Methods and Data
Following the definitions in Eq. (2), a quality- corrected EROI* is defined by
i=1 AUEi, t
i=1 Ai, tEi, t where liH is the quality factor for fuel type i at time t and Eo and Ec are the thermal equivalents of energy outputs and energy inputs, respectively. We construct Divisia indices for energy inputs and outputs to account for energy quality in the numerator and denominator. The prices for energy outputs (oil, natural gas, and natural gas liquids) and energy inputs (natural gas, gasoline, distillate fuels, coal, and electricity) are the prices paid by industrial end users for each energy type.
Energy inputs include only industrial energies: the fossil fuel and electricity used directly and indirectly to extract petroleum. The costs include only those energies used to locate and extract oil and natural gas and prepare them for shipment from the wellhead. Transportation and refining costs are excluded from this analysis. Output in the petroleum industry is the sum of the marketed production of crude oil, natural gas, and natural gas liquids.
The direct energy cost of petroleum is the fuel and electricity used in oil and gas fields. Indirect energy costs include the energy used to produce material inputs and to produce and maintain the capital used to extract petroleum. The indirect energy cost of materials and capital is calculated from data for the dollar cost of those inputs to petroleum extraction processes. Energy cost of capital and materials is defined as the dollar cost of capital depreciation and materials multiplied by the energy intensity of capital and materials (Btu/$). The energy intensity of capital and materials is measured by the quantity of energy used to produce a dollar’s worth of output in the industrial sector of the U. S. economy. That quantity is the ratio of fossil fuel and electricity use to real GDP produced by industry.