The Peak Oil answer to collapsing oil prices: queuing chaos

I waited 5 months after oil zoomed up before making my Peak Oil call.

Shortly thereafter the price collapsed.

You're welcome.

So now I'm in the market for desperate validations of my opinion. Like this one ...

The Oil Drum | Oil Prices Below $40 per Barrel

... This chaotic outcome with respect to commodities prices in face of scarce supply was studied by Ugo Bardi, who found interesting examples of it in the past. I first got to know his work soon after I read Kenneth Deffeyes' book and was especially impressed with the pattern Ugo identified in whale oil prices after the peak in sperm whale catches in 1850. The Whaling Industry was possibly the largest of its time, on a global scale that in many ways can be compared with the modern day Oil Industry. To me a most fascinating aspect about Peak Whale Oil is that in the book Moby Dick, published right about that time, Herman Melville lays down quite clearly the reasons for a coming decline of the Industry: in his view Easy Sperm Whale was over.

With all this information I became convinced an increased volatility in oil prices would unfold, eventually leading to a series of "boom and bust" cycles, just like whale oil prices in the XIX century. Predictions of oil prices would become impossible, and I never attempted to forecast them.

Another important aspect to my understanding of this issue was presented by Carlos Cramez and Jean Laherrère in 2006 at the seminar that kicked off ASPO-Portugal. They showed a chart with oil prices in terms of the number of working hours required to buy the oil in the US and France, and concluded that to return to 1980's levels, the last oil crisis, prices would have to reach something like 125$ per barrel (in 2006 dollars). This number stuck to my mind, and I assumed this would be about the level at which the "boom" would turn around into "bust"...

I'd feel better if he'd linked to past posts where he, you know, actually wrote, for example, that oil prices would crash at $125 / barrel.

I figured they'd go up and down, but not to $40 a barrel.

Of course I didn't figure on the world economy going off a cliff and then splattering on the rocks below.

I still don't know what's going on with oil prices. I really need Paul Krugman or Brad DeLong to speak up but they've been suspiciously quiet. Krugman in particular was very confident that the price rises did not represent speculation, so I think he has moral obligation to say something.

PS. This would be a good time to start slapping a carbon tax onto oil, offsetting the economic burden by reducing some other tax.