of Black Gold, by George Orwel|
The subtitle of this book, "The New Frontier in
Oil for Investors," would indicate this book is a guide to investing in
oil. It is not. If you're looking for a manual that will tell you how to
make gazillions of dollars from investments in the oil marketplace, keep
looking. Black Gold does provide some good tips for investors, but few
of those would be new to seasoned investors.
The real value of this book lies elsewhere:
understanding the energy issues facing industrialized nations. This
particular topic is one where the "ignorati" weigh in with various
unfounded opinions and absurd suggestions--everything from suggesting
Americans should boycott certain gas stations to assuming technology
will provide new energy sources that make oil obsolete.
Orwel, unlike the "analytically-challenged"
talking heads, very clearly presents the picture on the looming energy
crisis. Is there really an energy crisis? Many "experts" assure us there
is not. They point to alternative energy sources and say we have nothing
to worry about because these sources are here now. All we have to do is
switch over--no problem. Orwel dispels these notions by examining a few
of these. For example, he points out that "We could line the Atlantic
coast with windmills and still not make much of a dent in electricity
Many experts who agree there is an energy crisis
also say the easy solution is to simply extract more oil. They recommend
such thing as drilling in ANWAR or expanding production in existing
fields. The first recommendation ignores the realities of enormous lead
times. The second one violates the principle of getting blood from a
turnip. Even if we could do these things right now, they wouldn't fill
the gap produced by projected demand in the near term.
Other experts say we need to conserve. They are
correct, but we can't conserve enough to prevent ourselves from running
out of oil in the relatively near future.
Orwel discusses how much oil we actually have, the
problems in tapping into proven reserves, refining issues, and public
policy problems that hamper any efforts to increase the oil supply. He
also provides a detailed explanation regarding how most of the available
oil is in politically unstable countries. A supply disruption is more
likely than not, in the near future.
What about demand? Where has it all come from?
Orwel tells us that, as well. But he is careful not to simply discuss
the present drivers of supply and project a linear curve from there. He
looks deeper, drawing on both historical data and emerging trends. By
the time you get 50 pages into the book, it is fairly obvious that you
don't need to read his biography to know he's an analyst, and a good one
To me, this book is "required reading" for all
people who have been surprised over the rise in gas pump prices in the
last couple of years. For the rest of us, it helps us understand what's coming and how to prepare for it.
From the book's subtitle we know the book will reveal some things about
investment opportunities. But, it reveals so much more.