SUCKER BET?....I'm going to break my rule about linking to New York Times op-eds again, and I'm doing it for the usual reason: because I just can't help myself. Today's target is John Tierney's column, but, oddly enough, the target isn't Tierney himself. It's Matt Simmons. Here's what Tierney wrote today:

After reading [Matt Simmons's] prediction, quoted Sunday in the cover story of The New York Times Magazine, that oil prices will soar into the triple digits, I called to ask if he'd back his prophecy with cash. Without a second's hesitation, he agreed to bet me $5,000.

....I proposed to him a bet....that the price of oil would not rise faster than the average wage, meaning that future workers would be able to afford oil more easily than they could today.

Mr. Simmons said he favored a simpler wager, based on his expectation that the price of oil, now about $65 per barrel, would more than triple during the next five years. He said he'd bet that the price in 2010, when adjusted for inflation so it's stated in 2005 dollars, would be at least $200 per barrel.

Let me get this straight. In the next five years, the average worker's wage is likely to go up about 10-20%. Maybe 30% tops. Using the high number, this means that Tierney offered Simmons a bet that he could win if the price of oil hits $85 per barrel by 2010.

So what does he do? He turns down Tierney's offer and instead proposes a bet that he can win only if the price of oil tops $200 per barrel in 2005 dollars. Call it $240 in round numbers.

In other words, Simmons turned down an easy bet and insisted instead on a much harder one, something that doesn't speak well for Simmons's financial prowess, especially after 30 years in the banking business. He can't be that sure that oil at $240 per barrel by 2010 is a no-brainer, can he?

And a note to Tierney: if you're still looking for someone to take you up on your original bet, my checkbook is ready and waiting.

—Kevin Drum 10:54 PM Permalink | Trackbacks