« Open Thread, That Sinking Feeling | Main | Remedy du Jour -- June 23, 2012 »



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Nice summary. It's undeniable how strongly linked oil and the economy are, no matter what Yergin says. With Europe in deep trouble (though they seem to be able to stretch out the crisis indefinitely without everything falling apart, somehow) and China also slowing down, the drop in prices was inevitable.

And conversely, with a rise to $128, a drop in demand was inevitable.

That said, I was somewhat surprised by how it played out - rather than a big spike and crash like last time, it just floated up to $128 and then started drifting down. I wonder why it is so much less extreme than last time - of course, the economy never got back to where it was, but then why did it keep rising in the first place? Perhaps this is a new pattern. I was expecting a spike but now I can see that was naive of me.

I'm starting to think watching natural gas and coal is getting important - there are a few gas-to-liquids plants planned, and I think it may play out as a painful but hilarious series of peaks as everything is consumed to keep up the liquid fuel game. Peak oil in the strict sense may just be the leading indicator of collapse, with peak liquids being the true danger.

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