The Pundits Who Get It Wrong—and Pay No Price

In the 1980s, they predicted the end of natural gas. They were wrong. Now, they occupy powerful positions.

For the Washington Monthly’s 50th anniversary issue, twenty former editors revisited one of their most important stories for this magazine. They looked at pieces that had an impact on the world or on themselves; that presaged something big to come; or that were totally wrong in an interesting way. Below is one of the resulting essays. Read more of them here.

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The mind-set of the 1970s was that everything was running out, especially fossil fuels. The OPEC oil embargo caused long lines at gasoline stations and rising pump prices. The impending exhaustion of oil reserves widely was decreed by politicians, editorialists, and academics. The influential 1972 study The Limits to Growth used computer modeling—then thought to possess godlike powers—to predict that global petroleum supplies would collapse, as soon as 1992 and no later than 2022.

Natural gas was viewed as so scarce that in 1978 Congress enacted legislation that essentially banned the new use of natural gas for electricity generation, forcing utilities to burn more coal. President Jimmy Carter asked Congress to create the Department of Energy and set it off on the ultimate snipe hunt, an emergency super-subsidized project to convert coal into synthetic natural gas, justified with the claim that gas reserves “would be exhausted by the end of the 1980s.” Carter declared the Persian Gulf—previously an exotic destination for the U.S. military—an American national interest. Henry Kissinger began to comment about going to war to seize Arabian oil. Grandees and toffs (these are technical terms) declared that soon oil would cost $345 a barrel, while pump prices would soar past $50 a gallon. (Money figures in this article have been converted to today’s dollars.)

Now it’s a generation later. Oil and gas are in such oversupply that world markets are glutted. As I write this sentence in October 2019, the best-quality crude trades at $53 a barrel; adjusted for inflation, gasoline pump prices are at the level of the 1950s. The Synthetic Fuels Corporation established by Congress no longer exists, after having accomplished nothing. Now there is an extensive network of Pentagon bases throughout the Gulf region, protecting oil supplies the United States no longer needs and propping up dictators. Natural gas, a low-carbon fuel, is so plentiful that U.S. electric utility emissions of greenhouse gases have declined in most recent years. And far from depleting, gas reserves keep rising. 

Consider these numbers. In 1980, according to the federal Energy Information Administration, there were an estimated 2,500 trillion cubic feet of natural gas in the global reserve. Since 1980, the world has consumed about 3,400 trillion feet. Today there are about 7,100 trillion feet in the global reserve. Society has used more natural gas than there was in 1980, and today we have twice as much left.

How did the experts get this so wrong? Was it simply that no one at the time could have known that a huge amount of oil and gas was about to be discovered? In fact, there were plenty of leading indicators; they were just not visible in Washington, D.C., where the politicians and so-called experts live. 

In the summer of 1980, I traveled to Edmonton, Alberta, then the center of North American oil exploration, to interview people who handled rigs and maps and actually knew the geology of oil and gas deposits. Wildcatters and hydrocarbon geologists in the field told me there was plentiful fuel that deregulation could bring out. At the time, federal rules prevented most oil and gas from being sold at a profit—so why produce them? Offer profits and producers will innovate, such as with 3-D seismology, horizontal drilling, and hydraulic fracking in shale, advances that happened after the “experts” disdained new techniques on the assumption that the reserves would soon be gone.

In October 1980, the Washington Monthly published a cover proclaiming “Pssst—the Energy Crisis Is Over.” Inside was a story by Thomas N. Bethell warning that the Synthetic Fuels Corporation was a white elephant. At a time when Carter was calling this project “the keystone of our national energy policy,” Bethell presciently dubbed the whole concept “dehydrated water.”

Accompanying Bethell’s story was my article about the wildcatters who hunt for oil and natural gas. I argued that the energy shortages causing fear in many sectors were the product of regulatory errors and price controls. (To his credit, late in his term Carter set in motion energy price deregulation and investments in research that led to big increases in domestic production.) My article went on to argue that the favored solution of the “experts”—to ration use of fossil energy—got the whole thing backward. More production would cut the price of oil and gas, helping both average people and the economy, while energy efficiency and improved oil refining would moderate pollution and greenhouse gases.

At the time, the United States was importing 5.6 million barrels a day of oil from Gulf dictatorships. Based on my reporting, I estimated that domestic discoveries and new drilling technology could produce enough North American oil for the United States to need only three million barrels a day from the Gulf. I was wrong: Today the U.S. imports about 1.5 million barrels a day from the Gulf.

What lessons can be drawn from the cranky, underfunded Washington Monthly saying the opposite of what the best minds in Washington were proclaiming—and then turning out to be right?

One lesson is the importance of the core insight of founding editor Charlie Peters: Do not simply accept at face value what the people at the top of the institutional hierarchies are saying; go out and talk to those on the front lines who are engaged in the actual work of the institution. They typically know more than their bosses.

Another lesson is that the “experts” who turn out to be wrong rarely are called to account. For example, one of the voices crying “energy crisis” was the physicist and future Harvard faculty member John Holdren, who in 1971 predicted that oil and natural gas supplies “may be tapped within the lifetimes of many in the present population.” This prediction did not even get into the general zone of accurate. Yet Holdren went on to be White House science adviser for President Barack Obama. The fact that he was wrong on such a basic level was not held against him, because Holdren said what the environmental lobby wanted to hear (shut down industry!) and the Democratic Party wanted to hear (more regulations!). Donald Trump advisers who are denying climate change will be shown to be just as far off as Holdren was. But they are using the same playbook, saying what the president and his base want to hear.

A final lesson is to be suspicious of doomsday claims. Climate change is real, is driven by human activity, and is already causing harm. But the worst-case outcome is unlikely. Half a century ago, looking at then-current trends, experts thought the world’s forests would shrink rapidly. Since 1980, however, global forest cover has increased by about 15 percent. Smog was supposed to turn the atmosphere into poison. Since about 1975, the air in Los Angeles, for example, has become steadily cleaner. Population growth was supposed to overcome the carrying capacity of the planet. Today the family has nearly twice as many members as in 1968, when the doomsday book The Population Bomb was a best seller, yet the World Bank found in 2018 that extreme poverty “is at the lowest level in recorded history.” 

When existential threats become widely known, regulatory reforms are enacted, inventors and businesspeople roll up their sleeves, and state and local groups take action. This was the case during the energy crisis when many experts said hope was lost—and will be the case for the reduction of greenhouse gases, as well.

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Gregg Easterbrook

Gregg Easterbrook has published three novels and eight nonfiction books, mostly recently It’s Better Than It Looks: Reasons for Optimism in an Age of Fear. He was an editor at the Washington Monthly from 1979 to 1981.