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Doesn't Anybody Read History? (False alarms recycled from the 1970s)

As a political economist of a certain age, I naturally had a certain amount of Marxist writing inflicted on me, and found one particular thought of great insight. In “The 18th Brumaire of Louis Napoleon,” Marx commented that Hegel noted that history repeats itself, but neglected to mention that the first time was tragedy, and the second time farce. A decade ago, I published “The Farce this Time” about fears of peak oil, but since then, we have experienced another energy ‘crisis’ which has remarkably resembled a commodity price cycle but which, many pundits observe, is ‘different’ this time.

Below, the table compares some of the similarities between the late 1970s energy folderol and the most recent fears, warnings, importunings, etc. I have made only slight reference to climate change because, while many aspects of fears about climate change are reminiscent of the fears about oil and energy in the 1970s, I do not claim the extensive knowledge of the science that would permit the kind of conclusive statements about them. (Unlike many pundits, I try to stick to what I know.)

 

Then

Now

Major Fear

Resource Exhaustion

Climate Change/ Resource Exhaustion

Prominent Politician

Jimmy Carter

Al Gore

Prominent Work

“Limits to Growth”

“An Inconvenient Truth”

Led astray by:

Faith in computer models

Faith in computer models

 

(Resource)

(Oil/Climate?)

Leading ‘H’ pseudo theory

Hotelling

Hubbert

Warning us of peak oil:

James Schlesinger

James Schlesinger

Chic biofuel source

Jojoba

Jatropha

Oversubsidized energy

Ethanol

Ethanol

Even more oversubsidized energy

Photovoltaics

Photovoltaics

“Just around the corner”

Electric cars

Electric cars

Unnecessary energy source

Shale oil

Hydrogen

Financial Threat

Petrodollars

Sovereign Wealth Funds

Terrorist Threat

Red Brigades

Al Qaeda

 

In Ecclesiastes, there is the comment that “There is nothing new under the sun.” Odd how even then it seemed history was thought to repeat. Certainly, it is very true today, and we are doomed to repeat our mistakes to the extent that policy makers listen to those who are ignorant of even recent history.

This is obviously a work in progress and I welcome suggestions for changes and additions.

12 comments

1 Donkatsu { 01.26.09 at 5:37 pm }

Michael,
Please don’t be so hard on poor Harold Hotelling for the misuse of his work. He did not say that coal was running out, but only what the economics of resource exhaustion would look like over time. Of course, like the Limits to Growth, he had no technology function that could occasionally reset the depleto-meter, perhaps even in response to rising prices.

2 B Kristrom { 01.26.09 at 5:44 pm }

Correct. We run out of oil every 30th year. Next hysteria will be over us 2035 or so. History repeat itself with spooky regularity.

Cheers
Bengt

3 Rob Bradley { 01.26.09 at 11:46 pm }

Hotelling deserves his criticism if only because he framed his 1931 work in terms of the real world debate over oil conservation. If he had stated instead that his theory had false assumptions for the real world and therefore should be used with caution to real mineral situations, I would agree with Donkatsu’s statement.

4 mlynch { 01.27.09 at 6:04 am }

Forgive my parsimoniousness. (I think that’s a word.) Hotelling’s original work was misinterpreted by many, and he should not be faulted. It was the false ‘Hotelling Valuation Principle’, cited by many as ‘proving’ that mineral prices had to rise exponentially and oil prices at the rate of interest, to which I was referring.

5 Donkatsu { 01.27.09 at 9:04 am }

Michael, Rob,
Speaking of running out of oil, can we put up a market proposition on the the way oil and gas production will be sabotaged by the new Administration? My thesis is that they are too smart to roll back the offshore oil permissions. Instead, the allied NGOs will make it impossible to obtain drilling permits. Presto, problem solved. Would thinking like this also lie behind the recent strength in crude prices?

6 Ed Reid { 01.27.09 at 9:24 am }

I have faith that, before we all “freeze in the dark”, someone will figure out how to “draw and quarter” an NGO.

We need to find someone to perform an “ex-Gore-cism”.

7 Donkatsu { 01.27.09 at 6:57 pm }

Mike,
How about “The thing that policymakers do not understand: Then – price elasticity of demand; Now – price elasticity of demand

8 mlynch { 01.28.09 at 4:56 pm }

Amazingly, lots of so-called experts don’t understand price elasticity of demand (or supply elasticity, which is more complicated). In the 1970s, when demand didn’t respond very quickly, even many economists argued that it wasn’t slow but largely non-existent. Thus, engineers like Amory Lovins managed to gain some credence by pointing to the potential for savings (without considering the economics, then or now).
Mike

9 Heikki Jokipii { 02.05.09 at 11:59 pm }

In the 1970s as well as a couple of years ago the great economic ideal was “zero growth”. But then as well as now – what a great disappointment when this zero gowth became a reality.

10 Dodgy Geezer { 08.07.11 at 2:25 pm }

Can we mention Julian Simon and his Cornucopia theory here? It deserves to be more widely known….

11 jorgekafkazar { 08.07.11 at 8:30 pm }

As a friend of mine said in 1973: “Oil shale is the wave of the future. And always will be.”

12 The Right Opinion – August 8th | John R. Bolton { 08.08.11 at 3:17 am }

[...] Doesn't Anybody Read History? (False alarms recycled from the 1970s) In “The 18th Brumaire of Louis Napoleon,” Marx commented that Hegel noted that history repeats itself, but neglected to mention that the first time was tragedy, and the second time farce. [...]

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