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 compared 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?