this.

  15. CFO point of view | October 22, 2016 at 4:12 am |

    Dear Mr. SRSrocco,

    I would like to say that I respect your work in general – a lot.

    But there are points where you failed to understand things – like for example cash production cost. For much time you were writing that it is impossible for mining companies to mine below full costs that you calculated at ca. $20 per ounce of silver. We were many months/years now with prices below $18 and for many months it was below $16. And as I was trying to tell you (and many others) – nothing happened – mining companies didn’t go bankrupt. Of course in longer term this will have impact on their ability to keep mining current volume – it will not be possible due to lack of proper investments – but it was clear that you have to analyze it in long term – 10 years time frames – not short.

    Now I think you are being missled for second time – this time with this Hills Group thing.

    What they are telling is other way of describing dropping EROI values, adding some drama to it.
    I have much symapthy to you and don’t want to see you totaly depressed in 8 years time (2024), when in energy field nothing much happens – we will have more efficient cars using much less oil and also using other sources of energy like electric power. Of course due to financial collapse there will be less demand for oil, but all in all you will not see major changes – like people using horses on highways in 2030.

    Please consider what people are telling you – sunk costs is not some theory which some crazy people use to not believe in Hills Group theories. After you invest money – they are gone – is it on credit or not. And after this investment if you have to invest 1 barrel of oil to extract 20 from offshore oil fields – that’s your marginal EROI – even if total EROI from this investment is only 10!

    Second issue is like for metals lower price is a cure for lower price – demand is going up,then shorteges. This same will be if Hills Group wants or not with price of oil. Their theories will be buried in “market action”. As inventories will drop due to falling supply and shortages occurs, prices will go up, what will encourage new investments in oil business and also other substitutes in energy field as a whole.

    Of course maybe in 20-40 years it may be that we wil find ourselves in a siituation that we will not use oil anymore as it will be not efficient, and I clearly see such possibility – but as we peek oil production to see in 6 years end of usage for oil – you are way way way missled by these people.

    Once again – sorry for my English as I write from Central Europe.

    And please consider me your ally, not enemy. I just think that people will not give you easy time in few years – just as they are not giving Bo Polny easy time now. I would not like to see you frustraited!

    • CFO Point Of view,

      I appreciate your reply as you took the time to provide your lengthy comment. So, I will reply to each of your questions or comments:

      CFO: But there are points where you failed to understand things – like for example cash production cost. For much time you were writing that it is impossible for mining companies to mine below full costs that you calculated at ca. $20 per ounce of silver. We were many months/years now with prices below $18 and for many months it was below $16. And as I was trying to tell you (and many others) – nothing happened – mining companies didn’t go bankrupt.

      SRSrocco: I never said that it was impossible for mining companies to produce silver below their cost of production. I may have stated that it is “unlikely” that the primary silver mining industry could continue producing silver below its cost of production for a lengthy period.

      This is due to the fact that the mining companies have some cash reserves or can tap into revolving credit facilities. So, if they are producing silver at a loss, they are able to tap into their cash, sell stock or acquire needed credit.

      CFO: Now I think you are being missled for second time – this time with this Hills Group thing.

      What they are telling is other way of describing dropping EROI values, adding some drama to it.
      I have much symapthy to you and don’t want to see you totaly depressed in 8 years time (2024), when in energy field nothing much happens – we will have more efficient cars using much less oil and also using other sources of energy like electric power. Of course due to financial collapse there will be less demand for oil, but all in all you will not see major changes – like people using horses on highways in 2030.


      SRSrocco: First of all, I am not depressed by the implications put forth by the Hills Group and Louis Arnoux. I have known for quite some time now that things will get very messy and in a very short period of time. However, their thermodynamic oil model puts a timeline on it.

      Secondly, you are making some incorrect assumptions as to our way to “transition” to using electric cars or more efficient power. Electric battery cars will never work. For example, if we were to power a Semi Tractor Trailer pulling a full load of 80,000 pounds with an electric battery, the battery would have to weigh 70,000 pounds itself. So, battery technology will not save us here… and furthermore, battery production is very costly and inefficient.

      Lastly, I don’t know how things are going to unfold over the next 10-15 years. However, they will likely be quite sudden and shocking.

      CFO: Please consider what people are telling you – sunk costs is not some theory which some crazy people use to not believe in Hills Group theories. After you invest money – they are gone – is it on credit or not. And after this investment if you have to invest 1 barrel of oil to extract 20 from offshore oil fields – that’s your marginal EROI – even if total EROI from this investment is only 10!

      SRSrocco: Yes, I understand the economics of spending CAPEX such as sunk costs. However, the Hills Group and Louis Arnoux are describing the “Average Barrel” here. This is not an exact science, but rather what is taking place in the industry by using an average barrel. Louis explained in the interview that there will be those fields that are in worse shape than the average and some that are better.

      However, this will not change the overall situation all that much. It will be interesting to see what happens when the over-leveraged financial system finally disintegrates. Without credit, watch as scores of companies go bankrupt as they cannot continue producing oil at a loss. And most of the shale oil companies are producing oil at a loss even at $50.

      What happens when the price of oil hits $10-$15????

      CFO: Second issue is like for metals lower price is a cure for lower price – demand is going up,then shorteges. This same will be if Hills Group wants or not with price of oil. Their theories will be buried in “market action”. As inventories will drop due to falling supply and shortages occurs, prices will go up, what will encourage new investments in oil business and also other substitutes in energy field as a whole.

      SRSrocco: Let me start off by saying, I used to believe in the economic principle of supply and demand. However, something always bothered me about the Austrian School of Economics and their inability to factor in energy into their economics.

      I hope you listened to the interview because some of your comments would have been addressed by what Louis explained. Thermodynamics supersedes the economic theory of Supply & Demand. When we went into the Industrialized world back in the 1700’s, our economies were not based on supply and demand, rather it was always thermodynamics. This is what economists fail to realize.

      Once you understand that as the net energy declines toward zero, there will be no real supply.

      Lastly, this thermodynamic concept takes time to digest. It will make more sense as time goes by if one has an open mind.


      • CFO point of view | October 22, 2016 at 2:01 pm |

        Dear Steve,

        Thank you for your comprehensive answer.
        I must admit that I was waiting for this interview for few weeks time, as I appreciate your work and belangp work and FOFOA’s work very much. And I’m really dissapointed by the content of this interview – and I can assure you that I listened it carefully.
        What I miss here very much is description how these people think will future plays out. Because I see two scenarios:
        – eceonomic crash and start of real depression within 2 years time (maybe finished with hyperinflation in US and Japan) – in such scenario I see significant drop in demand for oil and oil prices dropping like a stone – even to $10 (of course in todays $, as I know it could be even $10 000 per barrel with all other prices x1000). Many companies will go bankrupt – but whole investments made in oil business will remain more or less intact. After we touch “bottom” we may sit on this bottom for even few years, and in this case you may even think Hills Group was right, but after some time some parts of the world will start increasing productivity due to inventions and hard human labor and demand will increase – also for oil. And so will price of oil – just to encourage supply to increase – and you will see bankrupt companies assets beeing bought and oil pumping restart – first at best locations. And this more or less ends the story of “succesfull” predictions of Hills Group – after some sort of reset we come back as humanity and oil price rises with increasing demand to attract supply. There will always be people who will pay $300/barrel to travel comfortably, and even $600!
        – smooth reset – like making agreement on gold price $50k/ounce in todays $. In this case life goes on. I would like to say that our current way of dealing with oil is so unreasonable! First egsample – if oil price will rise 8x then many more people will use public transport and also cities will make many more buss lines, trams, etc. Instead of 50 people using their cars using 7 litters per 100km, they will go with bus which uses 35 litters per 100km. So it is 10x more efficient, but less comfortable!!! We the people used to live very comfortably. And this same goes with transport for thousands of kilometers of goods. There is no need to do it – you can change business model into more local one – end of globalisation – and this is IMO outcome in which we are headed! And maybe in 20-40 years we will invent something really changing our future. But IMO we have time!

        • CFO, if the oil price rises 8x, there won’t be any companies producing public transport.

          So you just stand there and wait for the bus. Together with other CFO’s and economists.

          • CFO point of view | October 22, 2016 at 3:52 pm |

            Why if oil is $400 there is no public transport?
            You think people will be walking 50km to their relatives or to the work?
            Or we come back to caves because oil is $400?
            What I tried to show is that each day I see hundrets of cars with one person in (driver) which are going for tens of km’s through the city and to the city from near towns. If we just change 50 persons in 50 cars into 50 persons in 1 bus,then we have 1 bus * 35l/100km = 35l/100km vs. 50 persons * 7l/100km = 350l/100km
            so we as humans are 10x more efficient going to work! But maybe we travel less confortably and maybe we spend a little bit more time traveling. But there is nothing catastrophic in it! We just use resources more efficiently and allow oil from worse sources (lower EROI) keep our life not changed 180 degrees. I see such scenario + not transporting goods for 1000’s of km’s and producing them more locally as a simple solution with which we could go for tens of years if needed, there is no problem for me. Also you would not travel to your vacations to Brazil or France from NY, you would have chosen Miami or even something in your State. Businessmen would not travel throughout whole world by planes and so on. So much fuel goes for nothing now! Much higher price would change this paradigm quickly and for good!

          • CFO point of view | October 22, 2016 at 4:14 pm |

            Also people will try to find work closer to their place of living – to decrease costs of travelling daily. Also people will do shopping in their local supermarket instead of driving 15 km’s to their favourite shopping center, where they spend 100’s of $ which they don’t have on things they don’t need. There are many more examples how we waste energy each second, and I think each person could give 3 short examples what we could do to be more energy efficient – it’s just more convinient for us to behave like this and energy is to cheap now and it allow us to behave like this!

          • CFO, of course public transport is more efficient. What about the millions of people working in the car industrie, transport sector, and billions in fiat sloshing around, depending on profits in those sectors? Tax revenue for governments? We cannot shrink without blowing things up in a spectacular way. The question is imho, can we ‘degrow’ without a severe implosion of the whole financial system, triggering lots of other nasties like in the three links i posted.

          • CFO point of view | October 23, 2016 at 3:46 pm |

            Of course RESET is baked in the cake.
            Moreover I don’t see $400 oil anytime soon – I just wanted to show what are possible directions for humanity, and that we are not on one way street to be out of oil as this Hills Group trying to convince us.
            I think that growth measured by GDP is a hoax. There are lots of changes to be done to quit this paradigm and what I think – beggining is where we end with globalisation. Can we produce in Europe/US and not waiting for China to do it for us?
            Try to think it through starting from the point we should go to. If there is no globalisation and people have to produce everything locally – would it be something wrong? You think it means come back to caveman world? I don’t think so. It just means that governmants have to decrease their role, Soros and like will not make huge fortunes, but for average people – would it change their life so much?

  16. I think that the value of oil going forward is a source of confusion .
    The oil that becomes unobtainium, like getting the gold out of the oceans, is worthless.
    Eroi 1:1, it ain’t coming up out of the ground (unless it is to keep stock fresh), hence the value of that oil is worthless, other than a speculative hold on the field.
    The loss of future productivity because of that worthless unobtainium oil, rips prosperity from the future for many people. Declining energy return means declining job opportunities.

    Oil that is eroi effective will become scarce, but what will this oil be worth?
    This oil will be bid as per normal supply/demand rules. Sure their will be much less industrial demand, but so there will be much less oil supply.
    If food is scarce then valuable food will bid for oil. If war then oil will be confiscated.

    Attainable oil will not be cheap in due course, as a multi-decade depression progresses, or should I say adjustment.
    Steve if pm’s are, as you say, a store of energy wealth, then how in the world does attainable energy not remain wealth? You have a contradiction. Unless attainable oil is valuable as I expect it to be.

  17. I have heard it said that hydrogen is to be considered as stored energy like a battery.
    Anyone know the eroi of making hydrogen?

    • Counterfiat,

      The big problem with hydrogen is that it is not a primary fuel source, rather it is an energy carrier. You need some primary fuel source, such as electricity to produce the hydrogen fuel. Coal, oil and natural gas are primary fuel sources.

      So, it really doesn’t matter what the cost of producing hydrogen is, because we need some HIGH EROI energy source to do it. Currently, we are running quite low on High EROI fuel sources.


      • Steve, there is quite a bit of research out there on Thorium (molten salt reactor technology) being a possibility as an energy source (there seems to be plenty of Thorium reserves in the ground). Do you have any insights/opinion on this ? x

  18. Hi Steve,

    While I enjoy your original research into precious metals, I find it a little out of keeping this foray you are making into energy, alternative and otherwise. What sometimes happens is that what on the face of it appears to be groundbreaking ideas for the betterment of humanity can often be shrouded with darker motives. Often, these motives can be revealed by a little digging into the associations of the people involved.

    For example Mr Arnoux is an active contributor to – see At the bottom of this page is a note: ‘Resilience is a program of Post Carbon Institute, a nonprofit organization dedicated to helping the world transition away from fossil fuels and build sustainable, resilient communities.’ At the Post Carbon Institute website among the fellows cited is Bill Ryerson, ‘founder and President of Population Media Center, and President of the Population Institute. ‘ The Population Institute is a hotbed of neomalthusians, preeminent of which is Paul Ehrlich.

    The insidious elite roots behind corporate environmentalism is a deep and tangled web to unfurl, but it can be done in certain circumstances through good research as is provided in this 2008 article by by Michael Barker, The Philanthropic Roots Of Corporate Environmentalism – Note the collusion of elites such as the Rockefeller Foundation, George Soros and Maurice Strong to name but a few. Mr Ryerson’s close work with Paul Ehrlich is shown in the notes.

    An offshoot of the environmental climate-changers, are the technocracy crowd. Mr Patrick Wood is a leading expert about the history of technocracy. Here is an interview with him: Technocracy Inc, started in the 1930s, included the originator of the concept of peak oil, Marion King Hubbert – Louis Arnoux and his SynGeni ‘internet of energy’ seems to be a modern contribution to the technocracy opus as is the ‘Internet of things’ and the smart meter grids being built everywhere.

    What’s it all about can be summarized in the quote at the top of the Barker article, “Big money wants control; it’s as simple as that.” — Thomas Kimball.

    • CW,

      There is a lot I could reply to your long comment, but I would be REGURGITATING what I have stated before. While I try to answer as many questions as possible, it becomes a lousy EROI for me.

      However, to provide you a quick and blunt reply… I will say the following. I believe in climate change. I stated it before in a previous comment. Not only do I believe in climate change, I actually adhere to what is known as ABRUPT CLIMATE CHANGE. The climate warming starts to head into an exponential trend over the next several decades.

      This is based upon my own independent research from climate scientists that are providing data outside the Govt agencies. So, I am not going to get into the CESSPOOL debating the CLIMATE-GATE issue.

      That being said, I don’t discuss the climate on my site because there way too many ignorant people on the data that will just EAT THE LIVING HELL OUT OF MY TIME with thousands comments.. So, I just keep my TRAP SHUT and look to observe the climate to change more rapidly and with more volatility going forward. If I am wrong, then it was my own opinion. However, I doubt my opinion is wrong on this.

      Lastly, you are including Louis Arnoux in the GRAND CONSPIRACY of the ELITE that I don’t buy into. The Falling EROI will gut the Elite, the large Corporations and Govts the most going forward. While, nGeni technology is not a guarantee in my book, it is at least the best technology I have seen. It is also DECENTRALIZED… big difference from the CENTRALIZED ELITE controlled system today.


      • Steve, the Elite will have LOTS of PM, way more than the average shrimp stacker, so the meet the new Elite – its gonna be the old Elite, not matter what is going to happen. However, there will likely be a big shuffle in the upper 2% (though not the 0.1%) where one will likely find lots of former shrimp stackers that “magically” morphed into neo-lobsters…

        PS. Rapid climate change has happened in the past (for instance in Europe), where within a decade longtime average temps have changed as much as 10°C (due to changes in the gulf stream circulation patterns; e.g. from interglacial temps like now to ice age temps where Bergen climate moves Norway to Italy in 10 years). The rapid/catastrophic climate change (warming) could also occur due to a eventing of HUGE amounts of methane followed by a thawing of large areas of (northern) permafrost areas… in some areas this is already starting). So far 2016 proves to be the warmest year on a several 100 years record in (at least Europe), followed by (I think 2015 or 2003) as contenders for 2nd warmest – very unlikely in a non-warming/cooling world…

  19. My great grandparents lived in a world where electrical infrastructure was just starting to be deployed and where people moved along by walking. Believe it or not, man was built to survive and thrive in such a world. Sure the A.C.wont be on and we’ll snuggle in the winter, but in a generation or two, People won’t give it a second thought. Sometimes it’s hard to put into context our time on this planet. Easy energy created a false paradigm outside the norm of human existence, and it appears we have a rendezvous with reality.

    • Petedivine,

      My great grandfather’s private firm built the 3rd stage of the Old Aswan dam in 1930’s. His stonemasons came from Italy – and he built a pasta factory to cater for them. After the dam was built, many places in Egypt got some electricity.

      However, comparing a world with a population of 1 billion with today’s 8 billion is not reasonable. The USA’s population will have to head back to _below_ what it was when your great grandparents were young. All the easy oil and coal has gone.

  20. Johny Comelately | October 22, 2016 at 3:22 pm |

    Hi Steve. Thanks for this groundbreaking interview! I’ve been reading your work for a while and anticipating this long awaited interview!

    I have a question:
    Gregory Manarino says that wealth creation doesn’t go to money heaven when it crashes. It’s simply transferred from one perspective to another. This is a thermodynamic understanding of money.

    What I don’t understand is how value creation through supply and demand fundamentals can only exist in a thermodynamic expansion? When EROI goes to zero or negative, and or when the debt collapses, how will gold and silver retain its value (which it must under the conservation of energy law of thermodynamics) if economic expansion or value can no longer be created? The Thermodynamic model of supply and demand seems to imply that money will lose value in a thermodynamic collapse. It’s a bit of a contradiction. So I must be missing something!

    Also, could this CO2 to Ethanol catalyst be what’s behind the nGENI technology Dr. Louis Arnoux is talking about?

  21. Juergen Heil | October 22, 2016 at 3:36 pm |

    Thanks for that great great interview. I can’t disagree with the explanation of the available net energy / end user energy. But I found it quite shocking that in 2012 half of the energy was used by the OI itself, meaning over all EROI was 2:1 already. I believe these numbers are difficult to calculate and I never ever could collect all data and do such a calculation myself. But are we really so late in the game? I would have guessed that the EROI is by far better than what was presented to me. I really would like to have further explanation on how he get to this ugly result. If there is no error in this calculations we will see Mad Max play out in front of our eyes soon.

  22. Mark Stevens | October 22, 2016 at 4:38 pm |

    The supply and demand question wasn’t answered directly in the interview.
    Here is my take on that.
    In the past when there was plenty of “cheap”, or high EROEI, oil available
    an increase in the price of oil would mean more oil would be pumped. But
    this was oil which was easily extracted and did not require more energy per
    barrel to do so. However, in today’s world, and the future, the era of “cheap” oil
    is past. There is no more high EROEI oil available. Now more oil can be
    pumped, but it is “expensive” oil with low EROEI, so the net energy available
    from this oil is less than the “cheap” oil because it takes more energy to extract
    this oil than the “cheap” oil. As time goes on and the EROEI decreases as the
    oil is used up the price rises which makes available even more “expensive” oil
    with even less net energy. Eventually you get to the point where the only oil
    available has zero net energy. So you can see that the rising price doesn’t help.
    The other aspect to this is that as more expensive oil is used then the price of
    goods increases due to the higher energy costs. This reduces the buying power
    of the consumer leading to a reduction in GDP which makes the more expensive
    oil even less affordable. It seems that as long as there was more “cheap” oil available
    then GDP could keep increasing. However, as soon as that “cheap” oil was used up
    GDP would stop increasing and eventually fall as only more “expensive” oil was
    available. It is like being stuck in a negative feedback loop.

    • Mark Stevens | October 23, 2016 at 8:59 am |

      I should add that this is happening while the global population keeps increasing
      so that the GDP per person (head) really starts declining as GDP stalls out and then
      declines. So we are stuck in this world with declining EROEI and increasing population
      with no way out. Both of these trends are not going to be changed on a short term basis,
      so we will go over the edge into the abyss.

  23. Alice Quirky | October 22, 2016 at 4:45 pm |

    I understand the concept of net energy in the oil industry but if oil isn’t available for extracting more oil, couldn’t human labor come into the picture in place of oil? Iow, human energy powered “machines” to get at the remaining oil?

  24. God created America with its ample supply of cheap energy for one purpose, and that has been accomplished…………..

  25. I appreciate Louis’ last few comments about the economics of the 88% of total energy that is wasted and turning that into a business opportunity. This business model is going on now. For example, insulating a poorly insulated attic in a typical house will pay for itself in 3 years in energy savings. That’s a 33% rate of return, tax and risk free. For an uninsulated basement the payback is about 5 years but that’s still a 20% tax/risk free rate of return. Compare that to negative interest rates or the extreme risk that markets are offering now. Energy conservation is, by far, the best investment there is. And I should know because I’ve been in the business for 8 years and business is booming.

  26. The Kuntsler “World Built By Hand” or Stirling “Dies the Fire” have lots of interesting walking/bicycling situations that don’t use oil. There will still be plenty enough oil for lubrication and making plastics, just not enough that everyone gets to live like princes and kings in their own automagic-convenience palaces, driving back and forth pretending to “work”. There will be enough oil/fuel to run the Police State much later than regular folks will be able to fuel their 3500 pound death-machines/coffins/cages. Diabetes and obesity will be much less of a problem, after the first couple years of digging holes. There will be a genuine labor shortage after the die-off, as well as an amnesty for the things you needed to do to survive.

  27. Fascinating stuff, Steve. Thank you for bringing it to the audience.

    What I still don’t quite get was the discussion at around the 30 minute mark. To say that the average eroi of a barrel of oil is nearly zero and so the price of a barrel of oil will go to nearly zero is kind of meaningless. You have ridiculously hard to get shale oil and easy to get oil in some locations. The price of that still relatively easy to get oil will not go to zero, will it? How could it? If you have some very easy to extract oil in, as was mentioned, Kuwait, then why won’t the price of that oil go to $200 per barrel?

  28. Thanks Steve,

    Thermodynamics, these are the laws of nature. Is should be so obvious to everyone that oil is not excluded.

    No writing or words can stop the laws of nature having their progress. Just ride along!

  29. An English castle built in the middle ages right on the seashore is now over a quarter mile from the ocean proving a higher sea level back then, The show was on PBS years ago and now anything related to it has been scrubbed from showing up online or on TV. Global warming is a hoax imo.

  30. Hi Steve,

    A great interview. I have to say I am a little confused by the last part though. If nGeni is such an essential way to ward off the collapse of civilisation, why on earth is Louis not open sourcing it, so that it can be produced quickly cheaply and easily before things get bad.

    I find it a bit strange that the whole interview talks about the possible end of it all, and then at the very final moments starts talking about making a profit out of a saviour technology. Not to mention that producing and scaling up nGeni within 5 years to a meaningful level would require ‘war-footing’ levels of national commitment.

    Shame, because that really wrecked the whole premise and it came off sounding like an infomercial at the end.

  31. Steeve Girard | October 23, 2016 at 4:47 pm |

    About 2/3rds of the population is infected with Tooth Fairy Syndrome. They will never believe it is real and will actually kill people professionally and/or physically, in an imaginary hope of having their little egocentric lives not disturbed. I hope you people know that.

  32. Steve,

    Sorry to be so late to this discussion but it has taken me listening to the interview numerous times and reading and rereading the comments to formulate my understanding.

    Arnoux and Hill are saying the same thing you have been saying for years, namely that ERO(E)I is rapidly declining, but they have been able to more precisely quantify the actual numbers and dates.

    They are a bit too close to their subject and have made a mistake in their understanding of the markets.

    They state in slide two that “The threat is entirely driven by the thermodynamics of resource depletion and nothing to do with finance.” yet on slide three they show that 2012 is when ERO(E)I is approaching 1/1 and state “From 2012 onward the Global Oil Industry uses more energy than what it delivered to the Global Industrial World – Increasing production of oil products requires inputs from other Primary Energy Sources”.

    What other “Primary Energy Sources” are they using? They are NOT, they are using DEBT!, robbing from the future, and will continue to do so until the markets see through the manipulation.

    The laws of Thermodynamics do not trump the laws of Supply and Demand. Both are universal and eternal. At 29:00 he states that by 2030, at the latest, a barrel of oil will not contain “one drop” of “economic value”. What he fails to consider is it’s strategic value.

    Governments, military and the elites will still have oil products while the rest of us will be riding bicycles or horses.

    Great and enlightening interview. Thanks!


    • Steeve Girard | October 24, 2016 at 7:02 am |

      You failed to understand, that what they meant is: it will take the whole content of a physical barrel to create a new barrel by 2030. That means the oil that governments have, will start to deplete rapidly as they are using them. Until they reach a point where it’s transportability will be meaningless and therefore, will try to save the little they have by abandoning a lot of the so called strategic structures that contains them.

      • I understand what the meant, just disagree with the conclusion.

        ICBMs have no economic value, except perhaps to those that build them. They are an inefficiency or a tax, if you will, on maintaining our political system and yet we still have them.

        It will not matter if there is no “economic value” in the barrel of oil, the world will still pump and process them even at an obscene cost because of their strategic value until an acceptable, more economic alternative is found.

        • “I understand what the meant”

          no, you don’t. it takes energy to extract oil. that energy is supplied by oil (ignore the generalization for now). if more oil is required to extract oil than is extracted, then the limit is reached. economic value is irrelevant here – it simply becomes impossible to extract the oil.

          now, as to the generalization. oil is not the only source of energy. coal, wind, solar, and nuclear are also sources of energy that could be applied to the extraction of oil. it may be slower and take longer, but that will be ok because the oil won’t be for us or any kind of market but rather will be for the “global elite” “international financiers” “deep state” to use. they will tax us, we will pay, and they will be happy motorists.

          (there is also the issue of thorium. it can generate quite a bit of energy cheaply and is relatively abundant in the earth’s crust. perhaps someday people will get around to it.)

          • “now, as to the generalization. oil is not the only source of energy. coal, wind, solar, and nuclear are also sources of energy that could be applied to the extraction of oil. it may be slower and take longer, but that will be ok because the oil won’t be for us or any kind of market but rather will be for the “global elite” “international financiers” “deep state” to use. they will tax us, we will pay, and they will be happy motorists.

            My point exactly. Thank you.

            And, it will be extremely expensive.

  33. westernspirit | October 23, 2016 at 9:47 pm |

    I’m really surprised that you’ve never (to my knowledge) recorded any interviews with Chris Martenson. Here’s Chris’s most recent interview of Gail Tverberg this month titled: “Why There’s No Economically Sustainable Price For Oil Anymore” where they cover energy use correlation with world GDP, falling EROI and the dire financial situation of the oil majors, fallout from low oil prices and other energy-related topics.
    Apologies if I missed any recordings or print discussions you’ve had with this very knowledgeable man and great interviewer. I’d anticipate an extremely interesting back and forth between Chris and yourself.

  34. I’m a firm believer in Peak Oil. Arnoux seemed correct, though timing is not predictable as he thinks it is. However, he added nothing new to the conversation – this theory has been around in the same essential form since the 1950’s.

    The price of oil declining to $12 was not mentioned. This is a point of dissent among the readers of your blog – declining supply and steady to increasing demand should increase price, but you claim that oil will never again rise despite this formula. The claim is backed up by something called ‘thermodynamic collapse.’ This was not explained in the video in terms of currency, only in terms of energy (and correlated with gold).

    I’ve been studying this, even reading the available summaries on the Hill Group website and it is not clear to me how this price relation works. I don’t believe it and I do believe in the Peak Oil reality. I do understand that eventually the EROI drops below 1:1, at which time money can no longer motivate producers to find oil because it will cost them more in other available forms of energy to supply it.

    Basically, the argument seems to be a statistical one – long-term trends dictate future trends. This is not valid. Within the argument is an explicit statement of severe disruption on every societal level. Yet, they argue, the oil price curve will remain unchanged. This cannot be predicted. Even in 2008, from economic shocks alone, the price shot up, then later shot downward. Now, it has entered complete pacific low-levels until it fizzles away?
    Count me a doubter. There will be violent swings in the price. It is at a very long-term low and it will rise in the next few years, if not sooner. It will be rapid and strong.

    Also, Arnoux belief in Catastrophic Anthropogenic Climate Change makes his scientific credentials highly dubious (for me).

    The nGeni thing is exactly what he wrote – a magic green box that solves all problems. And like a genie, it was completely unexplained as to how it operates. Where does it source energy?
    I’ll be interested in any real explanation of the technology, but this was not it.

    I was very eager to watch the presentation, but it looks like snake-oil to me.
    Peak Oil is real, it’s coming, so … magic machine! Now help fund it.

  35. Steve,

    Thanks for doing this interview, it was very good to hear Dr. Arnoux explain these matters. I think it is important to keep in mind that 2022 is the deadline assuming BAU. Once the thermodynamic nature of the collapse becomes apparent enough to the insiders running the show, the deadline could be extended by reducing the expenses of the oil delivery system i.e. – by rationing its use away from non-remunerative consumption activities (such as supporting suburban sprawl and American-style “happy motoring,” ending distribution to all points across the globe and limiting production and distribution to essential and productive activities or to “important places.”. Whether this careful husbandry of the fizzling resource will applied, or whether countries will just waste oil in fighting over the remaining resources, I don’t know, although I see no evidence that our “leaders” will be wise about this. In any event, I expect we will see rationing restricting private use of oil and gasoline by 2020, even if it is for the purpose of supporting war efforts. The rationing will probably be billed as a temporary measure, but it will be a clear sign that the end is very near.

  36. Oil production follows a standard curve and we appear to be at/near the peak. However, Oil will continue to be extracted until none exists. The price of end-user products(gas, plastics, etc.) will go up until other energy sources are developed and their extraction/generation prices cross below that of oil. There will be pain during the transition away from oil as its use is prioritized and societies are forced to change.

    BTW: What is the typical efficiency rating of your device? What is the typical ROI?

  37. This work dovetails nicely with what Gail Tverberg has been telling us for quite some time.

    Looking at the problem from a somewhat different angle and coming to very similar conclusions.

    Multiple lines of evidence pointing in the same general direction.

    I am skeptical of the green box energy savior. But I will be interested in seeing information on this technology.

  38. Steve,

    There are a few issue,s you never adressed in the whole discussion of energy:

    1. the value of the USD whom can actually and realisticly predict this in 1 year, 2 year etc. It is
    a 100% pure fiat currency. If the world would change to another means of exchange this
    will effect the western world more then any model predicts.

    2. I am not sure if you ever have travelled around the globe I did and in fact petrol prices vary very
    much from 10 ct to more then 2 usd is some countries, clearly society can afford higher and lower
    prices as they will just adjust to actual price they need to pay for their energy locally.

    3. Uranium/Thorium energy is a vital part of our energy supply of the future and growing, only you never adress this.

    • Steeve Girard | October 27, 2016 at 8:48 am |

      I can say with almost certainty, that nuclear fuel will not be the future… First Uranium is as rare as Gold, which burning Uranium in the reactors is like burning Gold. Which is by itself an economic non-sense. Second, the reason why Uranium is used, is due to the weapon lobby, and they will defend that almost to the death, preventing any attempt that would hurt their business, that includes the sabotage of any attempt of alternative nuclear fuel such as Thorium.

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