top of page
  • Writer's pictureSol J

How did we get it so wrong?

Why has the established political, industrial and scientific hegemon overlooked such a basic approach to solving such a large universal problem?

When we break a systems based problem into its parts and try to analyse them in isolation it can lead us to cognitive failures. Throw in political bias, dualistic one-sided debate and perception bias, then we have a recipe for certain failure.

"If you don’t read the newspaper, you’re uninformed. If you do read the newspaper, you’re misinformed." - Mark Twain

I generally try not to surf YouTube much these days but occasionally I need a Star Wars fix to get the right hemisphere firing again and inevitably the left brain ends up guiding my hand to a link that somehow relates back to all matters energy. This time I end up watching a young vlogger vigorously expounding his theories about how the oil companies are engaged in this huge conspiracy to attract us all away from renewables in the name of corporate greed and profit. Teeth clenched, I reach out to the keyboard, ready to flame him before I remember I've entered The Matrix called social media, this is just a test program and if I look at the woman in the red dress, the sentinels will come and turn me into a battery to feed their AI. I unplug before its too late.

Without wanting to be unkind to him, I'm sure he's very passionate about his views and on the face of it there is a huge amount of evidence to support his theory. Unfortunately there's an even greater body of knowledge outside the realm of his cognitive framework that both debunks his conspiracy and explains another one. This knowledge is not available to us unless one can look at several sides of the debate objectively and passionate views generally correlate poorly with objectivity.

Oil companies don't compete with renewables companies, they ARE the renewables companies. Oil started becoming less profitable nearly 40 years ago in the early 1980s and oil companies have been moving into renewables steadily since that time because they are better business. These are energy companies, many of them openly branded as such and most of them to some extent are trying to divest themselves of their oil interests. They are more than happy to sell you all the renewables you want because it's good business. You don't have to take my word for it, look at the stock market announcements of any major oil company and see what they're invested in. Conspiracy theory debunked.

If there's no profit in something then clearly it doesn't make much sense to throw a lot of money into promoting it does it? So if there's no profit left in oil why do they do it? The reason is simple, like the rest of us they are dependent on oil. If they can't extract it then they can't deliver either oil or renewables and they're out of business on both, as are we all. Fossil fuels are the only energy source in our global energy supply chain that delivers a net energy profit, that's why the whole supply chain is built on top of it. If there were something else available that could do that, you can be fairly sure the oil companies would have thought of it before you.

The oil industry has been built up over decades to supply a certain continuous demand and up until now it could generate a profit at that level of demand (i.e. stay in business/keep pumping). But the net return on oil has been in decline for decades. Now this is where things start to get a bit weird. If oil companies try to raise prices then demand lowers and profits drop. And they can't lower prices either to increase demand since they are already have almost no margin left. So they are gradually getting squeezed into a narrowing price window outside which they become unviable.

As this progresses they become more exposed to any demand or price changes and dip into the red with increasing frequency. Every time this happens it gets harder to jump start the oil supply chain and bring it back to meet demand at a viable profit. What we see in practice is price shocks and fluctuations in supply and demand moving through the supply chain, with increasing frequency and severity as net energy return on oil diminishes. A hose siphon is a good analogy:

If you have a running siphon, as long as there is sufficient head to keep the siphon flowing it will generally continue to flow until it reaches the very bottom of the tank. If you lose that pressure and air gets inside the pipe you have to restart it with extra energy. You have to put energy in to get energy out. The further you have to draw the water up and the wider the hose, the harder it gets. Once it's running, gravity provides the energy required to keep it running and as long as the outlet is lower than the level in the tank you'll get a net flow. If it stops and the tank level is too low or the hose is too wide you can't start it again, whether there's oil left or not. This describes our global oil supply chain.

To continue this analogy to its conclusion:

To accomodate greater global oil demand the siphon pipe is now wider than it's ever been and at the same time we need to go further and deeper for oil. Every time we experience a drop in demand, the siphon mechanism falters for a minute and we need to expend a bit more energy than last time to stabilise it again. This effect has now been happening with increasing frequency and severity since the 1970s and it shows up as price shocks and variable supply and demand in the market. We actually saw negative oil prices briefly in 2020 as the drop in demand due to the pandemic saw a backlog of oil stocks that had to be urgently cleared to allow the wells to continue to operate. These price shocks and supply/demand fluctuations are the gurgling and back flows bubbling through our failing siphon analogy and were the early warning signs in the market that we have almost run out of oil. The downside of this process is what we call the "Energy Seneca".

Past a certain point it is not worthwhile for an oil company to keep going and it will sell off a portion of its oil stock, leaving that problem for someone else and instead focusing on renewables or some other business where they can focus on short term profit. Oil companies are not qualified or inclined to solve the world's energy problems - they never set out to and we certainly never paid them to. This is the job of science and the public who are the real stakeholders in the matter and are vested with the responsibility of thinking about a solution.

The solution does exist, however it is a thought challenge first and foremost. It consists of looking at why oil has been so persistent as a solution and so successful at allowing us to develop into a modern technology based world. And the answer is that the oil industry was until recently a self-powering supply chain. A self-powered energy supply system is necessary for any society or civilisation to develop and prosper. For over a century, oil has been the basis of the sole self-powered energy supply system we had. This is now nearly gone.

In the face of that challenge, it is only when we will be able to come up with a solution that offers an overall net energy return on energy invested (EROI), otherwise known as over unity performance, that we will be able to get out of trouble. And by over unity performance we must be clear that to keep sustaining the kind of living standards the most privileged of the global population enjoy, the EROI performance level must be well over 30:1 (at the production point), while for oil it is presently well below 10:1 and trending down. nGeni is such a solution and offers net energy return over 30:1 off either solar or fossil fuels, as the application may require and was designed from the outset with this objective in mind.

So the real conspiracy is one of ignorance - we have all conspired together in our failure to identify that the only way we can survive, is to achieve a (very) high net return on energy, in other words, a supply chain capable of powering itself and still having usable energy left over to deliver to energy end-users. If we go out of business before we get to that alternative, then the lights go out for good. We don't have time to waste.

4 views0 comments

Recent Posts

See All


bottom of page