Wednesday December 14, 2005

The Rainwater Prophecy

energybulletin.net -> fortune.com, peakoil.com :

Richard Rainwater made billions by knowing how to profit from a crisis. Now he foresees the biggest one yet. Richard Rainwater doesn't want to sound like a kook. But he's about as worried as a happily married guy with more than $2 billion and a home in Pebble Beach can get. You don't get to be a multibillionaire investor — one who's more than doubled his net worth in a decade — through incremental gains on little stock trades. You have to push way past conventional thinking, test the boundaries of chaos, see events in a bigger context.

The next blowup, however, looms so large that it scares and confuses him. Every morning he rises before dawn at one of his houses in Texas or South Carolina or California and spends four or five hours reading sites like LifeAftertheOilCrash.net or DieOff.org, obsessively following links and sifting through data. How worried is he? He has some $500 million of his $2.5 billion fortune in cash, more than ever before. "I'm long oil and I'm liquid," he says. "I've put myself in a position that if the end of the world came tomorrow I'd kind of be prepared." He's also ready to move fast if he spots an opening.

"Peak oil" theorists posit that global production is at or near its historic ceiling and will begin a long, inexorable decline. They worry that America is not ready for the downturn, for skyrocketing prices and even shortages. Savinar's site's opening line is, "Civilization as we know it is coming to an end." Rainwater has been checking it every morning since September, when his personal anxiety alert level moved to orange.

Rainwater sides with the imminent peak crowd, and can rattle off facts to back up his argument. "In 1988 there were 15 million barrels a day of shut-in production" - meaning surplus that could be tapped - "and the world was using about 55 million barrels of oil. Today the world is using over 80 million, and there's no shut-in production left. We've used it up, through the combination of depletion and growth." In other words, the spigot can't be opened any wider ...

(2005-12-14 11:31:00 SGT) [Energy] Permalink

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