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.