The Solution to Peak Oil

We may be witnessing a possible solution to the Peak Oil dilemma in the formation of an unsustainable speculation driven crude oil price super spike. The impact of which will be to shock corporate and private consumers into making the necessary changes in the near future to be able to better adapt to the real impact of Peak Oil which will mean the reduction of crude oil supply and hence fuel shortages.

Despite crude oil prices having doubled in a year, the fact of the matter is as the Saudi’s aptly pointed out last week that there is plenty of supply to meet current demand. Therefore the doubling in price IS to large degree speculator driven.


The plus side to the price rise is that it now sets the scene for a cap on oil prices for several years if not for decades, as we have witnessed when past bubbles burst they tend to deflate for many, many years. Whilst peak oil will continue to support crude oil prices in the long-run, the effect of a bubble mania driven super spike is to deliver two key changes to the oil market.

1. With the aid of government incentives to fast-track investment and plans for further exploration of crude oil fields and to develop new technologies to extract more from existing fields.

2. To shock consumers into making drastic changes in the way they use fuel, this includes consumers being more likely to accept higher taxes under the ‘Green’ banner.

The impact of the shock tactics is for these trends to persist long after the crude oil price spike passes, where even a decline over several years to half its current price will still exhibit consumer’s who are psychologically averse towards excessive fuel consumption in anticipation of possible further price spikes and fuel shortages just around the corner.

Market Oracle