Profit from the Peak: An Enjoyable Read About Our Energy Problems 45 comments
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An opening note of disclosure: a short while back, I received a free copy of Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century.
Written by a pair of energy analysts, Profit from the Peak is a fairly comprehensive sketch of the energy problems facing America – as well as other industrialized, and industrializing, nations – in the coming decades.
What I Liked:
- This definitely isn’t a fair-and-balanced view of Peak Oil or fossil fuels; the authors take a clear position that traditional energy production is peaking and we need to make immediate, massive investment in renewable forms of energy.
I am a believer in weak-form Peak Oil, if you will; I’m not convinced by the doomsday forecasters who believe we’re on the verge of imminent societal breakdown, but I think it’s completely reasonable to believe that it will become more difficult to bring new supply online, and that will lead to generally higher energy prices.
Similarly, I see the need for scaling up clean, renewable energy sources – but I think that fossil fuels can’t be overlooked as an investment opportunity for many, many years to come. One simple fact is that a large portion of our energy need is in the form of liquid fuels (which the authors note), and ethanol – the only renewable source masquerading as a solution – is causing enormous inflationary problems to everyone who isn’t a subsidized corn farmer.
- The broad examination of various oil alternatives.
The meat of this book is the type-by-type analysis of the possible solutions to our energy needs – tar sands, natural gas, coal, nuclear, geothermal, solar, and other renewables. As I mentioned, the authors come down very heavily on the side of renewables, and nary a fossil fuel escapes condemnation for one reason or another. Even if you disagree on their assessments of what will and will not work, the breadth of view given as to all the possibilities will almost certainly open your eyes to several unexplored angles.
- Presentation of the material makes it easily digestible, which is a good thing if you aren’t well-acquainted with discussions of Peak Oil and alternative energy.
I’ve already read two other books that deal with Peak Oil (A Thousand Barrels a Second
The segmentation of sections also makes this easy to pick up and put down, and I’d say that there’s minimal overlap in terms of sections, so readers wouldn’t have to read the entire book if their interest is in learning more about solar. Still, there is an underlying point I think the authors state very subtly, which is…
- The overarching argument that, for the last 50 years or more, people have overexploited the world’s non-renewable resources by externalizing costs to keep prices artificially low – and now we have to make drastic changes to a world economy with decades of legacy conditioning.
I’ve seen this thesis presented in different forms by academics in other fields, but it seemed most simple to understand when presented in the context of economic capital. This is likely to be the subject of a (very long) future post, but I’d urge people to expose themselves to this concept – while a bit long-dated, it could be the next Peak Oil.
What Could Have Been Better:
- The investing sections should have been fleshed out more, given the title of the book.
While it’s obvious that much can change in the months needed between writing time and publication – especially when dealing with a dynamic field like alternative energy – the investing sections (which end the chapters dealing with an energy type) almost come off as an afterthought. At best, they’re meant to give some kind of lead-in to further independent research. Maybe this is because alternative energy is largely outside my sphere of investing knowledge, but I have a feeling I’m not alone. Consider it more for industry knowledge than actual stock picking, although the authors do give a handful of specific stocks for each section.
- More realism, or cynicism, in seeing the benefit of short- to intermediate-term solutions.
My impression, given the authors’ heavy praise of renewable energy that meets such a small amount of current energy demand, is that they are taking a very long-term view to our energy problem. This is fine and will likely make the book more relevant over a longer time, but I think the need to find bridge solutions that will get us to a true solution without dealing with higher and higher energy costs gets glossed over.
Yes, coal-to-liquids might not be clean, and tar sands might destroy landscapes, but if the only bridge solution we subsidize (and hence use) heavily is corn ethanol, we’re going to have immense problems between food prices at home and starvation and rioting around the globe. Plus, we still have that pesky liquid fuel problem to solve as long as we have our existing transportation infrastructure.
Bottom Line:
I enjoyed the book, and reading it certainly didn’t feel like a chore. It would definitely be on my reading suggestions list to someone looking to understand our current energy problems, and how we might possibly solve them. Profit from the Peak has strengths in its broad, comprehensive analysis of the many potential kinds of alternative energy investments, and serves as a good base for greater research into those kinds of companies.
Stock position: None.
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This article has 45 comments:
And honestly Brian, 8 billion barrels and 33 billion barrels takes no time to deplete when world oil use is 85+ million barrels a day. Sure it can buy a little time, but with the majority of the worlds largest oil fields in decline, this will do little to keep up with the growing demand.
I'm sure that algae (nearly 40% oil naturally) is surprised that oil can only be created at 30 kbar...
I'll also bet that in 'algae heaven', they are pissed that we piss away their cousins so fast... you know, all that 90 million year old algae that got trapped in geologic upheavals and buried up to 3km below the surface, IN UNIQUE LOCATIONS, cooking long enough to slightly change the (here it is again) nearly 40% of it's mass of algael oil into what we now know as petroleum... and luckily for us were usually capped by salt dome formations so as not to escape throughout the long wait for Petro-Man to be created...
As to "infinite" supply, yes, supply of stupidity by the cornucopians is... INFINITE.
More Objectivity where this came from, as soon as the bozo's spout some more of their "Infinite" so-called wisdom.
"Natural petroleum has no connection with biological matter." -- Jack F. Kenney, 2001
"The hypothesis of abiogenic petroleum origin is an alternative hypothesis to the biological origin theory, and is NOT held by the vast majority of petroleum geologists and engineers."
TheRealBull has it right.
Algael oil is the building block of petroleum... keep denying this and make an even bigger clown of yourself.
Obviously those that get D's in chemistry and geology become investment banksters.
Algae has never been made into petroleum. Ever. That's impossible: www.gasresources.net/D...
i think not.
> jack
Investment banksters are hardly in position to expound on petroleum origin theory, so go back to filching widow's purses.
1) When will this start having a major impact on what most of us see as a limited world oil supply? 10 years? 100 years? Ever?
2) What do you hope to gain by constantly challenging the majority view? Seems like you statements just cause a lot of arguing rather than producing any productive results.
3) How are you specifically attempting to capitalize on your minority viewpoint?
1) All oil is abiogenic. There is no such thing as biogenic oil: www.gasresources.net/D...
2) Philosophy is not a profitable endeavor. However abiogenic petroleum origin is. Due to the success of this theory Russia is now the number one petroleum producer in the world.
3) Every commercial oil well drilled past 15,000 feet true vertical depth is proof of capitalization.
When evaluting ideas, one must first consider the source. I have read nothing but nonsensical, illogical ideas from Mr. Pursely, and nothing helpful that I can use to further making a buck. Perhaps that is typical for IB's in general, come to think of it.
Here it is should you choose to do so: www.pnas.org/content/9...
Shell's new president planning for future
by Kimberly Quillen, The Times-Picayune Sunday August 03, 2008, 7:00 AM
www.nola.com/business/......
"...The new head of Shell Oil Co. sees heightened oil and gas
production, increased reliance on alternative forms of energy and
conservation as ways of resolving the nation's energy crisis.
The problem, according to Marvin Odum-president of Shell Oil, is one
of supply and demand. Global energy demand is accelerating at the same time conventional supplies of oil are in decline.
"We're at the point now where, with geopolitical disruptions, those
(supply and demand) lines sometimes cross," he said. "That's what
drives prices. It's just a plain and simple supply and demand market
equation."
The Banker has a point. The so-called bio-fuels are not the same as petroleum products. Case in point: BioDiesel is trans-esterized vegetable oil which was not made under pressure deep below the surface of the planet. Compared to No. 2 (Diesel) oil (made from petroleum) it has a different chemical formula and runs and smells better, by the way.
Can't agree with an infinite supply of petroleum, makes no sense at all. About as much sense as an infinite supply of money to support our sagging economy ;-)
xpatUSA
8 billion barrels is a small field. Where are the Ghrawars? Where are the new fields of boundless infinite oil? Hint: Infinite means without limit, even our universe has finite limits. The only infinite resource on the planet is the well of your "knowledge". As the last thirty years have seen only a smattering of MEDIUM fields discovered, and the larger ones speculative and deep underwater, where recovery is extremely costly. Is that your shtick? Pimping deep water rigs?
Carioca isn't 8 billion barrels, it's 33 billion barrels. That is the third largest field in history after Ghawar and Burgan so there is your Ghawar.
The reality is Ghawar will produce infinite oil forever: www.offshore-mag.com/d.../
First of all, for an investment bankster, he clearly doesn't know the (banker focused no less!) petroleum industry construct known as "Proved Reserves"...
Bankster Purse-sly claims Titan has 300 TRILLION hydrocarbon barrels of "Proven Reserves" ???
To knowledgeable "banksters", Proven reserves denotes those quantities of hydrocarbons with a high probability (90%+) of being brought to market with current technology and economic conditions.
Titan? "Proven hydrocarbon Reserves"...??? Get real bankster! Current tech and economics makes Titan's supposed pools of methane exploitable? BY WHOM? Little green Martians?
Truly, the bankster known as B-P has his head in the stars.
Once peakoil dieoff starts, I suspect B-P to be a rough approximation of the character played by Bruce Dern in the 60's movie "Castle Keep", preaching his nonsense to the clueless doomed.
The fact is that it is just criminal how inconsiderate previous generations have been with our antural resources. I am young, and i'm looking with some dispair at the future, we may have a whole load of problems comming towards us be it resources, or our ecoligy, or the future of states and political systems. It jut seems the world is inconsiderate of young people's future as long as some can continue to profit as they had in the past.
I just want the world to concentrate on alternative energy now. It makes sense for so many reasons. While it might be expensive still today, if we concentrate on it technoligy will move fast and we will soon find ourself in a much better ecenomical position that if we hadn't done that. ere will be energy independance, job creation, cheap energy for manufacturing and etc., and there will be so much fewer pollutants.
And i don't care i this regard how fast oil will run up or how fast our ecoligy will degrade's by the various models of whatever scientist or pseudo scientist (or utter amateur in this regard), the fact is that wit all the uncertainty on these matters this generation is simply putting our future at risk, withought consequences for them, and with no idea how things will turn out for us. Atleast if we start to tackle these issue's now we could be preppared for a worse case scenario, and even if this doesn't happen then we will still benifit from it.
So pl take youre "oil is infinite" theory home, leave science debate to the specialists. The fact is that by now the very claim that oil won't run out soo or is even infinite is one of the fundamental reasons why we are now faced with an apparent energy crisis. It could have been prevented, but ignoring this issue in favour of the effeciancy of our current (perhaps unsustainable) economy is what has brought us to such expensive energy right now. The economy didn't want extra costs for prevention of something that it wasn't sure would happen, as it would have been an extra burden hurting the conomy, now we see that it's getting near to reality and were faced with even higher costs now.
People need to forget for once just how much money 1 million$ is. The world still has to provide us for infinity, or atleast until our sun goes supernova.
Learn all you can. Stay calm, as the truth is fairly frightening. Make every conscious decision of yours as to how to live a referendum on the facts as best you can discover them. Try very hard to focus on how to make it a tiny bit better, every day... but it isn't easy.
Show those you care about that their welfare drives your concern. And if you are spiritual or religious, take strength and comfort from that.
"but if it doesn't easily flow to the surface and it involves a lot of energy to produce, you have a net energy looser"
Really? The fact is that you can't rewrite the second law of thermodynamics. ALL forms of energy production are at a net loss! There is no such thing as zero-point energy. EVERY form is a net negative and the further you explore the production cycle the worse the problem gets.
You do know that Matt Simons is an investment banker don't you? In FACT he is the preeminent investment banker in the energy space and he and his firm stands to reap $BILLIONS from the never ending Malthusian nonsense which only enhances his deal valuations!
I'm constantly amazed at how many "get religion" when they read his work and never for a second realize what he and his day job are.
Amazing...
"science without turth can do harm to many"
lol... You got that right...
So I'm guessing you've turned off the plasma, unplugged the espresso machine, purchased a bike, dialed back the air-con, are showering on cold and on and on ad nauseum because you are so concerned about our future. Right?
Well I'm young too, and quite frankly I'm tired of hearing these rambling diatribes about the world ills and the "criminality" perpetrated by others (always) that really aren't an offer to a solution other than being a whiny little bitch. It seems like a genuine cry for help at a personal level. Buck up and do something other than buy into spoon fed nonsense about how we are all careening off a cliff at break neck speed. (because of others of course)
I will agree with you at a high level on renewables though. The problem is you have it all wrong. You've again bought into the populist paradigm of "if only we went all in on renewables". Well the FACT is that we are. The other inconvenient truth (lovin it...) is that the biggest impediment to renewables is the industry itself. The solar industry for example is completely chaotic because the are "crack addicted" to subsidy when they don't even need it. Don't believe me? Then you explain why the solar industry is minting millionaires and billionaires and are quite profitable yet they constantly enlist willing foot soldiers such as yourself to go out and extol the "critical need for subsidies". It's a joke. I know the industry very well and it is complete money grubbing land rush bubble that is this years "dot bomb" It makes me sick really because in the end you are right. We need these technologies to outrun the future need for energy yet a bunch of hucksters are using it as their own "green ATM".
So I'm guessing you've turned off the plasma, unplugged the espresso machine, purchased a bike, dialed back the air-con, are showering on cold and on and on ad nauseum because you are so concerned about our future. Right?
quote/
In fact, i have solar panels on my roof. I have a bike and ride it everyday to work. I have my investments in alt energy. I have no plasma screen and rarely watch tv, and the electricity comes from solar anyway. My house has savings lights, and everything is maximally isolated.
/quote
Well I'm young too, and quite frankly I'm tired of hearing these rambling diatribes about the world ills and the "criminality"... perpetrated by others (always) that really aren't an offer to a solution other than being a whiny little bitch. It seems like a genuine cry for help at a personal level. Buck up and do something other than buy into spoon fed nonsense about how we are all careening off a cliff at break neck speed. (because of others of course)
quote/
What sort of facism is it that you to tell me that? I do have the right to criticize these issue's and i have the right to point policy makers on what they should do withought me having to do it myself. Yes if i had billions of dollars or would be ceo of the mightiest company in the world i might do something about it. What is it with you to tell simple people to shut up because they havn't got the power to do everything that is needed themself? My behaviour here is perfect example of ones democratic right to give criticism to policy's that one finds absurd. Mre than enough great men of the past have pointed out that this is not only mans right, but his duty in a democratic world, Jefferson was a particular propponent of this sort of behaviour. You have every right to have youre oppinion too, but don't come out here with youre self rightious view that only youre perception matters and we should all shut up because we don't have youre intellect to see it the correct way. You know just as few about these matters as most others on this site.
/quote
I will agree with you at a high level on renewables though. The problem is you have it all wrong. You've again bought into the populist paradigm of "if only we went all in on renewables".
quote/
Poppulist paradigm my ass. Im a great propponent of wind turbine's and they are price competitive in fact. Wish we had 3 times as much now, and i'm not the only one. Everyone could have as much windmills as Denmark at this point. I'm sure with enough tecnoligy solar will even surpass wind energy.
/quote
Well the FACT is that we are.
quote/
Bull, they subsidize the alt energy sector with trinkets really, especially in the USA. Just count how much money goes to big oil and compare it to alt energy. trinkets really.
/quote
the other inconvenient truth (lovin it...)
quote/
I hope youre silly effort at making a pun did youre ego well, not nessecary with me though.
/quote
is that the biggest impediment to renewables is the industry itself. The solar industry for example is completely chaotic because the are "crack addicted" to subsidy when they don't even need it. Don't believe me? Then you explain why the solar industry is minting millionaires and billionaires and are quite profitable yet they constantly enlist willing foot soldiers such as yourself to go out and extol the "critical need for subsidies".
quote/
I'm getting paid now to promote alt energy?
And i never even mentioned the subsidies. Frankly i don't care how the world solves it's resource issue's exactly, as long as it's being done. Whatever you think about the sector is not my concern, my concern is that we get there, and if we are already there in youre oppinion and subsidies are no longer needed, well then thats good! Foot soldier my ass, i don't get a paycheck from the solar industry, i'm just concerned with my future and those of dozens of generations after me. Energy is just one of these concerns, but what about all other materials? Just how much of our proven reserve's of whatever critical resource has the genneration before us since the 70's consumed? Can you put a percentage on that?
/quote
It's a joke. I know the industry very well and it is complete money grubbing land rush bubble that is this years "dot bomb" It makes me sick really because in the end you are right. We need these technologies to outrun the future need for energy yet a bunch of hucksters are using it as their own "green ATM".
quote/
i don't know about that. Yeah could be that people are misusing it to put some money in their own drawer in some shady way. Well you have that in every sector really. Truly, i would think it's all fairly minute in a relative way if i compare it with the utter idiotic and egoistic way in wich banks have caused this credit crisis, really it boggles the mind!
Look, ill give you the freedom to be as critical about the solar industry as you want, and i won't speak against you on that one. If you find a corrupt firm among it, well then it's for the best that that knowledge is mad epublic, and ill congratulmate you when it turns out to be true. But what has my point of the egoism of our mass consuming society to do with shady bussiness in the solar sector? The only thing i want is green energy, but i'm not the one to talk to when it comes to firm corruption or the likes, ill leave the job of sepperating the good from the bad to people like you then. What you should understand though is that i am really really concerned about our future, and i have done my share of personal sacrifice to give the right example in this direction. So i think we can respect eachoters viewpoints withought it having to confront eachothers. Just plz don't make interpretations and assumtions about me that are just way off, like you did in youre reply. you don't have to compare me to what you think to be the "average stupid solar investor".
If you think I'm somehow "not caring" about the future and against renewable energy then your interpretation is with fault. I care deeply about both and unfortunately (for me maybe) understand the true economics of what is going on inside the movement. I say movement because that is what it is. Unfortunately in the last two years the "movement" has started to attract a whole new breed of huckster. They are VERY clever and quite smooth. They are ultimately not interested in what you and I are both interested which I think is a radical energy paradigm shift from old to new. What THEY are interested in is pre IPO shares, stock options, paid junkets, free drinks at parties and picking up chicks with the newest tag lines. "What do you do? I'm in renewable energy..." THEY and this aren't helping.
If you are really concerned. I Mean REALLY concerned here is what you can do to make a difference. Call or right your congress person and tell them to end any subsidy or fight any subsidy in the solar space. It sounds antithetical and just seems wrong but it is the best tough love you can provide to ultimately weed out the "get rich quick" types that are screwing up the movement. The reason I was so tough on you is because your statements are pulled right out of theses guys play books. They get you and I to lament and moan and work hard to pull the movement (by attacking oil, Republicans and every other cheap and easy target) while they simply scheme about there new found riches. To them it could be solar/wind or jet fighters.
You think this may outrageous behavior may be minute compared to other sectors. Let me give you an example of how systemic rampant, egregious and simply outrageous it is. The current California solar incentive program is funded at $3.2bn. Sounds great until you peak under the covers. This entire subsidy program was basically written by the solar industry with little understanding of regulators of how the system is gamed. The FACTS in a nutshell are that the poor and disadvantaged renters are paying into the fund every month so that rich homeowners can get the subsidy and then zero their monthly electric bill. The poor can't opt out. The poor won't get solar assets. The poor won't be able to zero their monthly utility bill. To further excacerbate this situation is that when you have thousands that now zero their utility bill the knock on effect is that the poor now get rate increases to add insult to injury! Why? because for every upwardly mobile homeowner that takes advantage of the subsidy and zero their monthly utility bill, there isn't a direct reduction in costs to the utility so they must make up the costs from somebody else. Guess what... for their troubles, the disadvantaged will now see their monthly bill ratchet up due to less top line revenue to the utility. Sad and cruel and FULLY understood by the new charlatan element running the solar industry.
On top of this, how can anyone justify a (in aggregate) a 50% subsidy when this industry is minting new millionaires and billionaires at the same time as I mentioned above, pulling money right out odf the wallets of the poor and disadvantaged to do so. This behavior actually pales to the oil/banking industry as you mentioned because these people are so smooth and they are ripping everybody off under the guise of "We are the new green revolution, we are here to help save the world" Please...
So there it is. Your friend may not actually be your friend and your enemy is not necessarily who you think it is.
"...start living in villages again, eliminate long distance communiting by liberating the workforce and paying by productivity and growing food locally, and starting to embrace an enormous amount of R&D into things we’re not really doing anything about today, like ocean energy, geothermal, then within 5-7 we could get ourselves out of a very deep hole..."
transitionculture.org/.../
How would he be profiting by telling the populace to drastically cut their oil consumption?????
So if his firm gets 5% of a $500mm deal that is $25mm. If he can talk the assets up to $1bn because of the "emergency importance of these critical assets" then his firm will now make $50mm. It's called "talking his book" in Wall St. parlance. Everybody on the street cringes when he goes on and on about this stuff because he's using the ULTIMATE in scare tactics to drive his deal dollar transactions higher.
I believe he believes "some" of this stuff. Much of it is hyperbolic to sell his position. The guy is a damned good salesman. One of the best. I just read his latest presentation which has now shifted the emphasis from peak oil to to "the problem of rust" Seriously. Now that more than few academics and the Saudis have proved his assumptions incorrect by producing more than he said they could, he's moved on to how a lack of maintenance and rust, I'm not joking -- rust, is perhaps worse than peak oil. What does that tell you? Right...
Let's not forget how is firm is now a market maker in a bunch of renewable energy companies which -- again -- is subject to him talking his book and making outsized returns for his firm.
Conflict after conflict superseding conflict.
Look here for yourself.
www.simmonsco-intl.com/