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This is good. John Tierney is betting Matthew Simmons on the price of oil. Simmons thinks oil is headed to $200 a barrel by 2010. He’s the author of the latest oil scare book, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. Tierney isn’t so worried, but it doesn’t have much to do with Saudi Arabia.

I didn’t try to argue with him about Saudi Arabia because I know next to nothing about oil production there or anywhere else. I’m just following the advice of a mentor and friend, the economist Julian Simon: If you find anyone willing to bet that natural resource prices are going up, take him for all you can.

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.

This is exactly right. The price of nearly every commodity has declined almost continuously for centuries. There are occasional price spikes, but they’re all temporary. I won’t guess where this top will be, but the price of oil will certainly fall.

Posted by edelfenbein at August 24, 2005 10:19 AM