Oil shock: denial in the New York Times

The new resident reactionary on the New York Times op-ed page, John Tierney, boasts in his Aug. 23 column, entitled "The $10,000 Question," that he has made a five-grand wager with Matthew Simmons, author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, against the latter's predictions quoted in the Aug. 21 Sunday Times Magazine ("The Breaking Point" by Peter Maass) that oil prices will hit the triple digits by 2011.

Tierney consciously evokes the famous 1980 bet between "Cornucopian" economist Julian Simon (author, The Ultimate Resource) and gloomy-gus ecologist Paul Ehrlich (author, The Population Bomb and The End of Affluence). Simon bet that the price of tin, copper and three other metals would decline by 1990; he won. The development of fiber optics and other new technologies had driven down the price of conductors like copper, supposedly vindicating Simon's thesis that "the Ultimate Resource" is human ingenuity. Tierney assumes this same logic will apply to oil. In fact, Julian Simon's widow Rita Simon agreed to split the wager with Tierney, with each of them putting up $2,500 against Simmons' $5,000. Writes Tienrey:

I realize this isn't a sure thing, because the price of oil has risen before -- it quintupled in the 1970's. But then it dropped, thanks to new discoveries and technologies, validating the Cornucopians' optimism.

A completely wishful interpetation of history. Global oil discoveries had already peaked 20 years earlier. And oil prices were high in the '70s not due to natural scarcity but OPEC policy. Similarly, they dropped not due to new discoveries or technologies, but because Saudi Arabia and the Persian Gulf states, at US behest, reversed their previous policy and pumped the stuff out of the ground like crazy. This was aimed at weakening the Iranian revolution, which had been counting on high oil prices to survive and consolidate. Low prices maintained until after the Iran-Iraq war. Then Saddam needed high prices to rebuild, and when the Saudis and Gulf states refused to slow production he took matters into his own hands by invading Kuwait--sending prices instantly soaring. This didn't work out too well for Saddam in the long run, as he misjudged the US reaction--but that's rather beside the point. So is the whole endless "Cornucopian"-vs.-"Peak Oil" debate. For now, at least, oil prices are determined primarily by politics, not geology.

We think that Tierney knows better than he lets on. He is not really betting on the "Cornucopian" thesis, but on Bush's ability to get Iraq under control and re-establish a Pax Americana in the Persian Gulf and Middle East generally.

But he won't own up to this, stating that he'll "extend Julian's challenge and consider bets from anyone else convinced that our way of life is 'unsustainable.' If you think the price of oil or some other natural resource is going to soar, show me the money."

More disingenuous bunk. With signs of global climate destabilization rapidly mounting, it is obvious that there are far more important tests of the "sustainability" of "our way of life" than commodity prices. As we have argued before, from the standpoint of global ecology, nothing could be more disastrous in the long run than continued high oil production and consumption.

But we should expect no better of the man who once wrote that "Recycling is Garbage" (NYT Magazine, June 30, 1996)--arguing (based on findings from ideological free-market right-wing sources like the Cato Institute) that it is more economical to export trash to eager private landfills, and dismissing the fundamental issues of resource depleletion and waste accumulation as a scam to create jobs for professional environmentalists.

Ironically, radical conservation measures and the development of alternative energy are the very things that could really cause a long-term drop in the price of oil and vindicate the "Cornucopian" thesis. And they are precisely what Tierney, with his ethic of unapologetic profilgance, sneeringly scorns.

John Tienrey's writing is what is "garbage," thank you.

See our last posts on the oil shock, the political factors driving it, and the global struggle for control of oil.