Cheap Gas, Peak Oil and Poor Predictors

It’s mid February and I just bought gas for $1.61 a gallon. The stock market is not doing particularly well at the moment. Here’s what Reuters has to say: “Only six weeks ago cheap oil prices were still expected to cushion the global economy, and the Federal Reserve’s decision in December to raise interest rates for the first time since the end of the financial crisis in 2008 was widely seen as a vote of confidence in the world’s largest economy.”

And from Newsworks.org: “Three years ago, when the average gallon of gas was spiking north of $4, Republicans said it was Obama’s fault. Yet today, with the average gallon falling south of $2.40, and reportedly going lower, Republicans are predictably mute.” Ha! today I wouldn’t pay more than $2 for gas!

So gas was too expensive a few years back, and now it’s too cheap? I can see why Harry Truman wanted a one-armed economist (one who can’t say “on the other hand”).

I think we need a dose of perspective.

Ten years ago–I think I was at an Iraq War protest–I bought a DVD movie titled The End of Suburbia: Oil Depletion and the Collapse of the American Dream. As I still held to moralistic beliefs about consumption and capitalism, I thought that the collapse of fossil fuels would be the karmic reward for our spiritually empty, consumption obsessed society. I have since come around and realized that my Calvinistic view of societal karma was not based on evidence. In the past few hundred years, humans have always found technology to get more out of finite resources. Fracking was not a household word in 2005. And just before humankind killed all the cetaceans Edwin Drake and John Rockefeller saved them with the petroleum boom.

This is not a post about oil or politics or economics. I’m concerned about the human addiction to predicting complex, open-ended events. While I am no fan of Nasim Taleb the man–he deemed me an “idiot” on Twitter before blocking me from his account–he is spot on about how poor humans are about predicting the future, especially devastating fat tail events like Spanish Flu pandemics and WWIIs. Yet we persist at predicting the doom of small things. Many Americans think that the world is getting more violent, less peaceful, more cancerous, less smart, more polluted, and less equal. They’re wrong. But this doomsday narrative persists.

My mission, and the reason for this blog, is to keep an eye on the big picture. Enjoy your cheap gas, and God only knows what the stock market will do. Could the low price of oil force the Saudi Arabias, Russias and Irans of the world to be more democratic as their oilocracic governments teeter? Democracy has been trending! Or will there be chaos? We don’t know, but the world is much more democratic, and oil does not appear to have a big future. In the medium term countries will be content to use natural gas as a cleaner carbon than coal. Long term, renewables are on the way (and I hope that nuclear–proven safe and CO2 free–makes a comeback). Pandemics may come and WWIIIs may too. The former we can’t control. And when I was a child the Warsaw Pact and NATO were the two great powers. Today Russia cuts the figure of a paper bear, despite Putin’s strutting. The big threats today are rogue states like North Korea, which can cause a mess but can’t conquer Europe or end life as we know it. It’s a reminder that these past 25 years since the fall of the Wall have been pretty good.

Enjoy your cheap gas while it lasts!

Cheap Gas