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The Oil Market's Worrying ECG - is a Lethal Arrhythmia Possible ?

Tom Therramus's picture
Researcher Self-employed

Tome Therramus writes on instability in the oil markets and its impacts on economics, politics and climate change. He posts at,,

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  • Dec 6, 2021


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My purpose over the last decade has been to bring to light a hidden aspect of the peak oil endgame – namely its destablizing effects on energy markets, as well as the insidious impacts of these instabilities on the economy and society-at-large.

Honestly, this has been a distressing topic to write about. I don’t blame anyone who is reluctant to think about the broader conundrum posed by the fixity of our planet’s resources versus the growing demands that humans places on this finitude. I confess I am fearful of it myself and perhaps this is the reason that I choose to write under the pseudonym Tom Therramus.

What my work has uncovered is a reverberative mechanism that has been in operation for the last 20 to 25 years as the world grapples with fossil fuel production levels maxing out, and in the case of some major producing countries, beginning to decline.

For those unfamiliar with my writings this may seem like an obscure topic area. However, in the coming paragraphs I hope to persuade an open-minded reader to consider that peak-oil-related instability in oil price is, or at least is a proxy for, a problem that may be amongst the most serious our civilization confronts.

I published my first article as Tom Therramus on oil price volatility and discussion of its impacts in 2009. Since then there have been seven further articles, as well as an interview on James Howard Kunstler’s podcast in 2019. Links to these publications can be found by clicking the link to the Kunstler podcast.

A superficial reading of these scribblings and oraculations may lead to the mistaken view that what I am about is making money using an arcane mathematical treatment to analyze the ups and downs of the oil markets. This is not the case. My goal has been scientific - to observe, to ponder and then write about my observations and thoughts. Price variation has served as a tool in my analyses - helping me unpack the real-world implications of the oil depletion curve as it effects unfold over time.

So how much impact have these efforts and publications of the last 10 or so years had ? Well, this article, which will be my last as Tom Therramus, is being published on my Linkedin page : ) Unfortunately, there was an underwhelming reaction from the editors who I normally work with to the content of my final essay. Again, I can't really fault them for not wanting to confront their readers with this depressing story.

This being said, it is a general problem that many who should know better take the Panglossian high road, assuming that the world will glide-up and then gently ride-down the declining side of the peak oil curve until alternate energy sources can be identified. What I can definitively say is that based on my observations and analyses there has been nothing gentle about this progression so far. Moreover, all indications are that our fossil fuel- powered ride is about to become significantly more jarring.

The practical focus of my work has been the identification and ongoing description of a 3 to 4 year cycle in oil price variance that appears to have kicked off from around the year 2000. This cycle has produced phases characterized by distinctive clusters of spikes in volatility in September 2001, March 2005, September 2008, May 2011, November 2014, and June 2018. A chart illustrating the evolution of this periodic spiking pattern is shown in the header of this article – republished from an earlier article.

For those who have kept an eye on this story over the long haul you know the record. Based on mathematical tools, including use of Fast Fourier Transformation (FFT) analysis of differences in daily price (mainly West Texas Intermediate crude oil price- see footnote on detailed methods below) to spot repeating patterns, the timing of clusters of volatility spikes that mark periods of oil market instability since 2011 have been able to be accurately predicted - always a few months ahead of when such periods occur.

If the rhythm of this cycle holds, we may see a new phase of increased volatility in oil prices between the winter of 2021 and the spring of 2022. So, keep a watch out from mid November 2021 onwards…

Corrections in the stock market that inevitably follow these large and repeating transients in oil price have also been reliably forecasted based on this pattern. Thus, if the next wave of oil price volatility crests as predicted, disruption is likely to ensue in the equity markets in outgoing months.

The comment sections of my articles have seen skeptics. Fair enough. In answer, I can only say that I have tried to be rigorous, with numbers checked by multiple colleagues with PhD-level engineering and mathematical skills. The analyses have held up in each instance– as disclosed in my articles. Whilst some detractors have brought strong opinions to the table, I have never proffered a point-of-view without trying to back it up with scrupulously validated data.

There also may be confirmatory power in the fact that the FFT analysis has enabled correct predictions to be made on a recurring basis. However, I’d would not want to over-emphasize this prospective attribute too much owing to the tautological loop that such a justification provokes.

As mentioned, this will be my last article under the nom-de-plume Tom Therramus. After more than 10 years, a point of culmination has been reached and there is not too more to add to this part of the story. Unfortunately, the next chapter may well be difficult - I suspect an altogether different and more chaotic episode in our checkered relationship with oil.

In the short term, I am concerned that the coming wave of volatility will correspond to a sharp ramp-up and crash in oil price – perhaps similar to that which occurred in 2008. A tight sequence of such ramps and crashes may also give rise to the spikes in variance that mark these recurring bouts of instability. If such a period of intense volatility does occur it may be a moment of reckoning for the oil industry... and for us all.

All the same, it is to be expected that a good part of the gaggled press will find some knuckle-headed explanation that happened 5 minutes ago to provide an account for any large or unexpected change in oil price. These folks will fail to entertain or grasp that what is happening is an organic process that has been going on for over 20 years - a process moreover that is not easily explained by the stock, go-to factors favored by the media.

There are regrets, the biggest of which is that a mechanistic hypothesis that accounts for the cycle of volatility in oil price variance borne out by the data has not emerged. Ultimately, my view is that the phenomenon relates to the so-called "bumpy plateau" in supply and demand that is anticipated to coincide with the cresting of global oil production. However, why it exhibits a somewhat ordered, wave-like pattern, as the Peak Oil mesa plays out between 2000 and 2030, rather than as random spikes is mysterious.

There appears to be some type of cryptic attractor in operation - but a satisfactorily explanatory nuts and bolts mechanism for the observed periodicity remains to be determined.

The fact that Peak Oil is somewhat flat-topped (i.e. a mesa rather than a Matterhorn), spanning a period of 20 to 30 years - a generation -should be re-emphasized. In human terms this is slow and a feature that has likely inhibited the development of a broader appreciation of the seriousness of the threat. A similar problem has been identified with our response to climate change - frog in a slowly heating pot and so on - though in the case of climate, the limitations of human comprehension that drive our inadequate collective response are more widely appreciated.

This being said, my own view is that the ongoing pattern of instability in the oil markets, and the chaos it wreaks, represents a more proximal, and therefore more serious threat than climate change. Paradoxically, this instability may also be in the process of instigating an expiatory cure for the climate problem - albeit a cruel one for the billions who now occupy our planet and who are also woefully uninformed of the looming danger.

In closing out, it'd be remiss of me also not to acknowledge the important contributions of Gail Tverberg. Her proposal that relentless increases in the real cost of extraction are making oil less and less affordable for consumers, resulting in a paradoxical declining trend in price long-term, is an important hypothesis. As are her ideas about how this process is amplified by over valuing the future with debt.

I have always admired the unaverted honesty and compassion with which Gail writes about the predicament facing our species. If one wonders where the animus for authoritarian movements such as Trumpism comes from, Ms Tvedberg’s blog deftly identifies the forces at work that are likely major factors in the ongoing impoverishment and demoralization of the middle class across the globe.

Occasionally, my observations on oil price, and its dismal implications, are compared to those of Tverberg. This comparison is barely justified - in my opinion she is a titan of a thinker and probably worthy of consideration for a major economics prize. This being said, there is a complementary difference in emphasis between myself and Ms. Tverberg. Whilst the mean effect of downward pressure on price perhaps governs (Tverberg's focus), I believe that one should also not discount the consequences of variance - as they say in Charleston South Carolina, “its not the heat, but the humidity that gets you".

Thus, my distinguishing proposition has been that the half-dozen large spikes in price volatility spawned by cresting oil production have acted like chaos injections. These recurring shocks in oil price over the last quarter-century have prompted disruptions in financial markets each time they occur, as well as propagating debilitating bouts of turmoil into our politics and systems of governance.

Over and above my ongoing characterization of this fierce and destabilizing cycle, its entraining effect on our economic and political arrangements is perhaps the key allied observation made during my documentation of the phenomena. The evidence suggests that we are being driven toward an unwelcome singularity. Thus, oil price volatility appears to have become a sui generis master regulator, synching downstream oscillations in equity markets, commodity prices (see figure 7 of article), and political polling numbers.

In a further example of this process of "entrainment", inflation is a cause-celeb of late. However, as I noted in 2009 oil price and inflation showed no persisting correlation with respect to time prior to the year 2000 (see Figure 6 in With the turn of the millenium, inflation and oil price began (and continue) to move in lock-step, with spikes in inflation jumping-up in slavish counterpoint following transients in oil price variation.

A further metaphor that might help to get one's head around this phenomenon is to think of the price volatility chart at the header of this article as something like a two-decade-long electrocardiogram (ECG) for the oil market. However, this ECG does not suggest health, rather it is more like a distress signal that indicates an irregular heart rhythm may be imminent.

Art Berman often repeats - "Oil is the economy". And even if you are not convinced that oil, or indeed energy writ-large is the whole body economic, it is hard to deny that it is not at its heart.

Could the next pulse of oil price volatility be the beat that pushes our civilization into a full-blown arrhythmia ? That scant attention is being paid to this possibility is something that I find perplexing and deeply concerning.

Prior to the pandemic, I had planned to write about a major spike in oil price volatility that occurred in 2019. This spike caught my attention as it was one of the few over the 20 year period between the year 2000 and 2020 that occurred outside the cycle that has been my main focus of attention. This out-of-phase spike had an obvious external cause, resulting from a cruise missile attack on Saudi oil facilities on September 14, 2019 - probably carried out by Iran. The prospect of war, and fear of subsequent attacks on Saudi oil production and shipping by an embargoed Iran, drove a temporary surge in oil price.

Based on my observations on the coupling between variance in oil and equity markets, in the immediate wake of the Saudi attack in late 2019, I was curious as to whether the resulting spike would trigger a drop in stock prices in 2020. In a related dynamic, I have previously speculated that an oil shock in the preceding year may provide some explanation for the Black Monday stock market crash of 1987.

However, my hope of getting a look at downstream effects propagating from the exogenous oil-shock caused by the 2019 attack were thwarted. More history intervened. The chance of discrimination of any cause and effect relationship was masked by the calamity of COVID-19 and its simultaneous impacts on both the oil and stock markets in 2020.

One interesting question will be whether the large off-pattern surges in oil price variance of the last 2 years resulting from Middle Eastern conflict and the Pandemic have impacted the underlying cycle. If a period of oil market volatility does happen in the November 2020 to March 2021 timeframe, in line with the 3 to 4 year cycle (the last spike cluster was in June 2018), it'll suggest that the mechanism driving the underlying ECG-like rhythm is robustly independent of general market forces and/or other broad economic factors.

Talking about external factors over which one has no control. My dear friend Therramus the neutered Tomcat passed away from an oral tumor since I last wrote in 2018. He had a long and good life for a cat and was lovingly cared for in his final days. He inspired the pen name that I have used and his leave moves his namesake to raise a parting glass, bid farewell and wish that peace be with you all.

Footnote on Methods: The volatility index plotted on the larger chart at the header of this article are differences in oil price between successive days between 2000 and 2018. The red lines making up this graph are plotted as a % of the absolute change on a given day normalized to the maximum daily change recorded over the period. What formally is being calculated in math terms is the 1st derivate of daily price, which when plotted by date gives a view of how daily rate of change in oil price varies with respect to time. Actual daily oil price is shown by the lighter gray line on the main chart. The source of the daily price data is the Cushing, OK West Texas Intermediate (WTI) Spot Price FOB as listed on the US Energy Information Administration (EIA) website. One way to grasp what the daily red lines on the large chart illustrate is to draw an analogy between daily oil price & daily oil price volatility and the velocity & acceleration of a moving body. Acceleration is the 1st derivative of velocity, i.e., acceleration is the rate of change in velocity with respect to time. The purpose of this exercise is to help me identify the pattern of spikes in oil price volatility over time at a day-to-day resolution. This can be done by eye - by noting when the 6 or so most distinctive spikes within clusters of spikes occur on the main chart - as indicated by the arrows - these typically surge >50 % above average volatility levels. However, I also carry out a Fast Fourier Transformation (FFT) of the daily signal to provide a more formal mathematical analysis of the apparent repeating pattern. The results of the FFT can be seen as an inset in the upper right hand side of the header chart - called the Volatility Frequence Domain (VDF). The red line on the VDF reveals a peak between 410 and 2048 days, consistent with the spiking pattern shown on the main chart zeroing in on a periodicity a little north of 3 years. There is also a smaller secondary peak between 410 and 228 days, consistent with a minor periodicity in oil price volatility of around 1 year. The flatter blue line on the VDF chart inset is an experimental control, wherein I randomized the daily volatility values and then repeated the FFT. As can be seen, this randomization results in the loss of the periodic signal (i.e., the red line on the inset chart) associated with daily changes in oil price when analyzed by FFT in the correct daily order. At the suggestion of readers I have also normalized for the effects inflation in past analyses and have discussed this further manipulation of the data in an earlier article . However, this does not effect the time course of the spiking pattern or the outcome of FFT. Thus, I now generally avoid normalization of the volatility index to inflationary effects on oil price as it does not seem add anything useful to the story of interest. In earlier iterations of this analysis I also used an index based on a 3-day rolling standard deviation or variance in daily price. This index is analogous to using derivative-based differentiation, in my opinion. Albeit that this method produces a more smoothened index due to the fact that its numerator is based on a sum of differences (from the mean of the 3 day period) over the 3 day period. I now prefer the first derivative, as it seems to allow a more intuitively familiar and conventional mathematical treatment of the data. All the same, it is interesting to intuit the connection between topological and statistical analyses that these analogous calculations infer. But as with what follows from closure of Therramus's work on oil price volatility, this is a topic that I'll leave others to ponder further on.

Acknowledgements and thanks: I'd like to express my gratitude to a number of people who have helped me over this decade-long enterprise. First, Gail Tverberg, who shepherded my first, albeit inchoate, ideas into publication at the in 2009. Second, my excellent editor at Steve Austen. I'd also wish to express my thanks to Mike Yost, Sai Veeraraghavan and Stephane Chatre who checked my numbers - Mike's expertise in signal processing led me to the use of FFT. I'd also like to thank Kristin Sponsler at, Euan Mearns at the Energy Matters website, Carol Smith at (United Nations University) and Nouriel Roubini (Economonitor) who republished my essays - and opened up the observations made there-in to their engaged and insightful readership. In a similar vein my thanks goes out to Jim Kunstler who chatted with me about my work on his podcast ( and also has provided feedback and ideas in delightful correspondence.


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Thank Tom for the Post!
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Matt Chester's picture
Matt Chester on Dec 6, 2021

One interesting question will be whether the large off-pattern surges in oil price variance of the last 2 years resulting from Middle Eastern conflict and the Pandemic have impacted the underlying cycle. If a period of oil market volatility does happen in the November 2020 to March 2021 timeframe, in line with the 3 to 4 year cycle (the last spike cluster was in June 2018), it'll suggest that the mechanism driving the underlying ECG-like rhythm is robustly independent of general market forces and/or other broad economic factors.

This is quite interesting, Tom-- what should stakeholders in the power sector do based on this information? Is it time to hop off the fossils roller coaster or just bake in these price fluctuations into their planning?

Tom Therramus's picture
Tom Therramus on Dec 7, 2021

Thanks for giving the post a read. Appreciated. You pose good questions, but these are also hard questions to answer. Firstly, IMO stakeholders in the power sector need to be aware of this process - as factors with major effects on the stability of the overall energy markets should be a central concern for such folk. The second part of your question concerning solutions - again not easy. Hopping off the "fossil fuels roller coaster" - not a realistic option. Baking such "price fluctuations into their planning"  I think this is already happening to some degree, albeit that planners are likely not familiar with the underlying processes that I describe in my post/essay. However, the governing issue is that of scale and what mitigations are realistically possible. This is a large (planetary) scale organic phenomenon linked to the oil depletion curve. King Kanute believed he  could command the tides ...  but found that his words and actions were not sufficient to halt it's progression. As with Kanute, the solution may ultimately be about learning humility - understanding that there are some processes that we are able to control and others that we can not.

Matt Chester's picture
Matt Chester on Dec 7, 2021

Thanks for the follow up and the keen insights, Tom! Much appreciated. 

This is a large (planetary) scale organic phenomenon linked to the oil depletion curve. 

This certainly seems as true as ever given all the recent developments. Will continue to be tracking closely!

Jim Stack's picture
Jim Stack on Dec 8, 2021

Very good. Time will show the truth that most people have been denying for years.

Tom Therramus's picture
Tom Therramus on Dec 9, 2021

Many thanks for giving the post a read Jim. It is a tough situation to face up too. As I write in the article, I don't blame anyone for not wanting think too deeply about this issue - but face it we must.

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