‘It is one thing to wish to have truth on our side, and another thing to wish sincerely to be on the side of truth’. (Richard Whately)
In The Ultimate Resource, originally written in 1981, Julian Simon challenges the notion that humanity is running out of natural resources - click for a short summary, from where the below excerpt stems:
Based on preliminary research for The Ultimate Resource, Julian L. Simon and Paul Ehrlich entered in a famous wager in 1980, betting on a mutually agreed upon measure of resource scarcity over the decade leading up to 1990.
Ehrlich was the author of a popular book, The Population Bomb, which argued that mankind was facing a demographic catastrophe with the rate of population growth quickly outstripping growth in the supply of food and resources. Simon was highly skeptical of such claims.
Simon had Ehrlich choose five of several commodity metals. Ehrlich chose 5 metals: copper, chromium, nickel, tin, and tungsten. Simon bet that their prices would go down. Ehrlich bet they would go up.
The basket of goods, costing $1,000 in 1980, fell in price by over 57% over the following decade. As a result, in October 1990, Paul Ehrlich mailed Julian Simon a check for $576.07 to settle the wager in Simon's favor.
Friedrich Hayek sent his first and presumably only "fan letter to a professional colleague" to Julian Simon (see The Amazing Julian Simon (1937-1998) - (3/3) ).
Another Nobel prize winner, Milton Friedman, commends Simon:
I think he probably should have been considered for a Nobel Prize. He took a very independent position with little backing, dug deep and provided very good evidence for his predictions and expectations.
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The basic point I believe in your natural resource discussion is that the economic product in question is not coal or oil or natural gas but energy. The question is, what is the supply curve of energy? The use of coal or oil is a simply a means of producing energy. The stock of coal, of oil, etc., is certainly in some sense finite, but that doesn’t mean that the potential amount of energy capable of being produced by whatever source is to be considered finite. Energy will be produced in whatever way is cheapest at the time and as new means of producing energy are discovered the particular mode of producing energy will change from coal to oil to natural gas to atomic sources.
And on peak oil, as the current phrase goes, he notes:
... oil is not as an economic matter an exhaustible resource. That result follows from the Hotelling demonstration that an exhaustible resource will have a price that is rising over time.
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... a resource that is finite will exhibit increasing relative prices over time. In fact, oil has not done so; its price has been falling. Hence, the Hotelling analysis implies that oil is not from an economic point of view a finite resource, that it is a producible commodity like most others which has an elastic supply curve, more elastic in the long run than in the short run.
The very readable source.
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