Energy Return On Investment - EROI

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DEFINITION of 'Energy Return On Investment - EROI'

The amount of energy that has to be expended in order to produce a certain amount of energy. The energy return on investment (EROI) is a key determinant of the price of energy, as sources of energy that can be tapped relatively cheaply will allow the price to remain low. The ratio decreases when energy becomes scarcer and more difficult to extract or produce.

BREAKING DOWN 'Energy Return On Investment - EROI'

The EROI for oil has decreased dramatically over the past hundred years. The amount of energy required to produce one barrel of oil has decreased as superior methods, such as fracking, have been introduced.


EROI = Energy Output/Energy Input

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RELATED FAQS
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  3. How can I find net margin by looking a company's financial statements?

    In finance and accounting, financial statements represent the fundamental means of analyzing a company's financial position, ... Read Full Answer >>
  4. How is the marginal cost of production used to find an optimum production level?

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  5. What factors make it difficult to compare performance ratios between retail stocks?

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