and natural gas have also been burned to produce electricity, although
historically that had always been mostly coal’s job.
Starting from Pennsylvania in 1859 and later in the Gulf Coast states,
U.S. oil production grew sharply, with supply far surpassing demand during
much of the 1930s, causing prices to fall to as low as four cents per
barrel until the federal government, using its interstate commerce legislative
authority, stepped in. To save the industry from collapse, the government
set production quotas for each state and also instituted tariffs on
imports from foreign suppliers like Venezuela.
Nonetheless, oil was on its way to becoming a global commodity with
a global market, while at the same time, domestically local producers
were in dire need of a stable market. In any case, with so much oil available,
Detroit car makers were spitting out fleets of automobiles at a high
rate, and the automobile began to have an enormous influence across
America by the mid-twentieth century.
A lot has changed since then. The twenty-first century is starting out
with a wake-up call: We must get prepared for an impending catastrophe.
We’ve enjoyed cheap oil for far too long, and now there are signs we may
be headed for a global “oil peak”—the point at which oil production
worldwide will start declining at the rate of 2 percent per year. When the
oil peak will occur is a matter of speculation and there’s already an intense
debate going on, but at least this much is certain: Our lifestyle will
have to undergo drastic changes.
How prepared are we, and what do average investors need to do, are
the subjects of this book. My understanding is that with better technology
we might be able to squeeze some more oil out of old wells, perhaps
through improved water treatment, or we may be able to prospect for oil
in the deep underbelly of the Atlantic off the Gulf of Guinea in West
Africa and in the Russian side of the frigid Black Sea; we may even be
able to increase our use of natural gas to generate power, or churn out
fuel from Canada’s eastern Alberta tar sands and from Venezuela’s heavy
crude oil, found north of the Orinoco River.
However, those would be temporary measures and they wouldn’t
much change the equation. So, we stop here to ponder the issue, and
knowing full well the grave consequences to our civilization, we ask the
same question as Samuel Beckett’s Vladimir:
Let us not waste time in idle discourse. Let us do something, while
we have the chance! It’s not every day that we are needed. Nor in-
INTRODUCTION 3