Customer Reviews

Over a Barrel: Breaking the Middle East Oil Cartel

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As the author of two books on Peak Oil, I admit to having a bias. Even so, I'd be happy to discuss Learsy's book in an even-handed way, questioning his arguments by stating counter-arguments, and supporting those with data. However, it is impossible to do this because Learsy makes no real effort to mount a scientific case in favor of his cornucopian assertions about plentiful oil for decades to come.

Instead, what he offers in his chapter "debunking" peak oilers is logical fallacy upon logical fallacy, with nary a fact to break the monotony. His favorite form of fallacy is the straw man: he attacks geologists like Hubbert, Campbell, and Laherrere for predicting that global oil production will follow a smooth bell curve--when NONE of them does so. He also says that most of the Peak Oil authors work for the oil companies or for oil-producing countries. How about some examples? I know just about every significant Peak Oil author (except Hubbert, who is deceased) and I can only think of one out of maybe a dozen who fits Learsy's description--which, if it were accurate, might lead the reader to think that Peak Oil authors have ulterior motives. These are just two examples out of many. It is really frustrating to see what should be a scientific discussion brought down to the equivalent of name-calling--evidently because the author has no actual evidence with which to argue his case.

Now to the author's primary assertion: that OPEC is gouging the world by imposing high oil prices. In fact, for most of its history OPEC has bent over backwards to supply oil at prices agreeable to Washington. The Saudis even let go of billions in potential earnings in the 1980s in order to flood the world with cheap crude so as to help bankrupt the USSR (it worked)--all to cozy up to George H. W. Bush and friends. Yes, OPEC countries could be spending more on production capacity, but the real reason for high oil prices today is that 33 out of 48 producing countries are past their all-time national production peaks. Global peak will probably occur within a few years.

Yes, let's implement the conservation measures Learsy advises. But let's bypass the scapegoating. We are all implicated: consumers, the oil companies, the producing countries, the governments of importing countries...and, oh yes, the economists (like Learsy) who have told us for years that we will never run out of oil because the all-seeing, all-knowing Market will always allocate resources wisely and provide substitutes whenever they are needed.

The reason that many of the negative reviews of this book have been of the 'snide' variety reflects (I hope) not so much the fact that the Bush administration is implicated in Learsy's conspiracy theory but that the book ignores the facts surrounding the story. If there is a political slant, I would argue that it is the inevitable American xenophobia that often creeps into political discourse in times of trouble.

As other reviewers have noted, the facts of the global supply/demand environment do not match with what Learsy is selling. He uses no facts to prop up his arguments that OPEC is gouging the US because the facts point to the opposite:

Consensus estimates show that OPEC is producing at as close to full capacity as possible (98%-99%). There is likely a small amount of production that is shut-in in Saudi Arabia but it is high-sulphur, low gravity (heavy) oil that wouldn't suit US refineries even if it was shipped. These numbers are readily available from any major investment firm or publicly from the International Energy Agency.

Secondly, Learsy conveniently ignores the fact that oil producers are price takers. Because oil is a global commodity, it is the international market that sets prices and as anyone who has been following commodity markets over the past five years has seen, the growing economies of Asia have been hungry for as much product as they can get their hands on. It is these competing buyers going after a finite supply that have sent the prices to current levels. OPEC has not been able to set prices since 2001 when there was still a surplus of global supplies and OPEC had spare capacity.

Finally, OPEC members may be corrupt but they are not stupid. Extremely high oil prices are a potential liability for these countries. Investments in the high-cost Canadian tar sands; deep-water offshore and politically unstable countries are a product of high prices. This increases non-OPEC supply and diminishes any last control OPEC may have over markets or influence it might buy with the US government.

If you want to read a proper book analyzing the current oil situation, read Simmons book, which has a cogent theory backed-up with facts and numbers. This book is simply a materialization of classic American xenophobia looking for a convenient scapegoat to bash in a time of economic uncertainty.

The world is not running out of oil, the world is running out of cheap oil.

Probably $60 and $70 oil brings the pundit out in all of us, but there seems to be three books that are percolating to the top of public consciousness that attempt to explain the rising cost of oil. "Hubberts Peak" speculates that worldwide oil supplies are peaking. The author employs his background in geology to explain the physical conditions necessary for the creation of oil and gas, and concludes that no new gigantic fields are likely to be found. He then uses statistics to predict the oil supply peak that will soon occur. The second book, "Twilight in the Desert" was written by a Houston Investment banker who has been to Saudi Arabia, and uses his knowlege of the oil industry to predict that the Saudi oil fields are old and will soon peak and begin to decline. Both authors use facts and skillful analysis to support their conclusions. I don't know if I agree with them, but at least their assertions are cogent and fact-based.

The third of this troika is "Over a Barrel." I would desperately like to read a logical, fact-laced book that counters the assertions of the other two books. Unfortunately, this is not it. The author has some kind of wierd paronoia that OPEC is in cahoots with George Bush and his oil cronies in devious activities to keep oil prices sky high despite a world supposedly awash in oil. He bases his arguments on his success as a successful commodities trader. He does not, however, base it on facts. He never addresses the belief held by most economists that cartels always eventually fail due to cheating. He never seriously considers that oil supplies may be peaking and that demand may be surging. For example, the IEA estimated last year that world oil demand would increase by 1%. Instead, it is increasing at 2%. That's 1.8 million additional barrels per day. Saudia Arabia produces about 10 barrels per day. Do we really know that S.A. can make up for this increase? The author just assumes that it can easily make up for this demand surge. Can S.A. make up the 2 million barrel increase in demand indefinetly when other world producers are in decline? If so, one has to believe that S.A. can produce 20 million barrels per day by 2010. Is this possible? Well, who knows? But in regard to this book, the author merely assumes this fact away.

Instead, the author seems to ultimately blame George W. Bush as well as OPEC. Nothing Bush does it right. He filled the national oil reserve at $35 when he should have been releasing oil according to the author. Nevermind that the 600 million barrel reserve would only last the U.S. about a month and a half. Nevermind that filling the coffers at $35 per barrel looks pretty saavy today. Nevermind that it is called a strategic reserve precisely because it is designed to react to emergencies, not price increases. Nope, it's all George Bush's fault.

I am certain that their is a reasonable, well researched book out there waiting to be discovered that will intelligently explain why "Hubbert's Peak" and "Twilight in the Desert" are foolish and alarmist. This, however, is not that book.

Learsy starts with the assumption that OPEC is responsible for high gas prices. That would be true, except for two facts: 1)OPEC currently only produces about 42% of the world's oil, and 2)commodity market prices are set by the HIGHEST-COST profitable producers (certainly not OPEC) - and they are probably within the U.S.

Yes, it is true that MidEast pumping costs may be as low as $1.00/barrel. However, if someone else is able to sell the same product for eg. $70/barrel (pumping cost of $60) - do you expect the Emirs to sell for only $1.00 (and ignore their Harvard economic educations)? To drive down the cost of oil, one has to reduce demand.

Fortunately, Learsy does come to the correct conclusion, and lists some good ideas for reducing demand. However, since the U.S. has proven that millions are not interested in conservation (would rather buy SUVs), this has to mandated via significant CAFE increases.

Another Learsy suggestion is to sue OPEC for price manipulation. However, I have trouble understanding why OPEC is bound by U.S. law for transactions outside the U.S. Further, petroleum engineers caution that pumping too fast can result in significantly reducing the TOTAL oil that can be removed over time.

Learsy also believes that OPEC can be "tamed" by utilizing the U.S. and other nations' oil reserves. The "bad news" is that the U.S. and European reserves would cover about two weeks usage. How is that going to impress OPEC, or anybody else?

Learsy also claims that the supply of oil is much higher than experts estimate. The bulk of his "logic" is based on prior warnings that proved false. Unfortunately, such rationale has no value - its like the hypocondriac that claimed each day would be his last - eventually he was right! Learsy then brings up the vast Canadian oil shale and sand deposits - ignoring the fact that there have already been a number of failures to profitably mine Canadian oil shale and oil sands.

Overall, the book is probably not worth the paper it is printed on. If one condensed "Over a Barrel" to its correct points, only about one page would be required.

I already stated my opinion as a reply to Dr Heinberg's criticism of the book. However I summarize my reply into a comment. "Over a Barrel": Breaking The Middle East Oil Cartel knows that Politicians and Financiers rule the world. The poor naive Scientists and Mathematicians believe that Theories and Algorithms will always be trumped By The President and his family's friends in Saudi Arabia. The book is a must read for every naive American voter before November, 2008. Otherwise; They will place another man in The White House who is owned by The Oil Special Interest countries and corporations.

I read for two reasons: entertainment and education. If a book fails
at achieving one of the two, then I consider it a waste of time.
However, Raymond Learsy's commentary on the current oil market
was hardly that. Learsy built a successful career in commodities
trading and spent some of that career in the Middle East. His is the
opinion of a capitalist and not a politician, which is a breath of fresh air for someone with limited knowledge on the current subject.In this book, Learsy tackles the problem of America's dependence on foreign oil like a veteran problem-solver. He first identifies the problem clearly while also doing away with much of the myth about America's oil dependence that seems to have flooded the mainstream press as of late. He then gives an historical account of how this problem came to be including the rise to power of OPEC. Then, he gives a detailed plan for how we can get ourselves out from under the boot of OPEC and free ourselves of the shackles of foreign oil dependence. Before I read this book, I had little insight into the problem we face as a nation when it comes to energy and foreign oil dependence. Now, I realize not only the complexity of problem, but I am also aware of a way to remedy it. I have Raymond Learsy to thank for that. I think this is a book all policy makers and political leaders should read. For that matter, it's a book all voters should read. It comes highly recommended from this reviewer.

Reviewed on behalf of readandreview.com

Learsy was touting his book on C-Span last night. He did not present any scientific evidence for his opinions. He made no attempt to correct audience statements such as 'most of the Alaskan oil is shipped to Japan'. He did not address the imminent natural gas crisis. The cost of natural gas has gone up more than gasoline. Does Learsy belive that OPEC controls production of natural gas in the US?

When I finished the last page of Ray Learsy's Over a Barrel, I sat motionless for several moments, letting the carefully researched information provided in the book sink in. Then I hurried to log on to Amazon.com, expecting to add my favorable reaction to a chorus of praise. Imagine my surprise to find that the reviews already posted not only took issue with his central argument (oil supplies are far more plentiful than is commonly supposed and "shortages" are the product of manipulation by the Middle Eastern oil cartel) but did so in snide tones.
Although I do not have the array of fact at my disposal that Learsy presents and that the reviewers dispute, I have vivid memories of other "shortages" (e.g. in the late 1970s when gas lines were the norm for filling our tanks) that were suddenly replaced by plentiful supplies of this crucial fuel. How to account for this reversal other than the suspicion that the shortage was the result not of oil scarcity but of manipulation of the commodity?
I was especially impressed by Learsy's very practical advice for conserving oil and reducing our dependency on it. Who can argue that as a nation we need to pay more attention to conservation, finding sources of alternatives fuels and producing more energy-efficient vehicles?
The reviewer who saw in this book only "Bush-bashing" might be startled to know, as I have discovered, that Learsy is a staunch conservative Republican who has supported Bush in both the 2000 and 2004 elections. Surely, it was painful for him to share the information to which he is privy, and surely he has done so in service to a nation whose well-being he has placed above party politics.
As an English professor and author of many articles and three books in print (with a contract for a fourth), commodities are far afield from my areas of expertise--rhetorical theory and composition studies. But my profession and experience qualifies me to recognize sound reasoning and effective prose style when I see it. And as I read Over a Barrel, not only was I fascinated with the well-documented argument provided between its covers but with the author's articulate abilities to convey his ideas in graceful, accessible prose. To Over a Barrel, I say Hurray!! I hope to see more of Mr. Learsy's insightful analyses in print. Joanne Brown, Des Moines, Iowa

As a complete novice to the in's and out's of the oil market, I found Mr. Learsy's book, "Over a Barrel" an eye opening experience. I think the information is quite interesting and I am surprised that his incites into the connection of between the extremely high price of oil and the collusion that seems to exist between the Bush administration and OPEC is not more widely reported. This book is well researched and personal. Mr. Learsy is trying to reveal the facts as they are in our global race to consumption. Mr. Learsy does something quite unusual in that he combines the scholarly attention to detail and facts with the practical knowledge of the workings of the commodity market (he has been a commodities trader for years he tells us). Rarely to we find practice and theory working so closely together. He presents an argument that proves what many of us already feel; that oil prices are artificially manipulated and maintained by creating the appearance of scarcity. We are being manipulated by our fears once again. His argument for the existence of vast untapped oil reserves is quite compelling and one can feel in his prose the passion that he feels about how to change the our cultural dependency upon those who have been proven to be our enemies.
I found it interesting that Mr. Learsy also offers advise on conservation and shows a way towards reducing our overwhelming dependency upon oil. As i was reading the book i was expecting an argument for greater consumption and was surprised by his ideas for energy efficiency and the reduction of waste.
this is definitely recommended reading for anyone who wants to understand why oil prices, and especially the prices at the pump, are so high.

Finally, a book that debunks the myth that we are running out of oil. The author clearly and definitively proves the lies and deception wrought upon the world by OPEC and the oil majors. This book should be required reading of every American.