There’s nothing like an oil price spike to bring the “Peak Oil” doomsayers out of their nuclear fallout shelters, even a spike as transparent as the present one. But the alarmists are no worse than the profiteering in which local petrol companies are indulging.

A bit of kidnapping in the Middle East and oil finished over US$66 a barrel overnight. Nothing has actually happened to supply or demand, it’s just speculation about what might happen if the UK and Iran get really silly over the 15 British sailors and marines the mad mullahs are playing with. It’s an easy way to come up with a “$100 a barrel” headline, even while acknowledging nothing is likely to happen.

If you were really cynical, you might think those canny Persians are just manipulating the oil price to their own advantage – a very fine example of successful insider trading. They have absolutely no interest in interrupting the supply of oil as they need the money, but this has to be a better method of boosting the price than cutting production.

Before anyone is taken in by the noise, it’s worth remembering that oil is only back where it was six or seven months ago and that it has run to $75 a barrel without causing much damage. And as for the “peak oil” Chicken Littles – the higher the price goes, the more substitution occurs, the better the market mechanism allocates resources, the more we brilliantly ingenious creatures find alternatives.

But in the immediate term, there’s been some very dodgy business going on at the local petrol pump. The Shell “average” price site reckons petrol peaked in Sydney yesterday at $1.30 a litre, down three cents from the previous Thursday.

As reported here on Monday, the peak should have been $1.28 if the petrol companies really base their pricing on a rolling seven-day average of Singapore unleaded.

And there still seems to be a convenient correlation between Middle East headlines and straight profiteering, such as the Shell and BP service stations charging $1.39 a litre. That certainly doesn’t reflect Singapore pricing.

So let’s start the rumour – Mahmoud Ahmadinejad is a petrol company stooge.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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