Chicken Little and Oil

Now that oil prices have reached $40 a barrel and gasoline is selling in some markets at $2 a gallon, Chicken Littles are gloomily predicting that the earth is rapidly running out of energy. Paul Krugman recently wrote a New York Times column about a future of continuing hikes in the price of oil owing to the “intensifying competition for a limited world oil supply.” Krugman famously predicted in the early 1980s that oil prices would surely rise—right on the eve of the steepest decline in oil prices in history. Even the Bush administration is investing billions of tax dollars in hydrogen-cell cars in anticipation of the end of oil.

But don’t despair: This is at least the fifth time in a century that “experts” have falsely predicted the planet would soon be running on empty. In the 1920s, many geologists said that oil supplies would run completely dry within 50 years. In the early 1970s the Club of Rome predicted oil would cost $100 a barrel by the year 2000—they were off by a factor of about 4. And Jimmy Carter declared during the 1977 OPEC crisis that “we could use up all of the proven reserves of oil in the entire world by the end of the next decade.”