The Hamilton theory of oil peaks is being tested

Brent

Jim Hamilton shows that we often go into a new regime when oil proces peak over the previous peak in oil prices.  Why would that happen?  We adjust out purchases to keep reserves in inventory, and that means shortening supplies lines, buying in high quantity, less often; thus reducing the network rank.  However, looking at the adjustment, it seems smooth, so the economy may just run the current regime to the max and hope for no supply disruptions.

How does that work in the market place?  oil traders have Huffman encoders, they look for price bunching, unattended aggregates.  So they buy into the unattended aggregate using futures market, and the oil tankers eventually respond with bigger convoys arriving less frequently.  The Windowed Huffman encoder is the link between network connectivity and optimal flow.