Book review: Game Over


Game Over: How You Can Prosper in a Shattered Economy by Stephen Leeb.

Game Over makes that case that we're running into resource limits on every front--energy, metals, water--and that this problem is going to affect everything we do. Then, it looks at what can we do about it, as individuals and as a society.

The book breaks down into four sections.

The first lays out the case that we're running into resource limits on every front. The second suggests that we, as a society, may well be able to do something about this--but only if we're clever and foresightful. The third looks at some issues related to the way we've been running the economy for the past few years. The fourth suggests a bunch of things individuals might do, to position themselves so that their finances don't get too beaten up by the problems.

Peak oil (and peak lots of other stuff)

Part one begins with peak oil, but then expands on that issue by pointing out that we're hitting limits with many other resources as well--metals, water, etc.

It's no surprise that we're hitting so many limits at once. For almost any resource there are partial substitutes. The end result of going down that path, though, is that the substitutes get used wherever they're adequate--meaning that eventually they'll hit a limit as well. If you aggressively substitute the cheapest alternative in every case--which is exactly what happens in a free market--pretty soon all your resources will be pushing up against their own limit.

Leeb lays out the case for peak oil pretty well. At some point--roughly at the point when half the oil has been produced from a field--that field hits a peak: it produces more oil than it has ever produced before or will ever produce again. This is clearly true of individual fields--we've seen it over and over again, all over the word. It is also clearly true of countries. The United States hit its peak in 1970. Since then, even with the addition of oil from Alaska, we've never produced as much oil again. It is true of the world as a whole as well--add up all the production from all the fields, each one eventually hitting its own peak, and at some point the planet hits a peak. Every year after that, the world will produce a bit less oil than the year before.

Besides laying out the case for peak oil, Leeb introduces another concept that he calls "absolute peak oil," by which he means that point at which it takes more energy to produce a barrel of oil than you'll get by burning the oil. It's an important concept, although I don't think Leeb develops it very well.

The concept he's referring to is the "energy return on energy invested," usually abbreviated EROEI. When your EROEI is less than one--when the energy produced is less than the energy it took to produce it--whatever you're doing is no longer an energy source. Of course, that doesn't make it worthless. Batteries, for example, have an EROEI of less than one--it takes a lot more energy to construct a battery and deliver it to you than your battery-powered device will ever get out of it. But that's okay. Batteries are an energy delivery mechanism, not an energy production mechanism. As long as people will pay more for a battery than it costs to make it, people will keep making batteries.

Peak oil will start to bite long before we hit that point. Once we hit the peak, the world as a whole will have to burn a bit less oil each year than the year before. The consequences for how people live will be enormous.


Part two talks about the development of alternative sources of energy, and the key message is that many alternatives that look possible simply don't scale, because of limits in other resources.

Wind, for example, could replace most of the energy that we get from oil. The EROEI for a wind turbine is pretty good. But there's a huge capital investment--you need to build towers, turbines, and generators. You can build hundreds of wind turbines no problem, but if you tried to build enough wind turbines to replace the energy we get from fossil fuels, you start running out of things like steel to build them out of.

All the alternatives have similar issues. Try to replace oil with ethanol and you start running out of land and water (and, in the shorter term, food). Try to replace oil with tar sands, and you run out of natural gas and water.

The key take-away from part two of Leeb's book is that there are many possibilities for alternative energy production, and that many of them will work to some extent, but that we need to look very seriously at which ones can be scaled up to produce enough energy to make a difference without hitting other resource limits.

I should add that this part of the book has Leeb's worst misstep. He talks about conservation as part of the basket of choices to get us through the rough patch where resource limits really start to bite--and then thoughtlessly dismisses the notion on the grounds that our conservation probably just makes the energy cheaper, so other people will use it up all the faster.

The point he misses (and he's certainly not the only person to make this mistake) is that the goal of conservation is not to "stretch out" the depleting supply for a while longer. The point is to find a balance between the production of energy and the use of energy.

It's sad that he couldn't take this step, as it follows rather directly from his previous point--that if we try to build enough windmills to replace the energy we get from oil, we run out of steel. Suppose, though, we could build some windmills--enough to replace a fraction of the energy we get from oil. Suppose we could also get modest-but-significant amounts of energy from other renewable sources (photovoltaics, biofuels, geothermal). The point of conservation is to find a way to live comfortably using only that much energy. Duh!


The third section talks about the economy, making the case that inflation will be the big economic problem over the next few years, and that it won't be easy to deal with.

The central banks have made the determination of late that inflation is the safer risk. We know how to end inflation, so it's safe to risk a little inflation in an effort to avoid a depression. Leeb says that this isn't going to work. Yes, we know how to stop inflation--but only by causing a recession. If the economy is already in a recession, the central banks will never make that worse just to end inflation.

There is, of course, the key counter-example of the policies of the Federal Reserve under Paul Volker in the late 1970s and early 1980s. Leeb's analysis, though, is that we were in better shape then to tolerate the disinflation, but that we're not now.

Personally, I hope he's wrong--and I think there's a good chance he is. In a recession, the pain hits some much worse than others--business owners suffer, workers who lose their jobs suffer. In an inflation, the pain hits everybody, but it especially hits people with money. To the extent that "people with money" have power within society, I think eventually the pain of a bad inflation will push policy maker's to grind the inflation out of the system, even at the cost of a recession.


The last section of the book is on investments. It's informed by his thinking on inflation, so one key suggestion is gold. He suggests a variety of companies that should make money as we try to build out alternative energy production facilities, and he suggests some companies that will thrive as developing countries (where they use less energy than the rich countries do) continue to grow.

On balance it's a good book. Certainly it's right about the problem. It also has a thoughtful (if limited) look at the range of possible solutions. His economic analysis is different from mine, which leads to different investment suggestions than I would make, but that's really the least important part of the book (and time may yet prove that he's hit closer to the mark than I).

If you're interested in learning more about how limits in energy and other resources are going to affect us, and how we might address those problems both as individuals and as a society, Game Over is a good place to start.

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Guest's picture

We all need to start thinking outside of the box or there will nothing left for future generations

Guest's picture

Eh, we've been "running out of oil" since the 1970s. While I think that oil is not a limitless resource, I do think there are many deposits we have not found yet. Devon Energy has made an entire business out of finding these deposits.

I do think that from a political standpoint, we ought not be so dependent upon oil at all. After all, we're sending billions of dollar to countries that don't like us much.

Guest's picture

Chris Martenson has put together a presentation outlining the intersection of several major trends/factors in the economy, the environment and energy.

I found his charts and graphs to be more comprehensive and compelling.

Guest's picture

The top story of the year is that global crude oil production peaked in 2008.

The media, governments, world leaders, and public should focus on this issue.

Global crude oil production had been rising briskly until 2004, then plateaued for four years. Because oil producers were extracting at maximum effort to profit from high oil prices, this plateau is a clear indication of Peak Oil.

Then in August and September of 2008 while oil prices were still very high, global crude oil production fell nearly one million barrels per day, clear evidence of Peak Oil (See Rembrandt Koppelaar, Editor of "Oil Watch Monthly," December 2008, page 1)

Peak Oil is now.

Credit for accurate Peak Oil predictions (within a few years) goes to the following (projected year for peak given in parentheses):

* Association for the Study of Peak Oil (2007)

* Rembrandt Koppelaar, Editor of “Oil Watch Monthly” (2008)

* Tony Eriksen, Oil stock analyst; Samuel Foucher, oil analyst; and Stuart Staniford, Physicist [Wikipedia Oil Megaprojects] (2008)

* Matthew Simmons, Energy investment banker, (2007)

* T. Boone Pickens, Oil and gas investor (2007)

* U.S. Army Corps of Engineers (2005)

* Kenneth S. Deffeyes, Princeton professor and retired shell geologist (2005)

* Sam Sam Bakhtiari, Retired Iranian National Oil Company geologist (2005)

* Chris Skrebowski, Editor of “Petroleum Review” (2010)

* Sadad Al Husseini, former head of production and exploration, Saudi Aramco (2008)

* Energy Watch Group in Germany (2006)

* Fredrik Robelius, Oil analyst and author of "Giant Oil Fields" (2008 to 2018)

Oil production will now begin to decline terminally.

Within a year or two, it is likely that oil prices will skyrocket as supply falls below demand. OPEC cuts could exacerbate the gap between supply and demand and drive prices even higher.

Independent studies indicate that global crude oil production will now decline from 74 million barrels per day to 60 million barrels per day by 2015. During the same time, demand will increase. Oil supplies will be even tighter for the U.S. As oil producing nations consume more and more oil domestically they will export less and less. Because demand is high in China, India, the Middle East, and other oil producing nations, once global oil production begins to decline, demand will always be higher than supply. And since the U.S. represents one fourth of global oil demand, whatever oil we conserve will be consumed elsewhere. Thus, conservation in the U.S. will not slow oil depletion rates significantly.

Alternatives will not even begin to fill the gap. There is no plan nor capital for a so-called electric economy. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment. The independent scientists of the Energy Watch Group conclude in a 2007 report titled: “Peak Oil Could Trigger Meltdown of Society:”

"By 2020, and even more by 2030, global oil supply will be dramatically lower. This will create a supply gap which can hardly be closed by growing contributions from other fossil, nuclear or alternative energy sources in this time frame."

With increasing costs for gasoline and diesel, along with declining taxes and declining gasoline tax revenues, states and local governments will eventually have to cut staff and curtail highway maintenance. Eventually, gasoline stations will close, and state and local highway workers won’t be able to get to work. We are facing the collapse of the highways that depend on diesel and gasoline powered trucks for bridge maintenance, culvert cleaning to avoid road washouts, snow plowing, and roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, large transformers, steel for pylons, and high tension cables from great distances. With the highways out, there will be no food coming from far away, and without the power grid virtually nothing modern works, including home heating, pumping of gasoline and diesel, airports, communications, and automated building systems.

Documented here:

Guest's picture
poor boomer

Oh yeah. Suuuuure. Riiiiiiiiight.

I can't even prosper in a booming economy, how am I supposed to prosper in ashattered economy?

Guest's picture
poor boomer

Leeb wrote about Peak Oil in The Coming Economic Collapse; at that time I think he was predicting near-term $200 oil.

I devour as much of this stuff as I can find, but I still don't see how any of this knowledge can help me prosper.

Guest's picture

I have been reading this book called Small Is Beautiful. It's an interesting book that was published in the early 1970's that foretold the impending doom that we face if we don't use our resources wisely. It's unfortunate that our lives our so dependent on non-renewable natural resources. It makes me wonder if the future generations have to look forward to a life similar to the pre-industrial age.

Guest's picture

There is a lot of argument for peak oil ...

And ...

There is a lot of research in new extraction technology and new technologies for alternative fuel production ...

No matter which side you sit on these theories (I'm on the fence.)

DON'T FORGET the HUGE auto production increases in the two most populace countries of the world (China and India.)

Even if new extraction and alternative fuel technologies were already online today - it's not possible to meet the increased fuel supply demand from the numbers of cars being produced for the peoples of China and India, as they begin their mad rush to embrace our western consumer ideals.

No matter which side of the fence you are on concerning global climate change/warming ...

It is clear (no pun intended) - the earth can't sustain the current levels of carbon release.

Katie bar the door when you look at increased carbon contribution from easterners newly discovered love affair with the automobile.