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 Great Book!! History, Economy, and Commodities Jun 17, 2009
This book does a great job of providing a backdrop of the history of oil, ties in many great points on economy, and still relevant in many regards even though some of the items highlighted are dated.
I am more of a business reader who enjoys newspapers and mag articles over books, and found this to be something I listen too(since I purchased the audio), over and over again.
Other financial books that i've read I believe hold too much of a bias from the author and I believe this one is fairly unbias and represents the history and items to consider very well. The book in itself is a great thought provoker on how one should view the future going forward.
Slow start, much better second half Jan 01, 2009
The name of this book is a reference to the fact that human civilization currently consumes over 86 million barrels of oil a day (a barrel is 42 US gallons or 159 liters). The book gets off to a very slow start with a discussion of the now mostly forgotten eighteenth and nineteenth century whaling industry where individuals went to the ends of the earth to hunt whales to near extinction to obtain highly desirable whale oil and spermaceti used as illuminants. Eventually the discovery of rock oil and the development of electrical lamps completely displaced the use of whale oil, but not before escalating prices had caused considerable disruption. Parallels are drawn with today's global search for sources of light sweet crude, but we are still a long way from a radical technology capable of fully replacing oil.
Following the history of whaling the book goes into a much more extensive history of oil: how oil displaced coal powered steam engines, starting with European navies before World War I, how the British, French and later the US realized the geopolitical significance of the Middle Eastern oil fields, and how companies like Exxon, Mobil, Chevron, Shell and BP rose to prominence. After WW II two decades of cheap oil under $20/barrel helped drive world economic growth at an average 4.9% until finally US oil production peaked and power shifted increasingly to OPEC resulting in two `oil shocks' in 1973 and 1979. The reaction to these shocks is instructive: there was a large scale switch to coal and nuclear power for electricity generation, and a build up in liquid natural gas (LNG) infrastructure. Many governments introduced taxes and other legislation to encourage oil conservation and greater energy efficiency. The world's dependence on oil for economic growth was reduced dramatically, and in fact Japan and the UK use no more oil today than they did three decades ago.
Twenty years later global economic growth, and especially growth in China has accelerated oil consumption once more, and sources of inexpensive light sweet crude are becoming harder to find. The result, combined with political uncertainty and lack of clear data on supply and demand has been that organizations that depend on the oil have tried to hoard supplies, resulting in dramatic price volatility. Today most oil consumption is for transportation: in the US relatively low gasoline taxes have encouraged widespread sale of trucks and SUVs that are relatively inefficient, and there has been continuing suburbanization with longer commutes and more congested traffic. Lacking a technological `silver bullet' to replace oil cheaply the only options in the near term will be a widespread switch to more fuel efficient vehicles such as clean diesel or hybrids, and a continuing switch to coal, nuclear and LNG for non-transportation needs in China and other developing nations. At consistently above $35/barrel it will also be economic to develop the huge oil sands reserves in Western Canada.
After getting off to a slow start, and despite some less interesting digressions, and a history readily available elsewhere, the second half of this book becomes a much denser source of facts, figures and ideas that give insight into the supply and demand for oil and its alternatives in the various parts of the world today. The conclusions are not radical, but the book provides a depth of perspective to the energy industry that I appreciated.
a good, basic introduction to the economics of energy Sep 15, 2008
This book gives a good introduction to the economics of energy, with an emphasis on what is going to happen when we run out of oil. It charts a middle course between doom-and-gloom pessimism, and blind optimism that innovation and market forces will automatically fix everything. The author uses his experience investing in the energy industry to give what seems to be a fairly realistic picture of what is likely to happen in the short term. The obvious fact is that as demand for oil begans to outstrip supply - and there are strong indications that the supply of oil is peaking or will peak soon - we will have to start making more use of other sources of energy. The good news is that additional sources are available, so civilization is probably not about to collapse. The bad news (for me at least) is that we are likely to follow the path of least resistance which entails making increasing use of other fossil fuels, especially coal. This is even worse for the environment than oil, and will just postpone and make more difficult the necessary process of transitioning to renewable sources of energy.
While there is nothing very deep or subtle in the book, it gives a good overview of the history of our use of energy, and lots of facts and figures and graphs about our current energy use. In particular there are lots of graphs showing the evolution over time of the "energy mix", namely how much of our energy comes from various different sources. As such, this book could be a very useful primer in order to better understand what one reads about energy in the news and the significance of the various numbers that appear there.
There are also a few very interesting tidbits. One of the more disturbing ones is that our rate of economic growth is strongly correlated with our use of oil. In other words, roughly speaking, for every dollar you spend, you cause a certain amount of oil to be consumed. The book claims that certain countries, such as Japan, have managed to neutralize this trend. However, because of globalization I'm not sure if it really makes sense to consider this question at only a national level. For example, lots of the fossil fuel that is burned in China is used to manufacture goods that are shipped to the US. This is an example of what I mean when I say that the book is not that deep or subtle.
Anyway, if you want to better understand what is going on with our use of energy, this book is a good place to start.
Excellent Read Jul 14, 2008
The author did an excellent job explaining the history of energy cycles and their general behavior. He explained in a simple way how the cycles worked and the time it takes to shift from one source to another source. Peter pinpointed what is behind the surge in oil prices and why it is different than the surges of 73 and 79. I really enjoyed his analysis of different countries' oil dependencies and their relations to GDP. The author discussed all the alternatives available on the table and showed which ones are likely to work within the near future and the extended future. He proposed several solutions to ease the burden on oil prices, some of them are very workable but need dedication from the population. I strongly recommend the book for anyone interested in energy matters and definitely for all energy companies' managers and executives.
 Oil Break Point Jul 06, 2008
I enjoyed this book. Mr Tertzakian knows something about oil. I don't share his optimist views of the future. Heavy sour and Tar Sands will not save the world, yet, overall Mr. Tertzakian is a smart man and I enjoyed reading his book. Regards, Keith Renick, Project Materials Specialist, Project Management Team, Riyadh Refinery, Saudi Aramco Oil Company, Retired
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