Friday, August 26, 2005

Oil, Betting, and Bull

Read below the link for my bloggy rant on oil, news media, and bullshit in general.

Okay, you're in for it now.


In Sunday's NYT Magazine, Peter Maas had an interesting, if economically very silly piece about "Peak Oil."

Basically it advanced Matthew Simmons's idea that the Saudis aren't being honest about how much oil they have and can produce (believable) and that oil is soon going to cost about three times what it does now (not so believable).
Silly, I (and many others smarter than me) say, because we can switch to alternatives, increase fuel efficiency and conservation, etc. Besides, the futures market isn't stupid, and it's not pricing 2010 oil anywhere near there.

Steven Levitt, the economist of the economist-and-writer team who wrote "Freakonomics," has a great post on his blog about the recent John Tierney column.

Tierney, emerging as quite the badass of the op-ed page, bet the Simmons $10k that oil would be under $200/barrel in 2010, adjusted for inflation.

Now, set aside that a big part of inflation is energy prices, and just realize that Simmons is saying we're going to be spending more than three times what we currently do on a barrel of oil instead of firing up some uranium reactors. No way. I mean, if Americans don't believe in evolution, how can we be afraid of mutation?
Mutation (artists's conception)

Simmons reveals (and Levitt points out) his ignorance of economics when he basically says that oil should cost more because it's so useful. In his e-mail to Levitt, he compares its utility to that of a rickshaw driver.

I took a microeconomics class with a "Marxian" economist who taught us standard micro but had ideas like this.

Marx was a very smart man. Ptolemy was even smarter, but the Sun does not go around the Earth.

Predicting what something will cost by evaluating how much it ought to cost, is, to give a little Yiddish lesson, narishkeit, bubbemeise, mishugas-- that is, foolishness, old wives' tales, craziness . . . bullshit.

Newspapers tend to be very good at reporting the basic facts of a story.
But as soon as they try to evaluate or report the details or any sort of theoretical underpinning-- legal, geopolitical, economic, medical, statistical-- they're out of their depth.

If you've ever been involved in something reported in a newspaper, you know what I mean. Even the best reporters can't get accurate details on a deadline. And aside from a very few reporters (Linda Greenhouse on the Supreme Court, for example), they don't know enough and/or feel it isn't their job to cut through the crap they're fed.

That's the praisweworthy role of BS-detecting columnists like Tierney and bloggers like Levitt. A calling to which I hope to contribute not at all.

Please, people.

This site is full of it.

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