There is nothing surprising or unpredictable about the current oil boom, except perhaps how far it has gotten in the face of an Administration that has done virtually everything it can to stop it (thank god there is oil and gas under private land). Your humble scribe, neither an economist nor an expert in oil markets, wrote way back in 2005:
Everything old is new again. Back in the late 70′s, all the talk was about the world running out of oil. Everywhere you looked, experts were predicting that we would run out of oil. Many had us running out of oil in 1985, while the most optimistic didn’t have us running out of oil until the turn of the century. Prices at the time had spiked to about $65 a barrel (in 2004 dollars), about where they are today. Of course, it turned out that the laws of supply and demand had not been repealed, and after Reagan removed oil price controls and goofy laws like the windfall profits tax, demand and supply came back in balance, and prices actually returned to their historical norms.
Supply and demand work to close resource gaps. In fact, it has never not worked. The Cassandras of the world have predicted over the centuries that we would run out of thousands of different things. Everything from farmland to wood to tungsten have at one time or another been close to exhaustion. And you know what, these soothsayers of doom are 0-for-4153 in their predictions.
The vagar
By guest bloggers James S. Henry and Nicole Tichon