John Tierney describes a wager he made in 2005 with Matthew Simmons, who bet $5,000 that the price of oil, then about $65 a barrel, would more than triple in the next five years, so that the average price of oil over the course of 2010 would be at least $200 a barrel in 2005 dollars....The average for 2010 has been just under $80, which is the equivalent of about $71 in 2005 dollars — a little higher than the $65 at the time of the bet, but far below the $200 threshold set by Mr. Simmons. (Tierney's mentor was the economist Julian L. Simon, a leader of the Cornucopians, optimists who believed there would always be abundant supplies of energy and other resources. Simon won a bet in the 1980s with Paul Ehrlich and two natural resources experts over the prices of five metals.) What happened to the grim predictions of declining oil reserves and rising prices? Perhaps there has been a temporary respite (which unfortunately will not help alternative energy efforts):
Giant new oil fields have been discovered off the coasts of Africa and Brazil. The new oil sands projects in Canada now supply more oil to the United States than Saudi Arabia does. Oil production in the United States increased last year, and the Department of Energy projects further increases over the next two decades...The really good news is the discovery of vast quantities of natural gas. It’s now selling for less than half of what it was five years ago. There’s so much available that the Energy Department is predicting low prices for gas and electricity for the next quarter-century. Lobbyists for wind farms, once again, have been telling Washington that the “sustainable energy” industry can’t sustain itself without further subsidies...As gas replaces dirtier fossil fuels, the rise in greenhouse gas emissions will be tempered, according to the Department of Energy. It projects that no new coal power plants will be built, and that the level of carbon dioxide emissions in the United States will remain below the rate of 2005 for the next 15 years even if no new restrictions are imposed.
Maybe something unexpected will change these happy trends, but for now I’d say that Julian Simon’s advice remains as good as ever. You can always make news with doomsday predictions, but you can usually make money betting against them.