I never make predictions, and I never will.
At the end of each calendar year, we all like to make predictions as to what the coming year may hold for us all. Question: How many people in December 2019 predicted that, in the first half of the year 2020, the following events would occur?
A pandemic would sweep the world, causing hundreds of thousands of deaths.
There would be no vaccine or other means of effectively containing the disease.
In the United States alone, tens of millions of people would suddenly lose their jobs, thousands of small businesses would close, and major industries such as international tourism and shale oil would come to collapse.
Once more, in the United States, monuments to Confederate leaders would be removed almost overnight.
In other words, we need to be very humble and cautious when making any predictions as to what the future holds. Yet virtually everything that is written at this site, the book and blog is to do with future.
For now we see through a glass, darkly; but then face to face: now I know in part; but then shall I know even as also I am known.
1 Corinthians 13
Through a Glass Darkly
The scripture quotation at the head of this page is taken from 1 Corinthians, written by the Apostle Paul. What it tells us that even he, in spite of his magnificent intellectual and spiritual gifts, could not see the future in detail. But that does not mean that he was blind, he could see an outline as to what the future may look like.
To illustrate this point, consider the following image of a fogged-up window.
When we look at the picture, at first all that we see is a blur. But, on closer inspection, we see that there are railings, a river and hills in the distance. We cannot see the details but we can see an outline, and the harder we look the more we can see. So it is with our view of the future in an Age of Limits. We cannot predict what will happen in detail, and specific predictions are often wrong. But we have a general sense as where we may be heading. Therefore, although we must be cautious and modest about predictions, we still have a responsibility to think about what that future holds, and to have the courage to take action based on our understanding.
An additional difficulty to do with predicting the future is selecting the time frame. Is “the future” tomorrow, a week from now, five years away or a generation out? The further away it is, the less accurate our predictions will be. We can say with confidence that tomorrow will be much like today, and that the world five years from now will probably not be too different from what it is now. But beyond that the future looks increasingly hazy. After all, who would have predicted as little as ten years ago the impact that social media and mobile phones have already had on the lives of billions of people?
The need for humility and caution when it comes to predicting the future is personal. I started to take an interest in the ‘Age of Limits’ around the year 2010. This was the time when the ‘Peak Oil’ meme had a high profile. The situation appeared to be obvious.
The supply of oil in the earth’s crust is finite.
We extract the easy, low-cost oil first.
Therefore extraction costs steadily rise.
Hence we will see a steady increase in the price of oil, along with shortages and supply limitations.
The chart below shows the price of crude oil in dollars per barrel between the years 2004 and 2018. We can see how these predictions played out.
From 2004 to 2014 the price rose quite steadily from $40 to $105 (except for a dip in 2008, presumably caused by the recession at that time). When linearized, the price increases at around $6.50 per annum. Based on this trend, the price could be expected to be around $125/bbl in the year 2018.
However, what actually happened was that in the year 2014 the price dropped sharply; in the year 2018 it was actually $45/bbl. Moreover, in the last few years fuel availability has been fine — there are no lines at the gas pumps as there were in the 1970s.
Nicole Foss has studied Age of Limits issues — particularly its financial aspects — in depth, and her analyses are insightful. But — and there’s always a ‘but’ — in her year 2012 post 40 ways to lose your future, she states,
Ordinary people are unlikely to be able to afford oil products AT ALL within 5 years.
Ten years after her prediction, the traffic on our local roads is as bad as ever. (The 40 points in her article are built around the assumption that systemic deflation is about to occur. Her predictions may well turn out to be correct, but the timing was premature.)
The peak oil community did not recognize two issues that contributed to this price drop. The first issue was the aggressive development of tight oil in the United States using the drilling technique known as “fracking” (hydraulic fracturing). For a few years, this business venture put a lot of new crude oil on the market, thus depressing prices. Moreover, the government of Saudi Arabia responded by opening up their production in order to ensure that the tight oil business was not profitable. In this they were successful. By the year 2020 the tight oil business was in steep decline.
The second issue that the peak oil community missed was the fact that high oil prices depress the world’s economies. Because oil is so fundamental to our way of life an increase in the price of oil means that consumers cannot afford to buy as many products as they could before, so the price of oil goes down.
One of the themes of this site is that we are looking at extremely complex systems, with all kinds of feedback loops that we either do not understand, or or whose existence we have not even identified. Systems thinking is very tricky; humility is called for. For example, the topic of peak oil has not gone away. The collapse in the price of oil means that energy companies cannot afford to look for new sources of crude oil, so it is quite possible that shortages in the supply of oil will take place in coming years and that oil prices will increase.