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Simmons–Tierney bet

The Simmons-Tierney bet is a bet made in August 2005 between Houston banking executive Matthew R. Simmons and New York Times columnist John Tierney.^[1] The stakes of the bet are US$10,000.00. The subject of the bet is the year-end average of the daily price-per-barrel of crude oil for the entire calendar year of 2010. The bet is to be settled on January 1, 2011.

Simmons and Tierney had never met before. But their association began after Simmons had been interviewed by a journalist colleague of Tierney’s, Peter Maass, for a New York Times Magazine article called “The Breaking Point,” published on August 21, 2005. The article heavily emphasized the doomsday claims of Simmons latest book Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. That book is his prophecy of imminent global catastrophe which he asserts will be triggered by the allegedly soon-coming “peaking” of Saudi oil output, and the supposed domino effect of destruction that he says will subsequently be wreaked upon the global economy. Tierney’s dubious reaction to the article prompted him to call Simmons, introduce himself, and ask Simmons to back up his claims with cash. The friendly wager was immediately worked out over the phone.

Terms of the bet

Of the many claims that Simmons made in the Times article, his prediction of a tripling in the price-per-barrel of crude struck Tierney as perhaps the most incredible. In the Peter Maass article, Simmons was quoted as saying:

“We’re going to look back at history and say $55 a barrel was cheap,” [Simmons] said, recalling a TV interview in which he predicted that a barrel might hit triple digits. [Simmons] said that the anchor scoffed, in disbelief, “A hundred dollars?” Simmons replied, “I wasn’t talking about low triple digits.”

So Tierney focused upon that one detail and the two men fashioned the bet accordingly. Their final agreement was a commitment to tabulate every closing price-per-barrel of oil for each market day of 2010, then average out those prices for the entire year from January 1 through December 31, (adjusted for inflation to 2005 prices). If the year-end adjusted average comes out to $200.00 or more per barrel, Mr. Simmons wins. If it averages out to less than $200.00, Mr. Tierney wins. The winner takes the entire pot of US$10,000.00, plus interest ($5,000.00 from both parties, currently sitting in escrow).

The bet was made public just two days later in an op-ed piece by Tierney published in the New York Times, August 23, 2005 called “The $10,000.00 Question”.

Links

• http://www.nytimes.com/2005/08/23/opinion/23tierney.html
• http://www.twilightinthedesert.com/
• http://www.theoildrum.com/ – The Oil Drum

References

This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.