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PeakOil is You

Book: "Oil 101" by Morgan Downey (c 2009)

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Book: "Oil 101" by Morgan Downey (c 2009)

Unread postby Outcast_Searcher » Sat 27 Jun 2009, 23:37:12

For oil newbs (of which I'll admit to being one), this book goes over all the basics in a thorough, professional way. This (a couple of months back) is the only book I ever saw with over 10 posts on Amazon that had all 5 star reviews, which (IMO) says something about the quality.

Overall, the book is quite readable, but thoroughly covers each subject at a layman's level. There are plenty of charts, graphs, and drawings to illustrate technical points or to lay out large amounts of data in a readable form. You can get a high level summary of much of this book by looking at the Wiki article on Peak Oil. The high points are quite consistent in substance and general tone.

The author starts with a nice history of crude oil, to put things in perspective. At the end of the chapter he discusses alternatives, and here is where it becomes obvious he's an oil bull, by his tone. He points out (my language) that shale oil is an unproductive pipe dream. He points out that some oil sands can be obtained, but there is a tremendous energy input cost -- so high in fact that he forecasts that in the long run that the natural gas price will trend to the oil price we'll use so much of it for transportation in the next 25 years - that there may be only a very narrow window for profitable extraction of tar sands.

(Or they may be horrendously expensive given the lack of practical short term alternatives - my opinion). Then he gives a broad overview of world crude oil supplies, where the concept of "best first" is clearly shown, but I don't recall him using that term. The components of oil liquids, and the chemistry of oil follows.

In the chapter on components, he talks more about alternatives. He goes into more detail, but the bearish view on replacing 30 billion barrels of oil with alternatives in the foreseeable future clearly prevails. Then he goes through an industry overview, exploration and production, and then refining.

An example of his dry wit, while using objective language that I got a kick out of, was early in the chapter on the Industry Overview he states: "Most NOC's exist because they assumed ownership of oil within their national territory which private industry originally risked funds to discover.

The red text is a nice gentle way to say STOLE, isn't it? (I'm a libertarian, so property rights are crucial to me, BTW).

Then he talks about standards, finished products, and petrochemicals.
Next comes chapters on transporting oil, storage, and seasonality.

Then the chapter I was really looking for as a newb - reserves. The Hubbert curve, the 1982-1988 OPEC reserve figure inflation (and neglect to account for the 225 billion barrels pumped since), etc. are examples of topics he goes over, but with NO arm waving or yelling.

Then he gets into environmental regulations, and a few pages on new engine technologies.

Then he goes over oil prices and forward oil markets: futures and swaps, and forward oil markets: options, and finally, a chapter on managing oil price risk (i.e. hedging).

So, IMO, after reading this book, the oil newb has a very decently broad overview of the important aspects of oil, why it seems bound to get more expensive and harder to get usable end products from (aspects of the best first principle) in the coming years.
His discussions of the oil markets give a good perspective of the mechanics of oil trading and hedging and options, and by implication why blaming high prices on oil investors is silly at best.

Armed with this, the newb can form their own opinions, and (as I have) go to read oil based websites with enough knowledge to recognize malarkey and outright attempts to manipulate the reader.

It has enough data to cart around if you need to be able to look something on oil up to sanity check things, if you don't have access to the web, or want a shot at a reasonably unbiased source.

It was kind of expensive, IMO, at $31.45 on Amazon - but to have a sound basis to get started on a major investment and societal theme - I consider it well worth it. By the way, there are 18 reviews on Amazon, several of which are far more detailed than this one.

FWIW, my general assessment as a newb of where we were with oil seemed significantly more dire after reading this book. However, I feel that the author takes great care NOT to be overly biased in any way. Thus, the book seems to support the obvious trends Peak Oil implies just by drawing a clear picture of the overall global oil situation.

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One issue I had was even as a newb, that when he discussed natural gas (as a possible short term oil alternative) prices he seemed much more bullish to me than the reality of 2009 implies. I suspect he wrote that part of the book in 2008 when NG prices were above 10 bucks per MCF. However, since he's doing NO short term price forecasting or gloom and dooming (IMO) - and short term prices seem pretty darn random to all but those who claim to be market guru's - that 's a pretty small nit to pick. Just pointing out that NONE of us can predict the impacts of technology (the massive progress on Shale formations and sideways NG drilling supposedly accounts for much of the massive NG bear slump currently underway).

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I hope this is helpful. Perhaps most of the oil brainiacs on this site will already know everything a book like this contains...
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Re: "Oil 101" by Morgan Downey (c 2009) - book review

Unread postby TheDude » Sun 28 Jun 2009, 00:06:28

I have a copy. Balked at the price at first but was won over in the end by the reviews from "Heading Out" and Robert Rapier. Their blogs are Bit Tooth Energy and R-Squared Energy Blog if you want to peruse those; HO's was also posted at the Oil Drum. Five stars for me as well.

You glanced over the aspects of the book I find most useful, the exhaustive coverage of technical aspects of the industry, what refineries do for instance, the various components/outputs, and the minutiae of these, all the way down to various alternate names each has; and this detail extends to all facets of the petroleum industry, upstream and down. That's what I'd sell the book on; some of you may have read Matt Simmons's Twilight in the Desert and balked at its technical detail; this is just as dense, but worthwhile if you have that deep an interest in how the petroleum industry works. I can't imagine it being topped as a reference work; I do own other books that go into even more detail of, for example, exploration, but as a general purpose book it stands at the top of the heap according to HO, who has a fully stocked library of works on energy.

As a peak oil primer that's mostly secondary, he covers the Hubbert Curve in the reserves chapter without fully endorsing the concept of an imminent near-term decline; this comes off as a largely unspoken assumption, a neutral tone that almost all the book employs. One thing he is quite vindicative about however, as you state, is the lack of economic viability of oil shale, which I agree with, and was happy he took a firm stance on this. Cooking kerogen is the very height of madness for a whole host of reasons.

Morgan has a blog as well: Scarce Whales, the original title for the book as well.
Cogito, ergo non satis bibivi
And let me tell you something: I dig your work.
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Re: "Oil 101" by Morgan Downey (c 2009) - book review

Unread postby Outcast_Searcher » Mon 29 Jun 2009, 20:44:32

Mr Dude:

Thanks for the input, especially the input on the stuff I glossed over.

As a newb, although I found the sections you focused on fascinating and figured they would help me later when I wanted to follow some production stream and follow the terminology - I found this a bit overwhelming in the short term (don't learn as fast as I did 30 years ago in college!) ;)

And, as a newb I was wanting to get a reliable source to get an understanding of what I considered the basics likely to heavily affect supply/demand in the short term.

Thank you also for the links to the blogs for key reviewers / apparently smart guys about oil. I definitely plan to check those out.

Regards


(Edited typo and to ack. Mr Dude).
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