ENERGY IS EVERYTHING By Michael Lardelli Posted Thursday, 23 April 2009 No living or manufactured thing exists on this planet without energy. It enables flowers and people to grow.

ENERGY IS EVERYTHING

By Michael Lardelli Posted Thursday, 23 April 2009

No living or manufactured thing exists on this planet without energy. It enables flowers and people to grow. We need energy to mine minerals, extract oil or cut wood and then to process these into finished goods. Without energy the goods would not exist so we can think of each product as containing “embodied energy”. So the most fundamental definition of money is that it is a mechanism to allow the exchange and allocation of different forms of energy. The economy is energy.

The most important source of energy in the world economy is hydrocarbons - molecules made up of hydrogen and carbon atoms. Small hydrocarbon molecules form gases such as natural gas. Larger molecules form the liquid we know as crude oil. Hydrocarbons can be burned to provide heat energy to power generators and motors. Almost all transport relies on liquid hydrocarbon energy. Hydrocarbons are also incredibly useful for making plastics. It is difficult to find any manufactured thing that does not now include plastic. Oil and natural gas provide almost 2/ 3rds of the energy used in the world economy. A simpler way to say this is that hydrocarbons are 2/3rds of the world economy.

Until recently (about 2005) the world economy was growing. The number of people has been increasing which requires increased production of food, clothing and shelter - the basics. On top of this, many of us have been using more energy than previously - to travel farther, eat more food, buy additional clothes and enhance our shelters. Until 2005 we could expand our energy use to meet this demand. This is something we were able to do - with occasional interruptions - for the past 150 years. However, after 2005 we could not expand our energy supply. In other words, we could not expand the world economy.

Oil supply was flat from 2005 onwards and is now in decline. That is not to say that we did not try to expand the world economy after 2005. However, much of the expansion that occurred was an illusion. In many industrialised nations a great deal of “money” was created (by increasing the money supply and other means) but it did not correspond to an increase in energy use.

Meanwhile, the US economy began to contract at an accelerating rate. If you ignore the way the US government avoids clarifying its GDP calculation method to maintain a more favorable picture, you can see that that the US economy has been contracting since 2005.

China managed to grow until recently by declaring to own a greater proportion of the world’s stagnant production of oil. This was a significant factor in increasing the demand for, and price of, oil. China has also been rapidly expanding its coal-fired electricity generation. Indeed, coal provides the bulk of China’s energy.

As a whole, the world may attempt to turn to coal to continue to grow its energy production. However, the USA (the world’s greatest coal province) is already past peak net energy from coal production even though its total mined tonnage increases. World coal production is expected to peak before 2030 and will only be marginally higher than current levels. Coal currently supplies only 25 per cent of world energy so this will not compensate for the decline in energy from oil.

http://www.onlineopinion.com.au/print.asp?article=8817, access on March 14, 2010. (Adapted)

According to paragraphs 3 and 4, the year 2005 is significant because