314 of 338 people found the following review helpful
I am giving this book a 5 instead of a 3 or 4 because I believe that it does a superb job of laying out some facts that every normal adult needs to understand, and I want to encourage everyone to buy and read this book.
That having been said, I also found it disappointing. The author's main points can be summed up in this review, and take less than an hour to absorb in the actual book:
1) Peak oil and the need for alternative energies are being over-shadowed by myopic media and lack-luster academics that focus on poverty, climate change, terrorism, everything but the core Achilles heel of the Western world, its addiction to cheap oil which is no more.
2) Cheap oil is made possible by blatant political and financial maneuvers that enrich a few and set the rest of us up for life long poverty. Government subsidies and tax breaks purchases by expensive lobbyists giving expensive gifts and cash bribes to our politicians are directly responsible for pre-determined failure of our energy policy and the lack of an energy strategy.
3) The catastrophic nature of the collapse of cheap oil is dramatically enhanced by the combination of the *huge* U.S. deficit and by the increased prospects of war over oil.
The author concludes with some bottom line advice for investors: get out quickly from stocks associated with high oil usage (airlines, autos, chemicals; followed by cosmetics, food requiring processing and transport, and retail dependent on far away factories and raw materials).
I disagree with one key point he makes. He assumes that Wall Street and the media have been ignoring this problem because of "group think." I certainly do agree that the larger mass of the public and the average bureaucrat that do not know any better have fallen prey to unethical propaganda, but I am quite persuaded by Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy;Crossing the Rubicon: The Decline of the American Empire at the End of the Age of Oil;The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century and other books that this catastrophe in the making was clearly understood by the White House and the US Senate in 1974-1979, and a very deliberate selfish even treasonous decision was made to profit in silence and let the people fry.
This is a much simpler book than most of the others I have read and recommend, but I give it a solid five stars because if you can only afford to buy and read one book, this is the one that will be easiest and most to the point.
And just to drive the point home, when WIRED had the cover story on alternative energy, Cheney was meeting secretly with Enron and Exxon, and went on to amass 25 documented high crimes, 23 of itemized in my review of this book (Cheney makes Agnew and Johnson look like wall-flowers--this is the guy that put HIGH into "High Crimes."
Vice: Dick Cheney and the Hijacking of the American Presidency
68 of 72 people found the following review helpful
on March 3, 2006
The only disappointing thing about this book is the title. If I had not already read Leeb's previous book, 'The Oil Factor', I probably would have passed on this. Instead, I bought it immediately. The title puts it in the same crackpot category as Ravi Batra's rantings and the old gold bug diatribes from the 1970s, and that's a shame.
The book itself is an interesting sequel to the 'Oil Factor', but not quite as eye-opening since I've had 2 years to get into Peak Oil literature and energy investing. Leeb is an investment advisor, and his books are clearly biased toward the profit motive. His best contribution in the new book is his neat explanation of why Peak Oil isn't all over the media. Leeb's background is in psychology (a PhD), and he explains the psychological theory of "groupthink" where the best and brightest in government, industry, and academia simply go along with a consensus way past the point where it makes sense. In this case, the idea that there's plenty of oil out there is the groupthink chant coming from the likes of Rex Tillerson (Exxon CEO) and Daniel Yergin. The rest of the world then follows along. On the other hand, Leeb's investment advice is conservative enough that if Rex and Dan turn out to be right, you will end up owning some fairly conventional large cap investments like GE, Exxon, Schlumberger, P&G, and a few utilities, as well as some gold. Not a bad portfolio.
Leeb also differs from James Kunstler ('The Long Emergency') in his optimism for alternative energy sources. Kunstler would call this "cargo cult" mentality, where those technological/free market demigods will come down from the sky and give us the great gift of a cheap, non-polluting replacement for oil/gas/coal.
I'd give 'Oil Factor' 5 stars simply because it made me some money and clued me in, and this one 3 stars -- a decent book but kind of superficial compared to the other peak oil lit. However, the seriousness of the situation is starting to dawn on people like Leeb. The energy situation, if it's as bad as peak oilists think, is more than just a chance for a few clever investors to make a pile of money (see Richard Rainwater's comments in a recent issue of FORTUNE), it's a real emergency. Leeb thinks it's a matter of survival, and believes that whether we like it or not, families with the most money will have a better chance of survival in a very dangerous future.
157 of 176 people found the following review helpful
This is a funny book. I am quite interested in the subject of peak oil, and for a non-geologist, fairly well acquainted with the science behind it.
What's funny about this book is that the title and the cover lead one to think that it's another "How to profit from the coming asteroid strike!" investment books. I picked it up expecting little more than a good laugh, and ended up shelling out hard cash for a full price copy -- something I rarely do, and I have the receipts from Amazon to prove it.
I find much to agree with in the review written by "a diplomatic historian," but here's the nub of the problem:
"This book is based upon the major notion that growing energy demands from China and India will squeeze us and propel oil prices into the stratosphere. This is self-correcting through normal economic processes."
No, it isn't self-correcting through normal economic processes, unless one includes stratospheric oil prices as a normal economic process.
Almost 30 years ago, a song by the band Tower of Power warned that "there's only so much oil in the ground." The song was written during the first oil crisis, which as Leeb points out was really a political crisis rather than a supply crisis. It turned out that there was considerably more oil in the ground than most people would have thought in the late 1970s. However, Tower of Power basically had it right. Natural economic processes hold great sway over natural resources -- up to a point. But if a resource is truly in short supply, economic processes cannot conjure more of it out of thin air. If they could, we would be buried in cod, what with the prices having gone up manyfold in the last decade or so.
In any event, this book is very much worth reading for its clearly argued contention that a shortfall of oil supply is about to push us towards a very serious economic and social crisis. Leeb is right about the growth of China and India and he's right about the lack of growth in oil production. In short, he's right.
25 of 25 people found the following review helpful
on June 8, 2006
The title of the book is aptly chosen to describe what lies inside. Yes, there is a problem of soaring energy prices and at the same time it offers a rare opportunity to multiply our investments several fold if we make the right portfolio choices.
The book is a logical continuation of the previous book "The Oil Factor" by the same author. Oil prices have almost doubled since the Oil Factor was published two years ago. While the Dow has been relatively quiet since then, select investments in commodities especially in gold and silver have given handsome returns during this period.
Energy prices are heading northward, led by oil, thanks to limited supplies on planet earth. We also have huge associated problems due to the burning of fossil fuels and disposal of nuclear waste. Discovery of major oil reserves ( like the Saudi "Ghawar" examined in detail in "Twilight in the Desert" by Matthew R. Simmons) remain a remote possibility even statistically. On the other hand China and India are fast accelerating into the international highways for their due share of energy consumption. As a society we fail to understand and refuse to accept oil as a diminishing resource due to "group think" says Dr Leeb, citing several examples of failures of old civilizations, quoting extensively, particularly from another excellent book "The Collapse" by Jared Diamond.
The book then turns to the economic consequences that we are likely to face soon in an era of high energy prices and the portfolio choices that can protect and even grow our investments. The thread that links prices, inflation, interest rates, impact on various industries and finally their profitably and stock prices is woven extremely well. Alternate energy sources are discussed, but in my opinion deserves better treatment.
Dr Leeb examines and challenges the Modern Portfolio Theory and argues that instead of staying invested in the market as a whole, and while a majority of fund managers actually under perform in comparison to market performance, the most successful investors like Warren Buffet have made fortunes by investing in select stocks that turned ten baggers. In the context of rising energy prices, when the "oil factor" is positive, inflationary pressures can have a devastating effect on economies. The American economy is particularly more vulnerable due to its huge oil imports and rising trade deficits. Alternate options and possibilities that may be adopted by Central Banks and Governments to fight the inflationary pressures under rising energy and commodity prices are discussed well. It is precisely in such a scenario that we come across several investment opportunities that are not only the best bets to beat rising inflation and weak markets but perhaps also to make a fortune. A separate chapter lists these opportunities, starting with Gold.
To recall an old saying - When opportunities knock at our doors most people complain of noise. Very few rush to open the doors and embrace it with open arms. This book can make a huge difference on which approach we take when oil hits $ 200 a barrel.
27 of 28 people found the following review helpful
on March 5, 2007
For those who aren't familiar with the issues surrounding the peak in oil production, this easy-to-read book provides a short introduction to the hard times ahead. It also serves as a resource for those investor-types who want to try to surf that chaos and make a tidy profit. The authors, both experienced financial writers, set the stage for discussing the imminent oil shortage and its consequences by recounting the late-90s tech bubble and the fact that few investors noticed the unsustainability of this bubble. "The oil delusion is a mirror of the technology delusion. While almost everyone in 1999 believed that the bull market in technology would endure, almost everyone today believes that the bull market in oil is temporary" (12). Needless to say, the authors don't share this assessment of the oil market and go to great pains to explain their contrarian conclusions. The coming peak in oil production (whether this year or in 20 years), the increasing insecurity of American oil supplies, and the growing need for energy resources in China and India are creating "a clash between supply and demand that will send oil prices soaring to unprecedented levels" (19). According to the authors, the only thing that will postpone this hyper-bull market in oil is a worldwide depression, a situation that none would consider beneficial.
The near-future scenario outlined by the authors is similar to that predicted in other works on peak oil; in short, it entails at best a massive depression and reduction in societal complexity, and at worst the complete collapse of the economy and of civilization as we know it. "[A] crisis of epic proportions is brewing" (89). They assert that this crisis can be prevented or at least mitigated against and they repeatedly affirm their hope that it will be. However, they also recognize the profound failure in American leadership and the profoundly deluded perceptions of our economists, media, and citizenry about this looming crisis. In the 10th chapter, they outline a few possible visions of what the world of the near-future might look like---decline, stasis, or Armageddon---none of which options is particularly appetizing to someone raised in a world of boundless growth and opportunity.
The primary author, Stephen Leeb, holds a PhD in psychology, and he uses this expertise to articulate the blind spots of conformity and groupthink that are contributing both to this crisis and to the fortunes that will be lost with the economic downturn. Wise investors like Warren Buffett and George Soros have succeeded because they've not followed conventional wisdom. Likewise, the reader is challenged to abandon groupthink and to grapple with the reality of this looming crisis, both for reasons of personal financial success and for reasons germane to the whole of human civilization.
It is in the final two chapters that the authors outline their preferred investment classes and strategies for growing wealth in the hard times ahead, so if you just want them to show you the money, so to speak, you can skip the rest and read those concluding chapters. For those who want an introduction to the coming energy crisis, the rest of the book is an excellent, nonpartisan place to start.
26 of 27 people found the following review helpful
Leeb summarizes the evidence about future oil supply and demand - unfortunately between rising population, the new demands placed by China and India, and credible evidence and reports of declining supply, it adds up to a likely future economic crisis for the U.S. - much higher oil prices and serious inflation.
Most interesting, and valuable, were his investment recommendations - stay away from cash and bonds (except Treasury Inflation Protected Securities), and stocks (based on their performance during the 1970s inflation period). Instead, focus on gold, oil and oil companies, real estate, liquefied natural gas, and alternative energy suppliers.
Ignore this issue (and book) at your peril.
25 of 26 people found the following review helpful
on March 1, 2006
Much darker than "The Oil Factor". I bought the book for updated investment strategies.We didn't get to that until 85% through the book and it was about the same as the Oil Factor with the notable exception of Berkshire Hathaway which had a whole chapter in "The Oil Factor". It was not even mentioned as an investment in this book. What gives?
The authors just couldn't come right out and say "We are done and it is over" like Kunstler does in "The Long Emergency". For investment advice, the first book is much better and I would give it 5 stars. This book is like a rant by someone who just woke up to the really dire situation we face. Save your money and time and read "The Oil Factor".
19 of 19 people found the following review helpful
on February 28, 2006
I have been reading Leeb on and off for more than 20 years. While he has not been perfect I can say that the jacket copy in the book is right on. On the big trends he has been unfailingly right and for the right reasons. For example, in his book during the mid-80's his premise for the big bull market was based on predicting a dramatic and sustained decline in inflation. Nor was he bearish on tech simply because tech stocks were richly valued (though that was certainly part of the reason) but rather because he rightfully felt that information technology was not up to solving society's major problems such as energy. His most book before the present - The Oil Factor - was clearly right on and again for the right reasons.
Given Leeb's record his latest book is truly frightening. We are ignoring a crisis which if ignored much longer could become truly catastrophic. Frustrating is that there are solutions but not the will or willingness to apply them. The review from the reader in Eugene, Oregon is evidently typical of the ignorance that is so pervasive is this country. That reviewer dismisses wind as an alternative with fatuous factoids. Leeb's conclusions on wind come from peer reviewed articles by Stanford professors.
As a parent and investor - one who has made a lot of money with Leeb's advise - I urge everyone to read this book and take it very seriously. It may not be too late in the day but it is very late in the day.
30 of 33 people found the following review helpful
on April 9, 2006
I am not going to rehash what many of the previous reviewers have said, if they gave this book 5 stars, I agree with them. I have read many of the books Leeb and Strathy quote so I was already familiar with the whole peak oil concept (peak oil was last August I believe, kudo's to Deffeyes, he was right all along).
The comments I will make have to do with the whole concept of inflation as a good thing. In this book, the authors contend that if the Fed has to chose between fighting inflation and deflation, they should fight deflation. I think they are right. The rising price of oil is already starting to percolate through the economy so we will see some real inflation starting up over the next year or two. So who holds alot of our debt? Thats right, its our friends the Saudi's and the Chinese. Most of the current speculative real estate debt is also sold to foreigners as securities backed by that debt. If inflation comes roaring back, then these large debts get easier to manage, paid back with cheaper dollars etc. I can only guess thats what our bureaucrats are thinking about in Washington as they look for solutions to our titanic deficits. Gold and real estate certainly look good in that kind of an environment, so the authors investment advice is sound.
Since this book came out, Bush finally went on TV to decry our dependence on foreign oil. Imagine that. I don't believe he actually read this book, but I am sure others around him have. Its very clear now that the price of oil is only going up regardless of any short term spot oversupply. A pity he wasted 6 years of his administration in denial. Hopefully the next President will wake up and smell the coffee.
An interesting comment made by the authors is a discussion one of them had with William Kristol and how he was unable to be persuaded with the arguments for peak oil. Having seen Mr. Kristol's smiling assurances on TV that all will turn out well in Iraq just a few weeks ago (even as fellow conservatives like Francis Fukuyama are reaching for the parachutes on that subject) that does not surprise me. I would like to see what kind of book he will write 10 years from now when all this is so obvious. "Confessions of a Group-Thinker" would be a nice title.
Get this book, read it, follow its advice. You will be glad you did.
16 of 16 people found the following review helpful
on January 28, 2007
This book really should have been a pamphlet. It covers very little ground and the gist of it could have been communicated in several pages rather than several chapters. It is also a bit sensational, yet publishers generally pick the title so I won't hold it against Dr. Leeb. Yet I gave it four stars because of how it is unique in the world of financial books--it reveals the ultimate fallacy that drives the ever-expanding market: there is not enough cheap energy left to fuel its growth.
Much of the book makes comparisons between the future energy shortages and those of the 1970's. In someways, this is helpful, but in others it is misleading. I think Dr. Leeb relies to heavily on the 70's for guidance--the next few years could look much different (and the markets could respond much differently.) Yet his investment advice seems sound: divide your assets and place them in four different areas--energy, chindia stocks, precious metals and zero-coupon bonds.
As sensational as this book is, I tend to believe that Dr. Leeb is wildly optimistic in his projections. He believes that there will be a relatively smooth transition from one form of energy (oil) to the next (?). If he's right, most definitely it is good advice to place 30% of your money in companies who have forged a good market in chindia. But my question is this: how will China and India continue to grow economically when oil is $200+ a barrel? I can't see that as a real possibility. Thus I'll be less weighted in chindia than Dr. Leeb advises and have more of my money in tangible assets (greenhouse, wood cook-stove, quality tools, wind power, etc.)
Nevertheless, Dr.Leeb offers some good guidance for those of us who recognize that things are looking rather bleak in the world but are not exactly sure how we can prepare for it financially. This book coupled with a couple of good gardening books (Toby Hemenway's "Gaia's Garden", for one) and perhaps a survival book or two (think Tom Brown Jr.) will offer sage advice for those who see what's coming 'round the bend.