the dark brown river

Tuesday, September 27, 2005

peak oil psychology.

the peak oil scenario theorists might consider this one -

right at the moment o p e c has no takers for the extra crude
oil they have put on the market. so the ceiling on supply
is not in crude oil but in refined oil products. so peak petrol
(if you like) is a ceiling lower and tighter than peak (crude,
saudi) oil.

this is a further aspect of my repeated thesis that the
consumer does not experience 'peak oil' but only peak
petrol/diesel price at the pumps - plus the inflation caused
by other people factoring in higher transport costs to the
prices of their products. . .

now i want to go a step further.

markets are highly psychological. there can be a further
ceiling, and it is the perception of peak oil. that ceiling can
be lower again than the ceiling created by the actual supply
of refined products.

i suspect that the graphic scenes of southern u s
infrastructure, including oil facilities, getting destroyed, and
an administration powerless to do anything about it - is
capable of turning the tide of perception.

petrol/diesel supplies may now recover a little, oil prices
may fall a little - while at the same time the perception of
shortage continues to take hold.

where will it show ? i suggest in the weakening of the
price of second homes. whether for weekends by car, or
bi-annual trips by air, second homes as investments are
travel dependent and thus fuel price dependent.

secondly in the gas guzzler s u v market, where the
purchaser of a new vehicle has to look about four years
ahead, depending on how often they trade in their
vehicle. psychology plays a part there.

a further psychological downer is this - the perception
that invading weaker countries to grab oil (however you
wrap it up in rhetoric about freedom) does not actually
add to the flow of oil, but badly impedes it. the game is
up there also.

if peak oil psychology takes hold - oil can go back to
$40 dollars/barrel, and people will not be comforted,
'knowing' that this is only temporary.

these things can happen.

watch and see.