Peak Oil Passnotes: Falling Markets, Stable Crude. Why?

We have been used to hearing about how volatile the market in energy has become. But after the equity market events of recent weeks, all of a sudden one has to take a different view. One that could support the notion of


Of course roughly the same thing happened to crude oil. Slow but very steady progress has taken crude from around $30 per barrel to over $70 per barrel today. The path of crude oil has been slightly perkier with more spikes, thanks to hurricanes and various Middle East wars, and more dips, due to profit taking.

Equities on the Dow Jones, on the other hand, ploughed a flat furrow between 9800 and 10800 until the spring of 2006, when they simply took off, passing through one line of resistance after another. They had been spurred by the long term build-up of cheap credit – the build-up we are now possibly seeing undone in a very short space of time.

But for a long time, many people held that crude oil and energy would play a major part in the value of equity. First, there was the generally accepted wisdom that high crude prices dampen equities. Then we had a sea change. People started saying that the huge size of companies like BP [NYSE:BP] and ExxonMobil [NYSE:XOM] mean that if oil goes up, so in turn do those companies and so in turn do the indexes in which those companies sit.

One nagging thought at the back of people