Obama and Dave, what is it about peak oil that you don’t get?

Apparently Dave and Obama have decided that the price of oil is too high. So guess what? They are going to push down the price of oil. I could have titled this one don’t fight the tape but I’ve already used that for one of Dave’s previous wheezes. What has got into Cameron’s head? Has Samantha bought him a Superman costume or something, first he goes around encouraging people who can’t afford a house to overstretch themselves for a mortgage, and now he’s going to Do Something about the price of oil

So how can we do that? We could:

  • increase supply – nope, the IEA says we can’t do that much longer
  • reduce demand. Now there’s an idea, but it sits badly with rising global middle class aspirations

Hey, I know what we can do, says Obama. Let’s fudge option 1 and release a load of the US strategic reserves. That way American drivers don’t get pissed off in the Driving Season.

Oh good, says Dave. Tell you what, we’ll help you by releasing some of the UK strategic reserves to help you out, along with out Squeezed Middle. Presumably some Civil Service flack hurriedly whispered in Dave’s ear that the UK doesn’t actually have any strategic oil reserves. Thinking on his feet, he changes it to asking UK oil companies to hold less in reserve.

Great. That’s all sorted then. What part of ‘strategic’ was it that you guys didn’t understand, or should we send in the DEA to find out what you were smoking?

The high oil price is a signal. That signal is telling you that more people want oil than production can currently match, and the price will rise to shed demand until it matches supply. It’s also perhaps showing that the currencies of both the US and the UK have been debased in recent years.

Oh and by the way, guys, you haven’t got enough strategic reserve to deal with the probable war on Iran. They may be mad as a bag of spanners over there but the interruption to production will probably exceed the 40 days capacity of the US Strategic reserve. Just look at what happened next door in Iraq a few years ago.