Economic Optimism? Yes, I’ll Take That Bet: Peak Oiler Loses Bet Posthumously
Another Malthusian Nihilist has been proven wrong: how many does it take to shed these pernicious worry mongers from our backs? When you look at the grand sweep of human history one megascale trend marches consistently through time with only an occasional stumble: everything eventually gets better, and average wealth, energy, and education goes up.
Even after we exhaust the very last drop of oil on this planet (if we ever get there) substitutes and other energy sources will be found, and history demonstrates that they will be more plentiful, cheaper, and cleaner.
The bet was occasioned by a cover article in August 2005 in The New York Times Magazine titled “The Breaking Point.” It featured predictions of soaring oil prices from Mr. Simmons, who was a member of the Council on Foreign Relations, the head of a Houston investment bank specializing in the energy industry, and the author of “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.”
I called Mr. Simmons to discuss a bet. To his credit — and unlike some other Malthusians — he was eager to back his predictions with cash. He expected the price of oil, then about $65 a barrel, to more than triple in the next five years, even after adjusting for inflation. He offered to bet $5,000 that the average price of oil over the course of 2010 would be at least $200 a barrel in 2005 dollars.
I took him up on it, not because I knew much about Saudi oil production or the other “peak oil” arguments that global production was headed downward. I was just following a rule learned from a mentor and a friend, the economist Julian L. Simon.
As the leader of the Cornucopians, the optimists who believed there would always be abundant supplies of energy and other resources, Julian figured that betting was the best way to make his argument. Optimism, he found, didn’t make for cover stories and front-page headlines.
