Publications: Notes at the Margin

Stein's Law: Implications for Oil and the Economy

 

In June 1989, the late Herbert Stein wrote on “Problems and Non-Problems in the American Economy.”^[i] In his paper, he focused on the country’s budget and trade deficits, noting somewhat paradoxically that politicians, journalists, and leaders “worry that these conditions cannot go on forever,” that is, that the country’s economy cannot sustain these deficits indefinitely. He then added the following:

I have tried to comfort people who worry about this by propounding Stein’s Law which is that if something cannot go on forever, it will stop [emphasis added].

Stein also wrote that the trade deficit “is not a problem.” The current president of the United States obviously disagrees with him. However, the trade deficit is not the issue here.

Our focus here is on economic activities and political strategies that might not continue indefinitely. In particular, we discuss the following three items that “may stop” and, in doing so, eventually affect all fossil fuel industries:

• The exuberant investment in data centers driven by individuals and entities who expect the artificial intelligence expansion to continue
• Russia’s ability to maintain its oil production, refining, and revenue under new sanctions and increasing Ukrainian drone attacks
• The delusion among some that US consumer prices are falling

 

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