Part 2 (1/2)

One afternoon in the lobby of a London hotel, Peter Schwartz let me in on a little secret. ”The truth is,” he said, ”in the oil industry today, the most senior executives don't even try to pretend they can predict the price of oil.” As a former strategic planner for Sh.e.l.l whose work preparing the oil giant for the price collapse of the mid-1980s is famous in the industry, Schwartz knows oil. As a consultant to the biggest corporations at the highest levels, Schwartz also knows corporate executives, and he underscores his point by waving over a friend of his. Lord John Browne, the legendary former chief executive officer of British Petroleum, worked all his life in the oil business, and he is convinced the price of oil is fundamentally unpredictable. ”I can forecast confidently that it will vary. After that, I can gossip with you. But that's all it is, because there are too many factors which go into the dynamics of the pricing of oil.”

Still, the oil forecasting industry keeps growing because lots of people are prepared to pay for something top oil executives consider worthless. ”There's a demand for the forecasts, so people generate them,” Schwartz says with a shrug.

BUT WHAT ABOUT THE PREDICTABLE PEAK?.

Anyone familiar with the history of oil forecasts will object. What about peak oil? Yes, predictions about prices have failed over and over. But one oil forecaster made an important prediction that proved exactly right.

That forecaster was M. King Hubbert, a geophysicist who worked with Sh.e.l.l and, later, the U.S. Geological Survey. Hubbert wrote a paper in 1957 that predicted overall petroleum production in the United States would peak sometime between the late 1960s and early 1970s, after which it would irreversibly decline. Experts scoffed. They stopped scoffing when American oil production peaked fourteen years later.

Hubbert's methods were relatively simple. When an oil field is discovered, its production rises steadily until it peaks and starts to fall as smoothly as it rose. Although the field may never run completely dry, what matters is that more drilling and pumping will not significantly change the downward slope of production. Eventually, a chart of the field's production will look like a cla.s.sic bell curve. If this happens to a single field, Hubbert reasoned, it can happen to a group of fields, or a whole oil-producing region. Or a nation. By examining reserves and production rates, Hubbert calculated the moment when the chart of American oil production would hit its peak and begin its long, slow decline. And he was right.

If American production can peak and decline, so can the world's, and that is the sense in which the term peak oil is generally used today. No one disputes that peak oil will come. Oil is a finite resource and so a peak in production is inevitable. What matters is the timing. Some a.n.a.lysts think we've already reached the peak. Many others see it coming within a few years, or perhaps in a decade or two. Some insist peak oil lies in a future far too distant to worry about, but the ranks of these optimists have thinned in recent years. This is a debate with enormous ramifications. Hitting peak oil in a world of expanding economies whose expansion depends on oil would shake the foundations of the global economy.

”Peak oil” advocates are convinced that we are at, or near, the top of the bell curve, but it's important to understand that Hubbert's prediction for American production was based on a linear equation and some big a.s.sumptions. For one thing, it took as a given that demand growth wouldn't change in a big way. Nor would technology. And of course it a.s.sumed that Hubbert's estimate of total reserves in the ground was right. These a.s.sumptions turned out to be right, in that case. But will they always be? We can answer that question by noting that Hubbert applied his methods to global oil production. It would peak in 1995, he predicted. The decline that followed would be rapid. By 2010, it would be down a terrifying 17 percent. ”The end of the Oil Age is in sight,” Hubbert proclaimed in 1974.

The fault was not Hubbert's. A very long list of experts got the same call wrong. An international group of a.n.a.lysts brought together by MIT, for example, concluded two and a half years of work in 1977 with a declaration that global oil production would peak around 1990 ”at the latest,” although the group thought it more likely that the peak would be reached in the early 1980s. No wonder Jimmy Carter was gloomy.

Lord John Browne only chuckles when I mention the latest panic over peak oil. ”In my career this must be about number seven,” he says.

ASKING THE RIGHT QUESTION.

So why can't we predict the price of oil? That's the wrong question. What we should ask is, in a nonlinear world, why would we think oil prices can be predicted? Practically since the dawn of the oil industry in the nineteenth century, experts have been forecasting the price of oil. They've been wrong ever since. And yet this dismal record hasn't caused us to give up on the enterprise of forecasting oil prices.

Vast numbers of intelligent people continue to spend their days a.n.a.lyzing data and crafting forecasts that are no more likely to be right than all those that came before. Na.s.sim Taleb, author of The Black Swan, recalled giving a lecture to employees of the U.S. government about the futility of forecasting. Afterward, he was approached by someone who worked for an agency doomed, like Sisyphus, to do the impossible. ”In January, 2004, his department was forecasting the price of oil for 25 years later at $27 a barrel, slightly higher than what it was at the time. Six months later, around June 2004, after oil doubled in price, they had to revise their estimate to $54,” Taleb wrote. ”It did not dawn on them that it was ludicrous to forecast a second time given that their forecast was off so early and so markedly, that this business of forecasting had to be somehow questioned. And they were looking 25 years ahead!” That twenty-five-year prediction was actually modest, believe it or not. The International Energy Agency routinely issues thirty-year forecasts.

We never learn. When the terrifying forecasts of the 1970s were followed by the return of cheap oil in the 1980s, it wasn't the concept of forecasting that was humiliated and discarded. It was only those particular forecasts. New forecasts sprang up. When prices stayed low year after year, the consensus of the late 1990s was that any price increases would quickly be offset by conservation and stepped-up production. Thus, the era of cheap oil would last far into the future.

It lasted until 2004.

In 2005, as oil prices climbed steadily and sharply, Steve Forbes, publisher of Forbes magazine, said it was a bubble that would soon pop. ”I'll make a bold prediction,” he said. ”In 12 months, you're going to see oil down to $35 to $40 a barrel.” The price kept rising. By 2007, a new consensus had emerged: Oil was going higher. And it did. In the first half of 2008, oil pushed above the previously unimaginable level of $140 a barrel. ”The Age of Oil is at an end,” declared environmental writer Timothy Egan in The New York Times, echoing, whether he knew it or not, M. King Hubbert's declaration of thirty-five years earlier. Experts who had led in forecasting the rising trend became media stars, quoted everywhere, and what they had to say was not good: The price would continue to climb. It will break the $200 mark soon, predicted Arjun Murti at Goldman Sachs. Jeff Rubin, the chief economist at CIBC World Markets, agreed. ”It's going to go higher. It might go way higher,” investment banker and energy a.n.a.lyst Matthew Simmons said on CNBC. ”It's not going to collapse.” Simmons said that in July 2008, when oil was selling at $147 a barrel.

It didn't go higher. In September 2008, financial markets melted down, precipitating a dramatic slowing in the global economy. The experts hadn't foreseen that. The decline in growth drove down demand for oil and what Matthew Simmons said would not happen did. By December, oil traded at $33 a barrel. If any a.n.a.lyst had made that call six months earlier, when the price was more than four times higher, he would have found himself out of a job.

At the time I'm writing these words-early 2010-the price has risen, then fallen, then risen again. It's now a little more than $80 a barrel. Where will it go from here? I don't know. But plenty of other people have no doubt at all. ”Petroleum is a finite resource that is going to $200 a barrel by 2012,” wrote a business columnist with the confidence of someone predicting that trees will lose their leaves in the autumn. The British newspaper The Independent declared, ”The era of cheap oil has come to an end,” without mentioning that this was not cheap oil's first death notice. A poll conducted in June 2009 revealed that business executives are even more sure of themselves than journalists: Asked what the price of oil would be in five years, only 5 percent answered, ”Don't know.” Asked about the price in ten years, 10 percent answered, ”Don't know.” Even when they were asked about the price twenty years in the future, a mere one-third of business executives doubted their powers of divination.

Maybe the era of Mad Max really is coming, finally. Or maybe cheap oil will rise from the dead once again. Or maybe new technologies will surprise us all and create a future quite unlike anything we imagine. The simple truth is no one really knows, and no one will know until the future becomes the present. The only thing we can say with confidence is that when that time comes, there will be experts who are sure they know what the future holds and people who pay far too much attention to them.

3.

In the Minds of Experts.

It is a singular fact that the Great Pyramid always predicts the history of the world accurately up to the date of publication of the book in question, but after that date it becomes less reliable.

-BERTRAND RUSSELL.

Arnold Toynbee was brilliant. About that, even his critics agreed. The British historian's magnum opus, A Study of History, was stuffed with so many historical details drawn from so many times and places it seemed Toynbee knew more history than anyone on the planet. Even more dazzling was the central revelation of A Study of History: Toynbee claimed to have discovered an identical pattern of genesis, growth, breakdown, and disintegration in the history of every civilization that had ever existed. The implication was obvious. If there is a universal pattern in the past, it must be woven into the present. And the future. In the late 1940s and the 1950s, as the United States and the world entered a frightening new era of atom bombs and Cold War, A Study of History became a ma.s.sive best seller. Arnold Toynbee was celebrated and revered as the man who could see far into the frightening maelstrom ahead. He was no mere historian or public intellectual. He was a prophet-”a modern St. Augustine,” as a reviewer put it in The New York Times in 1949.

But for all Toynbee's brilliance, A Study of History never won the respect of historians. They didn't see the pattern Toynbee saw. Instead, what they saw was a man so obsessed with an idea-a hedgehog, to put it in this book's terms-that he had devoted his energy, knowledge, and decades of toil to the construction of a ten-volume illusion. In the blunt words of the Dutch historian Pieter Geyl, ”The author is deceiving himself.”

Arnold Joseph Toynbee was born April 14, 1889, to a proper Victorian family that valued education and religious piety above all else. Young Arnold did not disappoint. In 1902, he won a scholars.h.i.+p to the ill.u.s.trious Winchester College, where he was immersed in the history, language, and literature of ancient Greece and Rome. The experience shaped him profoundly. The ancient world became as comfortable and familiar to him as the Britain of cricket pitches and Empire. It was his foundation, his universal frame of reference. He even dreamed in Latin.

In 1906, Toynbee landed a scholars.h.i.+p to Balliol College, Oxford, and proceeded to win awards at a satisfyingly brisk pace. An appointment to the faculty naturally followed graduation.

Toynbee's tidy world ended with the outbreak of the First World War. Rejected from military service on medical grounds, he conducted political a.n.a.lysis for the British government, an involvement with current affairs he maintained through the rest of his life. It was a natural fit. Tying together past, present, and future was something Toynbee did intuitively. ”What set me off,” he wrote decades later in an essay explaining where he got the idea to write A Study of History, ”was a sudden realization, after the outbreak of the First World War, that our world was just then entering an experience that the Greek World had been through in the Peloponnesian War.”

In the summer of 1920, a friend gave Toynbee a copy of The Decline of the West by the German Oswald Spengler. The book was a sensation in postwar Germany, where defeat had been followed by revolutionary turmoil and the sense that the world as people knew it was collapsing. Spengler captured the gloomy mood perfectly. All civilizations rise and fall as predictably and inescapably as the swing of a clock's pendulum, he wrote. The West was old and doomed to decay, senility, and death. There would be no more science and art. No creation, innovation, and joy. ”The great masters are dead,” Spengler proclaimed. The West could do nothing now but dig its grave.

”As I read those pages teeming with firefly flashes of historical insight,” Toynbee later recalled, ”I wondered at first whether my whole inquiry had been disposed of by Spengler before even the question, not to speak of the answers, had fully taken shape in my own mind.” But Toynbee was appalled by the absence of concrete evidence in The Decline of the West. Spengler's argument consisted of nothing more than a.s.sertions, Toynbee realized. ”You must take it on trust from the master. This arbitrary fiat seemed disappointingly unworthy of Spengler's brilliant genius; and here I became aware of a difference of national traditions. Where the German a priori method drew a blank, let us see what could be done by English empiricism. Let us see alternative possible explanations in the light of the evidence and see how they stood the ordeal.” Toynbee would do what Spengler had done, but scientifically.

One evening in 1921, leaving Turkey aboard the fabled Orient Express, Toynbee took out a fountain pen and sketched an outline of what would become A Study of History. Although Toynbee had yet to study non-Western history seriously, his outline confidently stated that the course taken by all civilizations follows a pattern: Birth was followed by differentiation, expansion, breakdown, empire, universal religion, and finally, interregnum. Toynbee's terminology changed a little over the years, and the list of laws and regularities in history steadily expanded, adding layers of complexity, but the basic scheme never changed from the publication of the first three volumes in 1934 to the release of the final four in 1954.

With grand outline in hand, Toynbee set out to study Chinese, j.a.panese, Indian, Incan, and other non-Western histories. Over and over again, he found he was right: They did indeed follow the pattern. The parallels were most p.r.o.nounced in the terminal stage of ”disintegration,” he found. In what he called the ”Time of Troubles,” a dispossessed minority founds a new religion, there are increasingly violent wars, and the civilization rallies to form a ”universal state.” This is followed by a brief respite-an ”Indian Summer”-from the internal decline. But the clashes resume and decay worsens. Gradually, the universal state collapses, and the civilization with it. But that is not the end. For the new religion continues to grow, holding out the promise of renewal in some distant future.

It's not hard to see Greece, Rome, and the Christian church in Toynbee's allegedly universal pattern of history. But did the other twenty civilizations identified by Toynbee all follow the same course? He insisted they did. And his spectacular erudition-only Arnold Toynbee could write a sentence like ”If Austerlitz was Austria's Cynosephalae, Wagram was her Pydna”-cowed the average reader. The man seemed to know everything about everywhere. He was Wikipedia made flesh. Who could doubt him?

But historians did doubt Arnold Toynbee. Pieter Geyl and others who took the trouble to carefully sift through Toynbee's vast heap of evidence found he routinely omitted inconvenient facts, twisted others, and even fabricated out of whole cloth. A blatant example was his handling of Mohammed and the Islamic explosion in the seventh century, in which a handful of peripheral tribes on the Arabian peninsula suddenly swept across much of North Africa and the Middle East. This was a problem for Toynbee's system because it created a single government-the Umayyad Caliphate-ruling over a vast swath of territory. That's a ”universal state” in Toynbee's terms. But in Toynbee's scheme, universal states come about only when a civilization is old and on its way down. Yet here was a universal state that seemed to spring up out of the sand. Holding a square peg, Toynbee pounded it into his round hole: ”He declared that the Arab conquerors, inspired by Mohammed's newly minted revelation, were 'unconscious and unintended champions' of a 'Syriac' civilization that had gone underground a thousand years before at the time of Alexander's conquest,” wrote William H. McNeill. ”No one before Toynbee had conceived of a Syriac civilization, and it seems safe to a.s.sume that he invented the entire concept in order to be able to treat the Ummayad Caliphate as a universal state with a civilization of its own.”

With few exceptions, Toynbee's fellow historians thought his project was absurd. The criticisms began with the publication of the first works in A Study of History. They grew louder as more books appeared. ”His methods, he never ceases to tell us, are empirical,” wrote Hugh Trevor-Roper, one of the major historians of the twentieth century. ”In fact, wherever we look, it is the same. Theories are stated-often interesting and suggestive theories; then facts are selected to ill.u.s.trate them (for there is no theory which some chosen facts cannot ill.u.s.trate); then the magician waves his wand, our minds are dazed with a ma.s.s of learned detail, and we are told that the theories are 'empirically' proved by the facts and we can now go on to the next stage in the argument. But in truth this is neither empiricism nor proof, nor even argument: it is a game anyone can play, a confusion of logic with speculation.” Another eminent historian was even more cutting. ”This is not history,” declared A. J. P. Taylor.

To be fair to Toynbee, historians were a tough audience. Most were-and are-deeply skeptical of the notion that there are universal patterns and ”laws” to be discovered in history. Some go further and argue that all events are unique and history is simply ”one d.a.m.ned thing after another”-an idea H.A.L. Fisher put more elegantly when he wrote, ”I can see only one emergence following upon another, as wave follows upon wave, only one great fact with respect to which, since it is unique, there can be no generalizations, only one safe rule for the historian, that he should recognize in the development of human destinies the play of the contingent and the unforeseen.” (Although he wasn't aware of it, the very reason Toynbee was in Turkey on the night he drafted the outline of A Study of History supports Fisher's view that ”the contingent and the unforeseen” played leading roles in history: As a correspondent for the Guardian newspaper, Toynbee had been reporting on the disastrous Greek military campaign whose origins lay, as we saw in the last chapter, in a monkey bite.) The chorus of catcalls from historians, which reached a crescendo in the mid-1950s, shook Toynbee. But it didn't make the slightest difference to how the public received Toynbee and his work. When volumes one to three were released in 1934, and again following the release of volumes four to six in 1939, A Study of History was acclaimed, particularly in the United Kingdom. Sales were brisk. In the depths of the Depression, with British power waning, totalitarianism rising, and another horrific war increasingly likely, pessimism flourished. Like Spengler before him, Toynbee captured the mood perfectly. Although he explicitly dealt with the prospects of modern Western civilization in only one of the last volumes of A Study of History, his writing was covered in a pall of gloom and he left no doubt about where, in the grand pattern of civilizations, the West found itself. Breakdown was now long past and we were deep into disintegration. The end was approaching, as it had for Rome all those centuries before.

In 1942, when Toynbee traveled to the United States on behalf of the British government, he expounded on his theories, and what they meant for the coming postwar future, with American officials and notables. One was Henry Luce, the publisher of Time, Life, and Fortune magazines, whose circulation and influence were immense. Luce was deeply impressed. A devout Christian and a pa.s.sionate advocate of American leaders.h.i.+p in world affairs, Luce was thrilled by Toynbee's message because, gloomy as it was, it was not without hope. Western civilization had not yet brought forth a ”universal state” and the ”Indian Summer” that follows, Toynbee noted. So that must be what lies ahead. Who could bring about such a universal state? Britain was finished. The n.a.z.is or the Soviets could, but that would be a horror. No, it must be done by the United States.

Luce asked Toynbee to speak to the editors of Time and they, in turn, made his views a fixture of the most important magazine in the United States. In March 1947, when a mercifully abridged version of A Study of History was released, Toynbee's somber face graced Time's cover and an effusive story detailed his great work for the ma.s.s American audience. ”The response has been overwhelming,” Time's editors wrote in the next edition. Academics, governors, congressmen, journalists, and ”plain citizens” wrote in unprecedented numbers. The military asked for seventeen hundred reprints ”for distribution to Armed Forces chaplains everywhere.” The abridgement of A Study of History became a best seller and ”Toynbee's name,” a writer in Time recalled, ”tinkled among the martini gla.s.ses of Brooklyn as well as Bloomsbury.”

Once again, timing was everything. The prewar order was shattered, a terrifying new weapon had entered the world, and it seemed obvious that the United States could not go back to isolationism. But what should America do instead? Friction with the Soviet Union-which some had taken to calling a ”Cold War”-was growing steadily. ”Western man in the middle of the twentieth century is tense, uncertain, adrift,” wrote Arthur Schlesinger Jr. in the famous opening to 1949's The Vital Center. ”We look upon our epoch as a time of troubles, an age of anxiety. The grounds of our civilization, of our cert.i.tude, are breaking up under our feet, and familiar ideas and inst.i.tutions vanish as we reach for them, like shadows in the falling dusk.” Arnold Toynbee was the man for the moment.

For literary critics, philosophers, theologians, politicians, writers, journalists, and others interested in big ideas, Toynbee's vision was electrifying. ”If our world civilization survives its threatened ordeals, A Study of History will stand out as a landmark, perhaps even a turning point,” wrote the critic Lewis Mumford. Toynbee was hailed as ”the most renowned scholar in the world” and ”a universal sage.” ”There have been innumerable discussions of Toynbee's work in the press, in periodicals, over radio and television, not to mention countless lectures and seminars,” marveled the anthropologist Ashley Montagu in 1956. ”Through the agency of all these media Toynbee has himself actively a.s.sisted in the diffusion of his view.” Toynbee loved his fame, not so much for the money and adoration that went with it-or at least, not only for that-but for the opportunities to expound on the state of the world and where it was headed.

Toynbee's vision of the future never wavered, as might be expected given his belief that there is a universal pattern woven into all civilizations. If there is such a pattern, after all, it suggests a deterministic process is at work: All civilizations must and will follow the same path, no exceptions. Oswald Spengler had no trouble with such determinism, and he bluntly concluded that an old civilization could no more avoid collapse than an old man could avoid death. But not Toynbee. It chafed against his Christian conception of free will, which insists that people are free to choose their actions, and so, even as he promoted the idea of a universal pattern in the life of civilizations and made predictions for the future based on that pattern, Toynbee insisted choices matter. And in the Atomic Age, the choice was between a universal state, followed by a profound religious revival or a war that would bring the violent end of humanity. One or the other. Nothing else was possible.

Toynbee repeated this general prognosis constantly. Occasionally, he was more specific. For a 1962 volume on the population explosion, he foresaw the creation, by the end of the century, of an international agency with unchecked power to control the production and distribution of food. It would be ”the first genuine executive organ of world government that mankind will create for itself.” Other iterations of his vision were more ambitious. In a 1952 lecture, Toynbee sketched the world of 2002. ”The whole face of the planet will have been unified politically through the concentration of irresistible military power in some single set of hands,” he declared. Those hands wouldn't inevitably be American but he thought that most likely. Nor was it clear whether the unification would come about by world war. But ”if a modern westernizing world were to be unified peacefully, one could imagine, in 2002, a political map not unlike the Greco-Roman world in A.D. 102. . . .” Nominally, the universal state would be democratic but the public would no longer exercise real control over the government, and the government-faced with severe overcrowding and resource shortages-would regulate every aspect of its citizens' lives. People would accept this control as the price of order and prosperity, but the suppression of freedom ”on the material plane” would generate an explosion of freedom ”on the spiritual plane.” Humanity ”will turn back from technology to religion,” Toynbee predicted. The leaders of the future would no longer be men of business and power; they would be spiritual guides. ”There will be no more Fords and Napoleons, but there may still be St. Francises and John Wesleys.” As for the origins of this religious revival, ”it might not start in America or in any European or Western country, but in India. Conquered India will take her matter-of-fact American conqueror captive. . . . The center of power will ebb back from the sh.o.r.es of the Atlantic to the Middle East, where the earliest civilizations arose 5,000 or 6,000 years ago.”

In his later years, Toynbee's support for American leaders.h.i.+p faded but his belief that a universal state must come into being, and soon, was unshakable. In 1966, he mused about the possibility of a ”Russo-American consortium” and suggested that if the Cold War antagonists couldn't get the job done, China would. In any event, freedom would certainly be extinguished, perhaps brutally. ”I can imagine,” he told a j.a.panese interviewer in 1970, ”the world being held together and kept at peace in the year 2000 by an atrociously tyrannical dictators.h.i.+p which did not hesitate to kill or torture anyone who, in its eyes, was a menace to the unquestioning acceptance of its absolute authority.” As horrible as this version of the universal state sounded, Toynbee insisted it would be for the best. In an age of nuclear weapons and overpopulation, it is simply impossible to have freedom, peace, and national sovereignty at the same time. Humanity ”has to choose between political unification and ma.s.s suicide.”

In 1961, long after A Study of History had provoked the condemnation of historians and made Toynbee wealthy and famous, he published a final volume, simply ent.i.tled Reconsiderations. In it, Toynbee conceded much and failed to respond to more. ”By the time Toynbee had agreed with some points made by his critics, met them halfway on others, and left questions unresolved in still other instances, little was left of the original, and no new vision of human history as a whole emerged from Reconsiderations,” wrote his biographer, the historian William H. McNeill. Of course, Toynbee didn't consider this to be final proof that the pattern he saw in history was an illusion and his whole project a waste of a brilliant mind. But that's what it was.

The collapse of Toynbee's vision was not the end of his renown, because neither Toynbee nor his adoring public noticed that it had collapsed. Toynbee continued to publish books and commentary at a furious pace, and demand for his views about the present and future never flagged. He even won new acclaim in j.a.pan, where ”Toynbee societies” sprang up and the great man was invited to lecture the royal family. ”No other historian, and few intellectuals of any stripe,” concluded McNeill, ”have even approached such a standing.”

But when Toynbee died in 1975, his fame and influence were buried with him. The grand schema of A Study of History left no lasting mark on historical research and his visions of the future all came to naught. The ”thick volumes of A Study of History sit undisturbed on the library shelves,” Hugh Trevor-Roper wrote in 1989. ”Who will ever read them? A few Ph.D. students, perhaps, desperate for a subject.”

And so we are left with a riddle. Here was a man who probably knew more history than anyone alive. His knowledge of politics and current affairs was almost as vast. He brimmed with intelligence, energy, and imagination. And yet, his whole conception of the past and present was based on a mirage, and his supposed visions of the future were no more insightful than the ramblings of a man lost and wandering beneath a desert sun.

How could such a brilliant man have been so wrong?