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Bibliographic Metadata
- TitleCommodity price fluctuations and the EROI of oil - How the availability of surplus energy affects non-fuel commodity prices
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- Is part ofJournal of Business Chemistry, Issue Journal of Business Chemistry, page 180-197
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- AnnotationSection "Research Paper"
- LanguageEnglish
- Document typeJournal Article
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Abstract
We study the long-term effect of a changing energy return on investment (EROI) of oil on non- fuel commodity prices. Compared to economic growth, interest rates and uncertainty, the EROI of oil is the main driver of commodity price variations since 1938. A change in the EROI of oil accounts for up to 30% of the variation in commodity prices. We show that over the past 100 years, periods of low EROI have been correlated with higher commodity prices and vice versa. Commodity prices thus depend on the amount of surplus energy available for society. As renewables show substantially lower EROI values than fossil fuels used decades ago, the energy transition poses major challenges not only to our society but also to resource-intensive companies. The adoption of new business practices like the circular economy fosters the development of strategies increasing the EROI and reducing the large demand for external sources of energy and raw materials.
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