Resource Bet Redux

Ronald Bailey from the April 2011 issue

Humanity is always allegedly on the verge of running out of some vital resource. In 2000, on the 30th Earth Day, I looked at how several doomsaying predictions about nonrenewable resources had fared (“Earth Day, Then and Now,” May 2000). One of the forecasts came from a 1970 speech at Swarthmore College by the ecologist Kenneth Watt, who declared, “By the year 2000, if present trends continue, we will be using up crude oil at such a rate…that there won’t be any more crude oil.” The furor over resource depletion increased as the “oil crises” of the 1970s seemed to ratify that conclusion.

In 1980, at the height of this frenzy of resource despair, three leading doomsters—Paul Ehrlich, John Holdren, and John Harte—made a famous bet with cornucopian economist Julian Simon. The trio wagered that the prices of their handpicked basket of five exchange-traded metals worth $1,000 would increase in real terms during the next 10 years. Simon predicted that their prices would fall. He and Ehrlich et al. agreed that the losing side would pay the difference between $1,000 and the actual price. Ten years later, Ehrlich sent Simon a check for $576.07. The prices of all five metals had dropped by more than half.

By 2005 the world was again purportedly running out of oil. Explicitly inspired by Simon’s bet, New York Times writer John Tierney arranged a similar wager with one of the leading peak-oil alarmists, Matthew Simmons, author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. In 2005, when the price of oil was $65 per barrel, Simmons bet $5,000 that the average price of oil in 2010 would be at least $200 a barrel in 2005 dollars.

In 2010 the price of oil averaged about $71 in 2005 dollars. Simmons died in August 2010, but his estate sent Tierney a check for $5,000. In his article announcing the results, Tierney concluded, “You can always make news with doomsday predictions, but you can usually make money betting against them.”

Back in 2000, I made a prediction of my own. Thirty years hence, I wrote, “there will be a disproportionately influential group of doomsters predicting that the future—and the present—never looked so bleak.” And they will still be wrong. 

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