The Enduring Lesson of Unpredictability
The debate over the world’s energy future is often framed as a battle between competing visions—a green transition powered by renewables versus a pragmatic reliance on fossil fuels. Proponents on each side urge governments to pick a path, subsidize winners, and penalize losers. Yet, history offers a crucial, often ignored lesson: the future is radically unpredictable. Technological disruptions and commercial shifts arrive without warning, making any attempt at long-term central planning a “conceited folly.” This article explores how past events, from the oil shocks of the 1980s to the current artificial intelligence boom, demonstrate that the most effective energy policy is not to choose a direction, but to remove government controls and allow market forces to navigate the unknown.
When Deregulation Defied the Experts
To understand the power of markets in the face of uncertainty, one need only look back to 1981. When President Ronald Reagan decontrolled oil and gasoline prices, freeing them from the shackles of Carter-era regulations, a chorus of critics predicted disaster. The conventional wisdom held that prices would skyrocket, punishing consumers and crippling the economy. Instead, the market responded in a way few foresaw. Over the course of Reagan’s presidency, oil prices collapsed, plummeting from nearly $40 a barrel to as low as $7. This dramatic shift rendered many promising investments in domestic oil extraction economically unviable overnight. The episode was a stark reminder that expert consensus is often wrong. Reagan’s triumph was not in predicting the price collapse but in his decision to trust the market’s mechanism for discovery and adaptation, proving that freeing the system is more potent than trying to steer it.
The Flawed Logic of Central Planning
The Conceited Folly of Picking Energy Winners
The core error in government-led energy policy is the belief that planners can accurately forecast the complex interplay of technology, economics, and consumer demand decades into the future. The 1980s oil price collapse serves as a powerful case study. Investments that seemed prudent and strategic when oil was expensive became financial albatrosses when the market shifted. This illustrates the inherent risk of any top-down industrial strategy. When politicians attempt to anoint certain energy sources as “winners,” they are betting taxpayer money on a single, static vision of the future. But as history shows, the commercial landscape is dynamic. A market, with its millions of independent actors making decentralized decisions, is far better equipped to process new information and pivot quickly than a rigid, bureaucratic plan.
The Unforeseen Energy Demands of the AI Revolution
If the 1980s oil shock feels like distant history, the sudden rise of artificial intelligence provides a dramatic contemporary example of unpredictability. In early 2022, virtually no one predicted that a company called OpenAI would release a product, ChatGPT, that would trigger a global technological arms race. The subsequent explosion in AI development, led by chipmaker Nvidia, was not on any government planner’s roadmap. This revolution has created a staggering, unprecedented demand for energy to power massive data centers. Tech giants are now planning to invest trillions in infrastructure, fundamentally altering the global energy equation. This sudden, non-linear shift in demand underscores the futility of trying to centrally plan an energy mix for a future that can be upended by a single innovation.
Why Modern Interventionism Misses the Point
This historical and modern context casts a critical light on contemporary policy proposals. President Trump’s plan to dismantle “green” energy subsidies while favoring fossil fuels, nuclear, and geothermal power is often framed as a pro-market stance. In reality, it is simply a different flavor of central planning. Instead of subsidizing wind and solar, it implicitly steers investment toward another set of preferred technologies. This approach repeats the same fundamental error: it assumes a planner knows what the future requires. The lesson from both Reagan’s era and the AI boom is not that one set of energy sources is inherently superior to another, but that the government is the worst possible arbiter of that question. The market, driven by price signals and commercial needs, is the only mechanism nimble enough to determine the optimal energy mix for a constantly evolving economy.
Charting a Course for an Unknown Future
The only certainty about the next several decades is that they will be defined by disruptions we cannot yet imagine. The AI boom is just the beginning. Breakthroughs in quantum computing, biotechnology, or advanced manufacturing could each create their own unique and massive energy demands. Will the future require immense, steady baseload power, favoring nuclear and geothermal, or will it need a distributed, flexible grid better served by renewables and storage? The honest answer is that nobody knows. A policy that locks the nation into one path risks creating a brittle energy system unable to power the next wave of innovation. A market-driven approach, in contrast, fosters a diverse and resilient ecosystem of energy solutions that can adapt to whatever comes next.
Embracing a Hands-Off Energy Strategy
The analysis yields a clear conclusion: the most prudent and effective energy policy is one of humility and restraint. Rather than trying to design the future, policymakers should focus on creating a level playing field where all energy sources can compete on their merits. This means systematically removing subsidies, mandates, and regulatory barriers that distort price signals and favor one technology over another. For businesses and investors, the key is to remain agile and responsive to market dynamics rather than relying on government largesse. The lesson from the 1980s oil market and the 2020s AI surge is that true energy security comes not from government planning but from a dynamic, competitive market free to innovate and adapt.
The Wisdom of Getting Out of the Way
The history of energy proved to be a graveyard of failed predictions and unintended consequences. From the oil price collapse that defied the experts to the AI revolution that nobody saw coming, the past consistently taught us that the future of commerce was in constant flux. Because the economy was unpredictable, the energy mix required to power it had to be as well. The most visionary energy policy, therefore, was the one that acknowledged the limits of its own vision. As demonstrated decades ago, leaders found success when they trusted the decentralized wisdom of the market. The most strategic and enduring path forward was for the government to simply get out of the way.
