US Energy "Independence" - Do Those Pushing It Face Consequences If This Narrative's Screwed?

[hatrack]

EDIT

Now, a lot of people stand to get hurt by the energy independence/abundance story--which is, in effect, a forecast--if the story turns out to be wrong. This is because governments, businesses and households will not have prepared themselves for a negative surprise--all because they were assured that the United States and even the world had nothing to worry about when it comes to oil supplies.

So, the short answer to the above question is that no one will get hurt except those who believe the story and act on it. And, herein lies what author and student of risk Nassim Nicholas Taleb calls the agency problem. His latest book, Antifragile: Things That Gain from Disorder, has much to say about the agency problem and should be mandatory reading for anyone who must manage risk--which means just about everyone.

Let's take the dodgy U.S. energy abundance story and see if the people who are propagating that story will be hurt if it turns out to be wrong. These people are essentially acting as agents for the industry even though they often appear in the media as neutral observers and thus agents for the public in its quest to understand our true energy situation. The most salient fact about these sources is not their hidden ties to the industry--which is bad enough--but rather the fact that they don't have any "skin in the game." That means that while they may have significant upside as a result of their forecasts or as a result of repeating the forecasts of others, they do not share proportionately in the downside if their predictions are wrong. This is a key point. It tells us that people can hype a development to increase their own wealth and/or stature while dumping the risk on others. The actual truth of something becomes immaterial to the prospective gains.

EDIT

Certain parts of the academic world--usually economics faculties--are laced with influential voices who offer advice on public matters, but, once again, suffer no punishment if their ideas are adopted (often with vigorous assistance from the financial industry) and then result in disastrous consequences. We can see how well that has worked for financial deregulation advocated by so many academic economists. So far as I know none who advocated such changes have been ousted from their tenured seats. In fact, Harvard academic Lawrence Summers as deputy treasury secretary during the Clinton Administration was instrumental in the repeal of the Glass-Steagall Act--a Depression-era law which had kept the commercial banking system safe for 60 years by keeping it separate from high-risk investment banking. Summers not only didn't get punished for his role in setting the stage for the banking meltdown of 2008, but actually returned to run the National Economic Council under Barack Obama.

EDIT

http://www.resilience.org/stories/2013-12-08/the-u-s-energy-independence-story-will-anyone-be-punished-if-it-turns-out-to-be-wrong

[Nihil]

1. Excellent article ...

... not that I think it will change anything because - as it says - the people with the power
to change things have absolutely no incentive to do so.