Ten years ago, I entered a wager on the price of oil. My position, inspired by the writings of Julian Simon, was that oil, like many other natural resources, would drop in price in the long run. A period of ten years was deemed long enough to weather temporary fluctuations in price, and was the term used in Simon's famous bet with Paul Ehrlich.

Because my friend had reservations about the U.S. dollar as a stable marker of value, we went with the price of a Big Mac, as tracked by The Economist. At that time, 19.2 Big Macs had the same price as a barrel of oil.

Oil spiked in the first years, and the record shows that I did not comment often on the wager in those gloomy days. But within three years, prices had equalized.



Oil continued to drop, and then recovered some, so by the halfway point it was a close race.



Occasional bumps in the Big Mac index, keeping the burger ahead of inflation, kept things exciting as the years advanced.



After eight years, I was trailing, with the Big Mac basket valued at $87.55 to oil in the mid-90s.

Then, just in time, oil crashed. With less than a year to go, oil prices fell by about half. I was saved.



Oil closed at $41.08 on December 1, 2015, 42% lower than the inflation-adjusted price of $71.05 from 2005, lower even than the non-adjusted 2005 price of $58.47. Anyone stockpiling oil in anticipation of a peak would have taken a beating.

I have not yet collected, but I am thinking of offering double-or-nothing, despite the apparently low present prices of oil. My wager was never about oil per se, but about the increasing availability of natural resources in the long run, a trend that has held true for many resources. I see little evidence to support the idea that this trend is likely to reverse. Who wants in?

With fewer than twelve months to go before the wager matures, a sudden and dramatic crash in oil prices has me hopeful of a win.



A barrel of oil now has approximately the same price, inflation adjusted, as it did nine years ago, when it was $58.75. The Big Mac has appreciated relative to inflation, so the bundle of 19.2 burgers is now worth about 65% more than the oil barrel.

During the last spectacular oil crash in 2008, the price dropped by about three-quarters in six months, from $143.57 on 2 July 2008 to $33.87 on 19 December 2008. This time the price dropped by half in the same time, going from $107.26 on 20 June 2014 to $55.91 on 15 December 2014.

But a year is a lot of time for a recovery. By mid-December 2009 the price had risen to the mid-70s, above the burger index at that time.

With just two years to go in our decade-long bet, the race could hardly be closer.

The basket o' Big Macs is worth $87.55, and oil barrels are trading in the mid-90s.

Oil has stubbornly held on to the higher price for most of the past eight years, but now and then takes a dip below the burger line, giving me hope.

Peak Oil is still an idea whose time has not yet come.

The sequel to the 2005 hit is just what you would expect: more casual, sometimes cheesy, and invariably fascinating explorations into human (and, in the epilogue, capuchin) behavior. Levitt and Dubner deserve credit for popularizing the notion that economics is not all pie charts and interest rates. Here you will find a (meticulously researched) price list for prostitution services in Chicago, an analysis of the risks of drunk walking (with the intentionally scandalizing conclusion that driving is safer, for the drunk), and a revealing reinvestigation into the murder of Kitty Genovese, showing that the psychology textbook case of the Bystander Effect was probably much exaggerated.

There are also sections on the male-female wage gap, terrorism, and climate change. These are necessarily more speculative, but still provide helpful talking points in case you run into someone who has all the answers for one of these issues. A section on talent, showing that top performers often enjoy hidden advantages such as a good birthday month or a last name starting near the beginning of the alphabet, was mostly scrapped after several books appeared on the subject, such as Outliers. (The notes indicate that the authors worked with competitive eating champion Takeru Kobayashi for this section. Other heroes mentioned in the notes but not the index: Dr. Sherwin Nuland, author of How We Die, Atlantic and Vanity Fair author William Langewiesche, and Neal Stephenson. There is also a mention of the Ellsberg Paradox and a great quote: "Facts, like jade, are not only costly to obtain but also difficult to authenticate." One ignores book notes at one's peril.)

I look forward to UltraFreakonomics. I have no objection to a disorganized collection of material, full of revealing data and great stories. One of my favorites is the crisis of equine transportation, which gets a couple pages of attention in the introduction. I first read of this in Simon, where the wonderous passage below was quoted (from H. B. Cresswell in the Architectural Review, 1958, according to The Motoring Age by Peter Thorold).

The Strand of those days...was the throbbing heart of the people's essential London...But the mud! [a euphemism] And the noise! And the smell! All these blemishes were [the] mark of [the] horse....

The whole of London's crowded wheeled traffic - which in parts of the City was at times dense beyond movement - was dependent on the horse lorry: wagon, bus, hansom and `growler', and coaches and carriages and private vehicles of all kinds, were appendages to horses...the characteristic aroma - for the nose recognized London with gay excitement - was of stables, which were commonly of three or four storeys with inclined ways zigzagging up the faces of them; [their] middens kept the cast-iron filigree chandeliers that glorified the reception rooms of upper- and lower- middle-class homes throughout London encrusted with dead flies, and, in late summer, veiled with living clouds of them.

A more assertive mark of the horse was the mud that, despite the activities of a numberous corps of red- jacketed boys who dodged among wheels and hooves with pan and brush in service to iron bins at the pavement-edge, either flooded the streets with churnings of `pea soup' that at times collected in pools over-brimming the kerbs, and at others covered the road-surface as with axle grease or bran-laden dust to the distraction of the wayfarer. In the first case, the swift-moving hansom or gig would fling sheets of such soup - where not intercepted by trousers or skirts - completely across the pavement, so that the frontages of the Strand throughout its length had an eighteen-inch plinth of mud-parge thus imposed upon it. The pea-soup condition was met by wheeled `mud-carts' each attended by two ladlers clothed as for Icelandic seas in thigh boots, oilskins collared to the chin, and sou'westers sealing in the back of the neck. Splash Ho! The foot passenger now gets the mud in his eye! The axle- grease condition was met by horse-mechanized brushes and travellers in the small hours found fire-hoses washing away residues....

On Wed, Apr 4, '07 at 3:24 PM, I did pen:
As I put up the new FL web, I did set my pen to put in MAD gab the bit of lit we did use to dub the FL web, a new gab-set of the KJV.

At the get-go God did put up the sky and the big orb. And the big orb had no bod, and was nil; and the top of the H2O was all dim. And the non-bod nub of God did go to and fro on the top of the H2O. And God did say, let lux be, and lux was.

And God saw the lux, and it was OK, and God did cut the lux and the dim bit in two. And God did dub the lux Day, and the dim he did dub eve. And the eve and the new day did go by and it was Day One. And God did say, let the air be out in the H2O, and let it cut the H2O in two.

And God did put out the air, and it cut the H2O in two so the air was o'er the H2O and the H2O was o'er the air, and it was so. And God did dub the air Sky. And the eve and the new day did go by and it was Day Two.

And God did say, let the H2O all be as one, the sky o'er it, and let the sod be out: and it was so. And God did dub the dry sod the Big Orb; and all the H2O as one he did dub the Sea: and God saw it was OK.

Oil closed yesterday at $88.91, and the burger benchmark is $83.14, thanks to a recent bump in the Big Mac Index.


This marks the two-thirds point in my ten-year wager with Dave on oil prices, and it still looks like it could go either way. Taking a page from Julian Simon, I am betting that oil will not become more scarce and expensive but rather more cheap and readily available. Two game-changing technological advances are working on my side. Fracking is already delivering on its earth-shattering promises of abundant natural gas, driving energy prices down. And a shift toward electric vehicles is well on its way. A mild winter and weak economy probably aren't hurting my side either.

Keep in touch Dave, talk to you in three years and four months!

the scoreboard

The race between burgers and barrels remains too close to call, but petroleum backers have more reason for comfort. A barrel of crude, now priced around $100, has been worth more than 19.2 Big Macs for most of the duration of our bet. I had a brief taste of the lead in early October before a rapid correction.

Will The Economist give me a few more cost-of-burger-adjustments by 2015? Will Peak Oil finally deliver on its promises? Will nefarious manipulation give one side the edge? Keep your eyes on the dashboard for the latest figures.

I was made to learn by heart: ‘The square of the sum of two numbers is equal to the sum of their squares increased by twice their product.’ I had not the vaguest idea what this meant and when I could not remember the words, my tutor threw the book at my head, which did not stimulate my intellect in any way.
--Bertrand Russell

Paul Lockhart [Erdös 2] is the author of A Mathematician's Lament, the best screed I've read in years. The big idea is that contemporary education is broken, which hardly counts as news. But he quite eloquently demonstrates how the standard curriculum sucks all joy and life out of mathematics, which, he argues, should be taught purely as an art, without any utilitarian justification. What math does anyone learn in high school that has any use in the real world? The common inability to compute change without a calculator is often cited as evidence of woeful innumeracy, but Lockhart suggests that it is an appropriate tool; the real tragedy is that students are never given a chance to wonder about or discover mathematical ideas.

The "Lament" was mentioned in an article about Project Euler. Since discovering the site four years ago, I have been slowly picking off problems, sometimes getting stuck or distracted for months. In April 2010 I decided to stop hunting among the 350+ problems for easy scores and finish off the first 100. By Feburary this year, I had one problem left to reach my target. And I got firmly stuck. One of the early lessons in the project is that the direct approach -- brute force -- is usually too slow to get the job done. But, lacking inspiration, I often try it anyway, hoping for enlightenment. In this case I tried all manner of cheap tricks to get the solution in the minute of computer time promised to be adequate for every problem. Memoization, switching in my main loop based on the final two or three digits of the current value, precalculating magic numbers, all to no avail. Working off and on, with many false starts, I eventually accumulated 650 lines of mostly green C code.

Lockhart's screed gave me a critical, and purely psychological, boost. Soon after reading it I had a penetrating insight into the pattern of the problem -- as usual completely simple and obvious in retrospect. I noodled on some scratch paper (eventually to fill four pages) and worked out some patterns. It was a simple matter to put the new approach to code -- but it didn't work. The thrill and hope led to crushing disappointment -- was I perhaps going down one of the same wrong paths I had tried months earlier? Over several days, I repeated this same pattern -- insight, hope, experiment, crushing failure, renewed insight. I recall from Intro to Psychology that the variable positive reinforcement schedule is one of the most effective ways to make the rat keep pressing the lever, and I lost sleep working on the problem.

Finally, I cracked it. A little bit of insight, but mostly recognizing (yet again) idiotic errors in my algorithm led me to the solution (runtime 0.131 sec). I haven't submitted it yet, but I am completely confident. After posting this I will enter my solution and should get a new "award" on the recently-redesigned site: the Centurion is given to those who solve 100 consecutive problems. (Rather an elite group, with only 276 members so far, hopefully 277 soon!)

If there is anything like a unifying aesthetic principle in mathematics, it is this: simple is beautiful. Mathematicians enjoy thinking about the simplest possible things, and the simplest possible things are imaginary.

It was seven years ago that I snapped, with a CLIÉ, the photo that would become, for a while, the image for Wikipedia's article on Neal Stephenson.

Mr. Stephenson was back in D.C. this week for the National Book Festival, reading from his latest thousand-page tome, this one written not with a fountain pen but using Scrivener.

I was late for the reading but managed to catch the end and get in line for the Q&A session. The audio was a bit clumsy, with large loudspeakers pointed straight at the questioners, causing them to shrink away while Neal struggled to hear. I got the last question in.

mp3

NTS: Okay we're in overtime I'll just take one more real quick.
Q: Thanks, Neal. The word from Venezuelan state television is that Presidente Chavez intends to repatriate eleven billion dollars worth of gold reserves, most of which are now in London.
NTS: I can't hear what you're saying, sorry.
Q: [same volume, one octave higher] From Venezuela, Presidente Chavez intends to repatriate eleven billion dollars worth of gold reserves. Any comments on the logistics of that kind of a transfer?
NTS: I'm not somebody who is really competent to have an opinion about it. Interesting factoid; thanks for mentioning it.

Something makes me think Dubner, asking over a calibrated, burr-ground, skimmed and French-pressed coffee, would have gotten an answer. Commenters on both the news article and a referring blog made Stephenson connections. I'll have to settle for a chuckle from the audience.

I followed the ridiculously slow-moving author cart over to the signing table, thinking I would get one up on the other fans, only to find a hoard of them already queued up. Not content with my goofy question, I planned to present the author with my smartphone, freshly-purchased Kindle version of Cryptonomicon opened to the title page. I even brought a Sharpie in case his fountain pen didn't work on the screen protector. But the line was long, and one of the handlers mentioned that some of the authors are fussy and refuse to sign anything but their current book. I lost my nerve and bailed out.

At least I have a legitimate, searchable copy of a great novel now, so I don't have to rely on that pirate site with its copy of Randy Waterhouse's treatise on the challenges of massive international gold transfer.

A human being, like a factory, has a command and control system and a physical plant. The two work together, interdependent. The connections are complicated and wet, and we can more amusingly think about how they get along with a simplifying metaphor.

Imagine a person as a ship. From time to time, the commander will make extreme demands of the vessel and crew.

It is alleged that, when the admiral had finished his breakfast, he was apt to signal "All ships will strike topmasts. Report time taken and number of casualties."
--unsourced quote in Structures: Or Why Things Don't Fall Down, J. E. Gordon, p. 228

But the body is not a sailing ship, passively waiting for a breeze, it's a self-propelled steamer, carrying its own fuel.

Let's observe the ship after the captain directs a half-marathon run on a warm summer morning. Things go well enough in port, as the captain makes departure arrangements, directs the loading of fuel, plans a measured out-and-back route, and anticipates a challenging and satisfying experience. The crew falls in silently and obediently, comfortable with practiced routine.

During the brief sally to the departure point, the captain senses some tightness in the calves, calls for some stretching, then does final checks of the entertainment and navigation system before leaving port. From his position on the bridge, he monitors operations at a high, abstract level, while continuing to plan and navigate. He can manually control many aspects of the vessel's maneuvers, but the capable crew can handle these details, leaving the captain free to direct. He even puts on some music to relieve the tedium of what should be a two hour journey.

The chief engineer answers a status request from the engine room. "As usual, Cap'n, some creaking and groaning as we get warmed up, but should be smooth sailing." Sure enough, in ten minutes cooling systems crank up, and the chief requests some of the supplemental coolant laid in at port; the captain approves.

It's warm out, and the ship doesn't make her usual speed, but the captain knows better than to push hard early. "Chief, the engines are still hotter than normal, why don't you put in some more coolant." "Aye, Cap'n, it's not so easy to get the cap off the bottle out here as it is in port but we're working on it."

Then, an accident. "Alert! All hands prepare for impact! Cap'n, we've struck a root!" "Dammit, I noticed! I thought we would capsize! Damage report!" "Alarms from the port hallux, Cap'n, but she's still seaworthy." "Carry on, but keep your watch. We can't stop for repairs, and a hallux will take at least a week anyway." "Aye, Cap'n."

It seems odd, psychotic, to think of two voices speaking, and even arguing, in the same brain. But there's clearly at least one voice, that of the director giving orders, cursing setbacks. As the obstacles mount, there will be an undeniable struggle between the goals of the director and the resistance welling up from belowdecks.

"Chief, we've slowed down again, increase engine speed." "Aye, Cap'n, but there's trouble." "What's the problem, is it that hallux?" "No, Cap'n, halluces in order." "Fuel?" "Fuel supply adequate, Cap'n." "There's coolant all over, surely the engines aren't overheating?" "No, Cap'n, it's hot as blazes, but within operating limits." "Everything's in order. No excuses, let's pick up speed." "Aye, Cap'n."

There's more cursing in the bridge as the captain briefly forgets his route and orders two turnabouts. Before long the ship emerges from the woods and starts down the Washington and Old Dominion trail, frequently exposed to a blazing sun. Only five kilometers of the planned 21 are complete, and the captain is already starting to doubt his plan. He knows there are hard physical limits to his ship's performance, but also knows that he is nowhere near those limits, having pushed the ship harder and farther before, though not on such a warm day. The crew do not report details of the condition of the ship, only generalities and complaints, and he has to judge the seriousness of the situation by what he can see from the bridge and the volume of the whining. He commits to continue pushing unless there's a loss of fuel overboard.

"Cap'n, it's rough out today, perhaps we should slow her down a bit." The captain is trying not to focus on speed, but he is sure they are keeping no more than three-quarters of their usual pace. "We're just getting started, Chief. Carry on." The captain has been stranded before, far from home port and out of fuel, and he begins to calculate alternatives. They could turn around now, at a quarter of the intended distance, sail home, then go out again to complete the total. But he'll never convince the men to leave port once they see it. There's a source of fresh cool water at their turnaround point; perhaps a short break there would refresh the crew. No, once you stop you're done. But we wouldn't stop the clock, so we would pause ever so briefly. No, that's what you said last time, and we ended up lolling for ages.

"Cap'n, the crew requests a break, it's awfully hot today, I'm afraid we'll sustain damage if we push too hard." The captain ignores the chief. "Cap'n, we've used half our coolant, if we run out we'll surely be stranded out here." "Cap'n, we've never sailed in such hot weather." "Cap'n, it's so hot, and we've not even been out of port the last month. She can't take it." The captain gives in. "Turn back at the bridge over Difficult Run." "Aye, Cap'n." "At the end of the bridge." "Aye, Cap'n."

The bridge is visible in the distance. The ship sails to the end, and just a little further, as if to make a point, then executes a neat turnabout. Then, unexpectedly, the engines come alive and the ship speeds homeward, doing double time and throwing out a huge wake. "What's going on down there, Chief?" "Cap'n, we know you want to make good time. The men are pleased we're heading home." There's a hint of sarcasm in his voice, the beginning of open defiance. The captain is bitter about turning back, but the speed is exhilarating. "Just don't push her too hard, you know there will be a price to pay." "Aye, Cap'n." The ship slows down again shortly, indeed to a pace barely above drifting.

With nothing to do but continue toward home, communication dies down. The captain occasionally calls for more speed, and the chief sometimes responds and sometimes pretends not to hear. The captain is insulated from the engines in the air-conditioned bridge, but nevertheless feels irritable and seeks solace in a sailor's habits: frequent curses and fantasies of rich meals and indolence back in port.

"Cap'n, the men need a break. Just a minute of drift, then we'll make up the time." "Chief, if you idle the engines, we're finished. We'll drift all the way in." "Just a few seconds, Cap'n. We need a break." "Increase speed, we're practically drifting now." "Cap'n, we're back in the woods, rough seas. We could hit another root." "Increase speed." "Cap'n, someone is walking dogs ahead. We should slow down." "Increase speed." The ship stumbles along inefficiently, barely faster than idling speed. The captain knows nothing is seriously wrong, but the complaints are wearing him down, and his curses fall on deaf ears.

Finally, a minor obstacle brings the end. The ship drifts up a mild slope, smaller than one it sprinted up in defiance not long before. The captain neither authorizes nor openly acknowledges the cut engines. Predictably, the drift continues after the course levels. True to his promise, the captain stops the clock and declares the journey finished. He is disgusted, having covered just nine kilometers in an hour. The complaints from below cease, except for renewed alarms from the damaged hallux. It will soon sport a blotchy purple tattoo, an unwelcome souvenir from the journey. The captain uses the ample time drifting home to record observations in the log, the basis of an overlong allegory he might write up while back in port, itching for his next journey.