Profit from the Peak reviewed on Seeking Alpha

August 4, 2008 at 11:28 am
Contributed by: Chris

My book was reviewed twice by the Seeking Alpha financial site/newsletter in the last week:
“Profit from the Peak: An Enjoyable Read About Our Energy Problems”

“Profit from the Peak – A Great Surprise”

I have re-posted both reviews below.


Profit from the Peak: An Enjoyable Read About Our Energy Problems

By James Cullen, Seeking Alpha

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 and Twilight in the Desert), so this wasn’t really a problem for me, but the minimization of technical details makes Profit from the Peak much different than, say, Twilight in the Desert.

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.

Profit from the Peak – A Great Surprise

By David Gordon, Seeking Alpha

Brian Hicks’ and Chris Nelder’s recently published book, Proft from the Peak, comes as a complete surprise, and a pleasant one at that.

A surprise to me, certainly, as I suffered the pre-conception that this book would be a quickie — written and published hurriedly to take advantage of a topical issue. But it is, instead, well-argued, provides an in-depth analysis of the full cohort of issues, and does it all logically, consistently, coherently, and patiently.

The book’s subtitle, “The End of Oil and the Greatest Investment Event of the Century” states the authors’ intentions clearly and starkly, and sets out their far-reaching effort:
we take a hard look at the future of oil and gas, and how to invest in what’s left. Then we explore the potential (and the limitations) of each of the energy alternatives, and the carefully considered investing angles on each one. Although this is a study in how to profit from the peak, we hope it is also more than that: a sober look at the future of humanity as a whole. On current trends, humanity could reach the peak of food, water, and all forms of energy by 2020…

A massive effort, theirs; by and large, they succeed. Oddly, as I read the book, I thought Chapter 2, “What is peak oil?” would prove to be my favorite, as it digs deeply for what oil is, where it comes from, how we drill for it, and distill, process, refine, market, and use it. The chapter satisfies my interest in knowing the etymology (to misuse a word) of all things.

But the authors surprised me again; that chapter, excellent though it is, is only one of many excellent chapters. The authors dissect exceedingly well the questions and answers of energy — finding, obtaining, using, and the many (proposed) alternatives — and from so many perspectives that I suspect they cover them all. They do so fully from the question of supply, though, with no proportionate interest in the demand side of the equation; specifically, how to lessen demand to extend the lifespan of abundant, available, and inexpensive energy. I consider this a wise decision: better to investigate how to increase supply by new technologies and new products than to venture toward the hornets’ nest of social engineering via decreasing users’ demand for a product in diminution..

“My father rode a camel. I drive a car. My son flies a jet airplane. His son will ride a camel.”
— popular Saudi Arabian aphorism

Profit from the Peak serves admirably well my interests as a private consumer, selfish investor, and your fellow global citizen. Kudos to everyone involved with Profit from the Peak, which receives my highest recommendation.

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