Page 175 - Psychology of Money - Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)

$138 by 2008.⁶⁰
COBACOBA
The new price meant drilling oil was like pulling gold out of the ground.
The incentives for oil producers changed dramatically. Hard-to-tap oil
supplies that weren’t worth the fight at $20 a barrel—the cost of drilling
didn’t offset the price you could sell it for—became the bonanza of a
lifetime now that you could sell a barrel for $138.

That sparked a surge of new fracking and horizontal drilling technologies.

The Earth has had roughly the same amount of oil reserves for all of human

history. And we’ve known where the big oil deposits are for some time.
What changes is the technology we have that lets us economically pull the
stuff out of the ground. Oil historian Daniel Yergin writes: “86% of oil
reserves in the United States are the result not of what is estimated at time
of discovery but of the revisions” that come when our technology improves.

That’s what happened as fracking took off in 2008. In the United States

alone oil production went from roughly five million barrels per day in 2008
to 13 million by 2019.⁶¹ World oil production is now over 100 million
barrels per day—some 20% above what Brown assumed was the high mark.

To a pessimist extrapolating oil trends in 2008, of course things looked bad.

To a realist who understood that necessity is the mother of all invention, it
was far less scary.

Assuming that something ugly will stay ugly is an easy forecast to make.
And it’s persuasive, because it doesn’t require imagining the world
changing. But problems correct and people adapt. Threats incentivize
solutions in equal magnitude. That’s a common plot of economic history

that is too easily forgotten by pessimists who forecast in straight lines.

A third is that progress happens too slowly to notice, but setbacks

happen too quickly to ignore.