Gas Prices Will Go Down like they did in the 1980's

Fire of Liberty

Here's New York Times' columnist John Tierney's take on the whole high gas prices that everyone in the MSM seem to be carrying on about non-stop. Anyway, Tierney notes that while various folks keep on predicting that the price of a barrel of oil will reach into triple digits within the next decade are fooling themselves. The reason is that they fail everytime to look at prices through the prism of economics. In fact Economist Julian Simon debunked such canards in the 1980's when pointed out that the prices of commodities or energy will go down over time as humans perfect their techniques through pure ingenuity. So whenever people start moaning and crying about the price of gas/oil going up some two to three times higher in the next decade, just refer them to Julian Simons' wonderful book The Ultimate Resource 2 or for a more modern version just check out Peter W. Huber and Mark P. Mills wonderful book The Bottomless Well: The Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy. If you doubt that this is true, take a look at what Tierney had to write:

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," 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 Julian's offer and chose copper, tin, and three other metals worth $1,000 in 1980.

When the famous bet was settled 10 years later, the value of the metals had declined by more than half. As usual, people had found new ways to get the metals as well as cheaper substitutes, like the fiber optic cables that replaced copper telephone wires.

So just cheer up when you see these high energy prices because they will go down or be adjusted to correspond with what we make an hour. When you look at it from an economics standpoint, everything looks less dramatic. So take it easy.