Book Review: 'Game Over' by Stephen Leeb 46 comments
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I first read Stephen Leeb’s book The Oil Factor back in 2004. I read it again in 2008 and it reads more a history book now as Leeb’s projections for oil prices, precious metals, and investing in general were all spot-on. His latest book Game Over continues the main thesis unveiled in The Oil Factor: the world is beginning to run out of the essential raw materials such as oil, silver, titanium, iron ore and steel which are needed to support economic growth. Energy remains the key, and Leeb continues to pound the table in support of comprehensive and strategic energy policies for the US and the world.
Leeb is obviously a believer in peak oil and now proposes the concept of Absolute Peak Oil. He defines this as the point in which we’d have to invest more than a barrel’s worth of energy to pump, refine, and truck a barrel’s worth of it to the local gas station. He believes this point in time is very near and therefore suggests a massive investment in alternative energy. This is particularly important for the US, considering its 65% dependence on foreign oil.
Leeb discusses society’s complexities, both on an historical and a current basis. He points out that when complex societies run low on resources, they typically undergo wholesale collapse and experience large scale violence and starvation. Reading between the lines, it would appear he feels the US could easily slip into such a state if it continues to ignore its energy crisis. He points out that humans tend to live in denial and tend not to make significant changes until being forced to. The danger, he points out, is that waiting until then will be too late. We need wise and intelligent energy policy now.
But that policy won’t be easy to articulate. Obtaining the metals and water needed to generate more energy is a vicious circle of resource depletion. He points out the challenges in providing all the steel necessary to build 200,000 wind generators. Every investment at this point, Leeb says, must be analyzed in terms of resource/energy return on investment.
If I had to criticize Leeb it would be on his incomplete analysis of natural gas as a near and mid-term solution. Leeb goes into some detail on most topics, yet glosses over the major role natural gas could play over the next few decades in solving the problems he is most concerned about. He apparently does not quite understand the abundance of natural gas in the US and in the world. This is too bad considering the influence Leeb could have in advertising the strategic importance of US natural gas reserves. For the money Leeb suggests go toward energy research, the US could build out a very significant natural gas transportation infrastructure which would immediately and significantly reduce foreign oil imports. Mr. Leeb would surely benefit by reading Robert Hefner’s book The Grand Energy Transition.
Leeb continues to recommend investing in gold and suggest several countries and currencies which will benefit from resource shortages. Not surprisingly, the US does not make the cut and he forecasts further pain for the US in the near future: dollar depreciation, rising and rampant inflation, significantly diminished investment returns for the majority of Americans, and a Wall Street whose best days have come and gone.
I see no reason to discount Leeb’s predictions of the future and would recommend this book to anyone who hasn’t already read The Oil Factor. That said, it will be hard for Leeb to every write another book as timely and vital as was The Oil Factor. If only US policymakers had read The Oil Factor in 2004, perhaps the US wouldn’t find itself as unprepared for the future as we currently find ourselves.
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"If only US policymakers had read The Oil Factor in 2004, perhaps the US wouldn’t find itself as unprepared for the future as we currently find ourselves."
Do you really think US policy is made by people who take any notice of warnings or even think about the medium and long term? In the few areas of policy that are not the chew toys of lobbyists, the overriding consideration of policy makers seems to be avoiding hard choices and anything remotely unpalatable to the electorate. Thanks though - I like your posts.
An interesting book by Jeff Rubin (former chief economist at CIBC that predicted $100 oil prior to 2008 and peak oil advocate ) has just come out. It is called "Why Your World Is About to Get a Whole Lot Smaller""and is about how peak oil (currently masked by the economic crisis) will end globization. The high cost of shipping will end imports from countries like China and Brazil and nations will resort back to locally prodcued goods. An example of this was the drastic drop of steel imports from China in mid-2008. I just ordered the book from Amazon. It was only released two weeks ago.
I have not read Mr. Leeb's book yet, so I hesitate to make too many remarks. I will however make this comment, the idea that we can use alternative energy sources (wind, solar, bio-fuels, etc) to power the United States is nonsense, it can't be done. I would point folks to Robert Bryce's book Gusher of Lies, to get a better understanding of just how huge our energy needs are, and how none of the currently popular solutions will be effective in replacing oil. In my mind one of the first things the United States should do is stop thinking drilling is a dirty word. Drilling for oil and natural gas can be done cleanly and efficiently, with little impact on the environment. While we should continue to develop alternative energy sources to reduce dependency on oil, we also need to realize oil will be needed for a long time and stop tying the hands of the companies that can produce oil and gas in this country,
Time to prepare for Peak Oil impacts: survivingpeakoil.blogs.../
What could change first is the concept of growing apples in China. That requires a fast-moving vessel, so higher energy costs would definitely affect food shipping first.
On May 26 08:04 AM longoil wrote:
> I liked Stephen Leeb's book "The Oil Factor.
>
> An interesting book by Jeff Rubin (former chief economist at CIBC
> that predicted $100 oil prior to 2008 and peak oil advocate ) has
> just come out. It is called "Why Your World Is About to Get a Whole
> Lot Smaller""and is about how peak oil (currently masked by the economic
> crisis) will end globization. The high cost of shipping will end
> imports from countries like China and Brazil and nations will resort
> back to locally prodcued goods. An example of this was the drastic
> drop of steel imports from China in mid-2008. I just ordered the
> book from Amazon. It was only released two weeks ago.
Powered flight was a myth. So was the machine gun. So was nuclear energy. So was the laser. Etc.
what does leeb have to say about liquid transportation fuels from coal via 2-stage hydroliquefaction?
is ocean shipping really that expensive? floating heavy goods 1000 miles doesn't really consume that much energy compared to trucks over mountains, rail over mountains, etc. certainly economics of airfreight will be affected.
> jack
longoil: yup, The Oil Factor was a classic. i also agree with rubin that energy issues will require the world to become more locally sustainable, or, as Leeb puts it, less complex. as Leeb points out, it is not surprising that wall street has suffered large layoffs: what used to be simple deals in rockefeller's time (one lawyer, one contract, one handshake) now require 20 lawyers, 20 accountants, and 10 MBAs. this is unsustainable complexity most of which produces nothing tangible and sucks out capital. you are seeing the result in the massive down-sizing of wall street now taking place. this will continue.
SSALarry: perhaps you should start with Leeb's book "The Oil Factor". with respect to your comments on alternative energy - what i believe is nonsense is the idea that we can drill our way out of the peak oil problem. the US consumes 20 million barrels of oil every day, and imports 12 million of those barrels. that is, the US's imports alone are more than the entire production of saudi arabia. think about that for a moment or two....
cjwirth: please see previous comment to SSALarry...
EX-AD-MAN: exactly. as Leeb says, humans tend to live in denial and be content with the status quo until disasters hit. look at history at how many people were against the interstate highway system, cross-country telegraph and telephone, man-on-the-moon, and similar efforts. the government participated heavily in these projects and they all paid dividends to americans for decades and paid for themselves many times over. so it would (will?) be with alternative energy, but there is a lack of vision and urgency by many folks who are content to buy foreign oil derived gasoline to power their cars and trucks that they love so much and can't imagine changing. that said, they'll be forced to change. we can either do it intelligently and mitigate the crisis, or, we can wait until it's too late and the vehicles simply stay parked in the garage for lack of gasoline.
johngordon: i don't have the book handy, so i can't look at what Leeb says about coal gasification. that said, my opinion is why in the world would we go to the expense of a dirty coal gasification projects when we have abundant, clean, and cheap natural gas? it simply doesn't make sense. with respect to shipping, again, i think the problem is solved by engines running on CNG. the huge vessels now being designed to deliver LNG are going to run on, you guessed it, the same natural gas they carry as cargo.
Sincerely,
Stephen Leeb, PhD
SSALarry, I've also added your book to the list.
Bigger picture. . . it is refreshing and encouraging to read intelligent discussion of issues. Over the past 6 months, I have almost completely transformed my research to internet sources including financial blogs, overseas publications (e.g., FT.com), Europe/Asia interviews on CNBC (usually posted by a blogger) and Barrons. I have completely discontinued watching CNBC USA and the other financial porn outlets. I don't even trust them anymore and expect viewers are more likely misled than obtaining anything useful.
Thanks to all you contribute.
Thanks for you're reading recommendations. I've just finished your last one- The New Great Game- a fascinating look into central asian geopolitics and history. Also, for those interested in energy investments, I recommend considering the ETF OIH (oil drillers/service) for a portion of those funds. These companies have alot of work ahead of themselves.
Yes, we need alternative fuels but why isn't nuclear in the forefront for electricity? Natural gas was a quick, cheap alternative to coal to satisfy environmentalists relative to electricity generation but let's move forward and shift that natural gas to the automotive world for a few years. Instead our trustworthy government is using its government-controlled auto companies to develop a whole new generation of small cars running on what? GASOLINE! The other half of the govenment is weaning the country from oil. Please!
Until I see a jumbo-jet taking off with a couple of windmills strapped to the wings or hear about a fighter pilot who is confident flying into combat in his plane loaded with 20 tons of batteries, I'll bet that oil is here to stay. Let's not dream: let's reapportion the technology and resources we have and let them efficiently sustain us during the development and implementation period needed for new technology to take hold.
Cheers
bob
The folks who think that a global "drill baby drill" approach is the only answer to energy shortages miss Dr. Leeb's point on alternative energy. He appears to favor moving to new energy sources because of his conviction that the old sources will become simply too costly and will continue to be controlled by the likes of our favorite Uncles, Vladimir and Hugo.
The confluence of materials shortages and a declining US dollar will be a double whammy not only on the inflation front but on the medium of exchange front. Will the resource rich nations continue indefinitely accepting payment for valuable materials in a currency that seems destined to continue decline in relative value? Perhaps, but perhaps not.
In the short-term, moving from oil to other energy sources involves many tradeoffs and market inefficiencies. It is interesting however, to note that relatively small declines in global demand for oil has had significant impact on market prices during the recession because oil is priced based on the relationship of incremental supply and demand. If alternative energy cut several million barrels a day off worldwide oil demand, would that affect prices? Dr. Leeb would probably say "yes" in the short-term, but in the long-term, lower prices would encourage more developing world consumption and that is where demand growth is.
Since humans (and, more importantly, politicians) live in the short-term, it is easy to see that the short-term effect of lower oil prices would make a move to alternative energy sources appear uneconomic and that a change would be resisted. The more you spend on alternatives, the more you potentially drive down the short-term price of the fuel the alternatives compete with.
It is a complex issue -- the short and long terms both have to be considered simulatneously and that is customarily beyond human capacity.
One of the most dangerous places in the country to live has to be the Tennessee Nuclear Valley with a Nuclear power plant placed about every 50 miles all along it's length.
With Yucca Mtn. no longer a future storage site, and the Nuclear facilities forced to store their own waste, the area can hardly be getting safer.
Add to this the Oak Ridge National Lab, one of the hottest Nuclear sites in the world with frequent accidents, spills, leaks, emissions and unsafe conditions.
But there's more, including flagrantly unsafe air quality conditions from TVA and industrial coal ash dust in the air (the worst in the entire country on any given day), and more hazardous waste from 5.4 million cubic yards of toxic coal ash sediment dumped onto and leaching into the countryside and waterways (this was just the last accidental dump and does not include prior ones).
The latest estimate for this one accident alone is now approaching a $Billion dollars if it can be cleaned up at all.
The cleanup costs for Nuclear waste and contamination is ongoing, never ending and therefore is virtually inestimable.
Is this what the rest of the country desires for itself?
Better get with alternate fuels quickly , or you will be facing the same thing, or worse.
you can bet that books of the ilk of "the oil factor" have been absorbed by the Asian community. reminds me of the Q[quality] emphasis of the 1970/1980's- accepted by Japan, rejected by USA[first step in the demise of big US auto?].
read recent comment by H. Waxman[congressman,Ca]... not given emphasis in GHG legislation/stimulus bills 'cause it's not "renewable". as if lithium or rare earths[REE] are renewable!
previous comment, re h. waxman--"uranium" not given..