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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It should be obvious, even to the most obtuse, that the need for energy is insatiable. Fossil sources are finite and polluting and nuclear has major risks and will become increasingly expensive.
Alt energy sources will become more and more effective as time goes on and can be used for many of the current energy needs.
The key for the investor is, AS IT HAS ALWAYS BEEN, picking the right horse. BOLA
we could always recycle as the french have done for years. or as done by USA navy for subs, a/c cariers, destroyers since 1960s. please research the subject. it's done for more things in this world than yard waste, plastic/aluminum containers and old news paper. recycle also extends supply and reduces nasty ore mining.
On May 26 04:03 PM SeekingTruth wrote:
> I suppose that the French could obtain 100% of their electrical power
> from Nuclear sources, but that would not make it's use any safer
> , would it?
> That said, in their defense, I suspect that their methods and safety
> record are far better and safer than ours (that's not hard to do
> unfortunately for us).
>
> Before adding any new Nuclear facilities, we must know where and
> how the new Nuclear waste will be stored and handled safely and whether
> those selected methods are satisfactory to the citizenry occupying
> nearby populated areas.
> Of course, the storage locations and methods must also hold up to
> critical scientific inspection scrutiny as well.
> A competitive cost/benefits/payback analysis that includes storage
> and safe handling costs, using in part, well published and disseminated
> past history as a foundation would also be in order.
>
> I don't think this is asking too much for use of a difficult to contain
> deadly toxic carcinogenic substance that hangs around for thousands
> of years, do you?
GoSooners: the only time i have seen leeb on tv was on CNBC, and the interviewers, as normal on CNBC, ask dumb questions to push their agenda (which for some reason is not to believe in peak oil). leeb has been recommending gold for years. if you are going to pick a book to read, i'd read "the oil factor" first.
fran: well said.
fran again: recycling nuclear waste isn't 100% though, right? at the end of the day, there are still radioactive wastes true? didnt i read something once that the french were disposing of their nuclear waste in the US and at the bottom of the ocean? i need to do more research on nuclear energy and the waste issue.
You previously clearly outlined all the reasons why we must immediately shift to NG for transportation fuel and I agree with that conclusion. In addition we must also immediately move forward on advanced nuclear reactors which will solve our spent fuel nuclear waste problem and generate the large quantity of electricity required. Reprocessing the nuclear waste as some suggest is not the answer as that leads to plutonium that can easily be diverted to weapons. The IFR reactor design can consume the long half-life waste while producing a much smaller quantity of short half-life waste. There is no doubt that we must have nuclear energy as a major component of a realizable overall energy plan, especially if we need to decrease coal burning. Note that coal burning creates far more radioactive waste than nuclear power plants.
The French nuclear power generating success stems largely from their one design reactor policy and good quality control. That also lowers the electrical energy cost and theirs are the lowest in Europe. Even with fuel reprocessing they still have a waste disposal problem.
www.ourenergyworld.com...
Many thanks for your book, The Oil Factor. I read it in 2004, and, prompted largely by it (you), I set out to learn much, much more about peak oil and many other energy issues. Now, energy, alternative energy and clean tech make up approx 20% of my portfolio as an "Other" category...other than equities, bonds and cash. Until this price drop, I enjoyed being long BTU, PCX, CHK, CVX, RIG, NOV, FTEK, FCEL, SPWRA, AKNS, TSL, NBR, ENER, WFR, SSL, JOYG and GE. FSNGX and PRNEX are in there too! Yes, I've taken my lumps, but I'm holding for the times you forecast with the hope that I'm properly positioned - at least MOSTLY well positioned! Oh, and in this recent rally, our portfolio came back much stronger than the broader US market. -Jim
On May 26 10:17 AM Dr. Stephen Leeb wrote:
> Thank you very much for your kind words. Your commends helps me feel
> like I am truly helping individual investors become more aware of
> the upcoming volatility. Good luck with your investment choices.
>
>
> Sincerely,
> Stephen Leeb, PhD
www.bluewaterwind.com/
www.popularmechanics.c...
oldwizard: oh, i understood your argument totally. however, i still think the cost benefit for wind is there (especially when compared with coal). it wouldn't bother me if all coal plants were shut down in favor of nat gas. meantime, i am all for the buildout of wind. solar still needs some efficiency improvements, but there are areas of the country where it works fairly well, and again, when compared with all the external costs of coal (environmental, health care) i favor solar over coal as well. however, as you point out, if obama's dream of electrifying transportation comes to pass any time soon, i don't see how it happens without nuclear (assuming no coal and apparently no robust push into natural gas).
rip: yup, offshore is a great place for wind, as europe has already proven. however, everytime i hear about offshore wind in the northeast US, i hear complaints by environmentalist. should be interesting to see how it works out. all that said, the wind profile in the US great plains is also very prolific, as boone pickens keeps pointing out. but, like you said, this strategy relies on building new and highly efficient transmission grid. it probably also relies on the gov declaring imminent domain so that the grids can be built quickly and cheaply (without courts getting involved for every mileage of farmland they cross). so, there are obviously some challenges, but i am all for moving forward on wind. i just wish the country would simulataneously do so with nat gas!
Why we don't use more NG is beyond me. No doubt politics is to blame.
The market will eventually take care of the problem, but I also don't think it would be such a bad idea to invest in alternate energy and begin the process of reducing dependence on fossil fuels.
While I generally agree with your post that sentence stopped me in my tracks. Obviously you understand that it's not the drilling of oil that's at issue, right? I assume you've heard of global warming. Carbon dioxide levels in the atmosphere are measurable and real, which means that it's the burning of fossil fuels rather than the process of attaining them that we must address. And that's why seeking alternatives is important; drilling for oil is just a side issue with only slight relevance...
On May 26 08:14 AM SSALarry wrote:
> Thanks for posting your review of Game Over, I have read many energy
> books and always enjoy hearing when a new compelling book has been
> released.
>
> 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,
Let's assume all the alternative energy options are technically viable. the next question bet asking is how are we going to finance it. If all the existing nuclear and coal power plants are to be decommissioned and replaced with green energy, I believe we will go broke in very short order.
I am of the opinion that nuclear, oil and gas will be with us for quite a while. Yes, we will transition to something else one of these days. But that day is long way into the future.
As for manufacturing work coming back to North America, let me give you some factory labour cost comparison:
Chinese - $100-150/month (10-12 hours/day, 7 days/week)
Malaysian - $200-300/month (8-10 hours/day, 5 days/week)
American/Canadian - $10/hour minimum wage
I wonder how much shipping cost need to go up to bring these manufacturing work back to North America.
jhartz: research into the holy grail of hydrogen fusion continues. it has not been figured out yet and is not happening at this time (to the best of my knowledge).
I agree with you that coal is one of the dirtiest energies, if not the dirtiest. However, to totally replace all existing coal power plants will take long, long time and a whole bunch of money. I am quite sure the owners of those coal power plants want to be compensated.
I worked on an LNG project in China for BP. The LNG was gassified to supply several gas turbine power plants for peak shaving purposes. Base load was supplied by coal power plants located elsewhere. China is moving aggressively to nuclear power and gas turbine power plants. It takes a long time to get all these plants built even in China. Chinese government is now very concerned about pollution because they can see and smell the pollution everyday.
Trying to get any power projects approved in North America is a long drawn out process. I know of one hydro-electric power station that is going through the process for close to 25 years now.
Just a wild guess, I dare guess that it would be extremely optimistic if we manage to replace 10% of the coal power plants in the next 20 years.
Some 20-25 years, Canadian government used to provide incentive for CNG conversion for vehicles. For some reasons, it was dropped after a while. As we have quite a bit of natural gas in North America, we should go back to CNG as it is a proven technology. I believe there is a company that can provide a small compressor to refill car at home.
BTW, power plants do not create many operation jobs.
I am quite sure we will transition to other energy options. May be it will be electric heating for houses, electricity for urban transportation, oil and gas for petrochemical and flight, etc.
If electricity is going to make a major role in future, we have to make sure that we choose the right sources. Of all probability, it would be nuclear and hydro-electric would be the main sources. I don't believe that wind and solar would be the main players. They are most probably supplementary energy sources.
I also do not believe human activities are main contributors to weather changes (PC term), but we definitely cause a lot of pollution.The several developing countries I worked in all have major pollution problems. I believe environment engineering and pollution remediation will provide good paying employments This will be a growth industry. I believe this is where more developed countries will have the edge because we face the problems earlier than the developing countries.
BTW, there are uses for fly ash. It can be blended with cement to create different cementitious materials.
Cheers.