Points of Few: The Market’s ‘Lion Parable’

By Alan Steel

“Born freeeeeeee…..as free as the wind blows…..as free as the grass grows…..”

Or maybe not.

There’s an old ‘Lion’s Parable’ about a family that took in an abandoned cub who, despite being loved and cared for by the family, once grown decided to eat them all.

Ouch!

And in a not-so-obscure way that parable, and recent events, remind me of what’s going on with oil in the minds of investors.

Consider the re-emerging story of Cecil the Lion – he was the African big cat in Zimbabwe’s Hwange National Park in Matabeleland (try pronouncing that with a mouthful of crackers!) that was wounded, and then tracked and killed by an American game hunter named Walter Palmer last summer. In short, the story sparked outrage about how things played out.

Fast forward to now and it seems that outrage worked to stop illegal hunting to the point where there are now too many lions!

The Zimbabwe’s Bubye Valley Conservancy has announced that it needs to kill / translocate / re-home 200 lions because they “have more lions than the ecosystem can handle in the long-term.”

Apparently it’s a question of capacity. Hmmm…that sounds ‘oilfully’ familiar…

The oil sector, sparked by the outrage of high prices and the whims of OPEC and other oil producing nations, devised fracking as a way to level the playing field – a bit like hunting with a big drill in what is otherwise often conservationist territory.

The result is a glut of the stuff, which has subsequently driven prices back to that trading ‘home on the range’ they’ve inhabited for about 100 of the last 150 years; under $40 per barrel.

Call it a market cycle, this one driven by Outrage, Invention, and ultimately, Liberation: (OIL for short!). And the same goes for Cecil and the lion glut.

Now, I’m not justifying how that idiot with a gun killed Cecil. Quite the contrary.

But both ecosystems – oil and Zimbabwe’s Hwange National Park – now have more ‘product’ than they can handle.
And both ends of the spectrum cause panic and outrage, whether we’re at the ‘Fracking Fantastic’ and ‘Culling Cats’ stage, or ‘Peak Oil’ and ‘Last Lion’.

The lesson?

These are cycles. And all the interference and innovation in the world won’t domesticate them, it simply makes them turn.

Read this – Check out more of Alan Steel’s Points of Few here.

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