Monday, August 22, 2005

Joe Tierney: I'm dazzled by his erudition...

Actually, not.

Peter Maas wrote a pretty good overview of the peak oil situation in last Sunday's Times magazine.

Matthew Simmons, a head of a Houston investment bank specializing in the energy industry and author of "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy" was a main source for the book...

So what does Joe Tierney do? Well...

I didn't try to argue with [Simmons] about Saudi Arabia, because I know next to nothing about oil production there or anywhere else. I'm just following the advice of a mentor and friend, the economist Julian Simon: if you find anyone willing to bet that natural resource prices are going up, take him for all you can.

Julian took up gambling during the last end-of-oil crisis, in 1980, when experts were predicting a new age of scarcity as the planet's resources were depleted by the growing population. Julian had debunked these fears in "The Ultimate Resource," the bible of Cornucopian economics, which showed how human ingenuity had kept driving down the price of energy and other natural resources for centuries.

He offered to bet the pessimists that oil or any other resource they chose would be cheaper, in real terms, at any date they picked in the future. The ecologist Paul Ehrlich, author of "The Population Bomb" and "The End of Affluence," took up his offer and chose copper, tin and three other metals worth $1,000 in 1980.

Hey Joe, I got a bet for you! I'll bet you $5,000 that at some point the Anasazi ran out of water and became extinct...I'll bet you another $5,000 that climate changes in the Asian steppes brought about forced migrations due to lack of grazing land that brought about the fall of the Roman Empire.

I mean, if you're going to take it as a sure thing that natural resource prices can't go up to the point of squeezing civilization, then I would assume that when I trot out instances of environmental over-extension that he'd be perfectly willing to pay up.

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