Soothsayers in suits
People are desperate to know the one thing which they cannot know: the future. Because it is concealed from us, the future often seems menacing. And so, many seek out soothsayers of all types to assuage their fears and sometimes to feed their dreams of success.
This impulse to divine the future accounts for the palm readers, tarot card readers, and astrologers found in every city and minor burg. And, this impulse also drives sales of checkout counter tabloids which often feature amazing predictions around the New Year said to be important to your health and your finances. It is this last category, finances, which brings us to the acceptable face of fortunetelling, the soothsayers in suits.
Any good fortuneteller will gladly discuss your future finances with you. But unlike the soothsayers in suits, she will not give you any details about how she arrived at her conclusions. As for those soothsayers in suits--they go by many titles such as economist, forecaster, director of investment research, and analyst--most offer mountains of so-called evidence that their forecasts are correct. Billions are lost and made on the basis of such predictions, though the billions lost are not so often remembered or storied as the billions made.
For the average person all this so-called evidence adduced to buttress an argument for a knowable future might as well not exist. He or she would be unlikely to understand it even if he or she were to review it. (And, in fact, understanding it might actually make it less believable!) But so desperate is the need to push back the menacing shroud of the future that the average citizen gives about as much scrutiny to the forecast of so-called economic experts as he or she does to the methods of the local fortuneteller.
This is not a new phenomenon, of course. The ancient Romans had their augurs, priests who divined the future through an examination of the flights of birds. The ancient Greeks, of course, had their famous oracles. Neither enabled their respective societies to avoid the kind of folly all humans are subject to. But today we face obstacles that test not just an individual society but our entire interlinked global community. When we try to predict something trivial such as the winner of an athletic contest and even bet money on it, say, in an office pool, it is a largely inconsequential affair, a form of entertainment (unless we are compulsive gamblers). But when the fate of global society hangs in the balance on forecasts of global oil supplies or the trajectory of global warming, we must examine our reliance on such soothsaying much more closely.
A heuristic tool or rule of thumb suggested by Nassim Nicholas Taleb, a self-styled philosopher of uncertainty and author of Fooled by Randomness and The Black Swan, may be useful. He says that he is more inclined to take seriously the predictions of people who don't wear suits than ones who do. His logic is that scientists generally don't wear suits--often not even ties--while economists and Wall Street analysts almost always wear them.
Optimistic pronouncements about world oil supplies come mostly from economists and non-scientific analysts. On the other hand, our predictions about the trajectory of global warming come almost exclusively from scientists. There is great uncertainty in such predictions. But, Taleb's second admonition is not to accept predictions from somebody who cannot or will not tell you his or her error rate. Scientists can generally tell you what it has been and what it is now for their work. Sometimes this error rate goes by the name of "degree of confidence" or "range." Economists and financial analysts almost never talk about such things, especially about their past records (usually out of embarrassment).
Recently, members of the Association for the Study of Peak Oil-USA (ASPO-USA) offered a $100,000 wager to the analysts of Cambridge Energy Research Associates (CERA), perhaps the most well-known of the world's energy consulting firms. CERA has continually reaffirmed its forecast of a peak in world oil production 30 years in the future followed by a long, undulating plateau. On a shorter timespan the firm predicts robust oil supply growth through 2017. There is, of course, the question of how anyone can know much about anything that will happen 9 years hence, let alone 30 years hence. What CERA has not done is release its past error rate (that is, the amount by which its past predictions have been off) nor has the firm assigned even a range to its predictions 9 or 30 years out.
ASPO-USA has released a reconstruction of CERA's past error rate based on the firm's public pronouncements. (It's not a pretty picture.) CERA now predicts that world oil production capacity will reach 112 million barrels per day by 2017 which ASPO-USA says is the equivalent of about 107 million barrels of actual production since capacity is never used to 100 percent for various reasons. The ASPO-USA gamblers don't see how this production level can be reached. They have implicitly offered a fairly wide range in their forecast via their wager, that is, anything less than 107 million barrels of average daily production for 2017.
The ASPO-USA group's purpose is educative. (They plan to give the money to charity if they win.) They want to highlight the risks in such a production forecast and also the possible consequences (which could be severe) if it's wrong. Why? Because virtually every major organization public and private bases its planning on such optimistic projections.
So far, CERA has not responded to the wager. I do not expect them to. Doing so would inaugurate an ongoing discussion of their previous faulty forecasts and of the risks attendant in any forecast. Such a discussion would cast doubt on the wisdom of paying fees to those who make such forecasts, fees that can be very lucrative indeed.
Despite the dangers which lurk ahead due to oil depletion (and myriad other resource issues), the public remains largely ignorant of the risks. Perhaps it is not because the information about those risks is unavailable. Try an internet search using the words "peak oil" and you'll see how much information is there.
But, just as people prefer to hear positive news from fortunetellers, they also find the reassuring pronouncements of the soothsayers in suits much more to their liking. The adult in us ought to see those suits as a warning flag that calls forth our skepticism. But it is the child in us that seems to be prevailing, seeking out soothing bedtime stories that will help us brave the dark night of the future rather than facing up to the uncertainties that ought to guide our efforts in the years ahead.
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