'Tis the season to be jolly. It's also the time analysts and other soothsayers predict what will happen to the world in general and oil markets in particular in 2012—despite the fact they didn't guess most major events of 2011.
Forecasts for 2012 "appear to be heading towards the more apocalyptic," said Paul Horsnell, managing director of Commodities Research at Barclays Capital in London. Displaying the cynicism typical of jaded journalists and professional fortune-tellers, he lists three reasons.
"First, it is within the usual psychology of human nature that you are going to get more attention with your outlook if it involves an asteroid actually hitting Earth rather than being a near miss. An outlook in which the global economy just about muddles by and in which growth is muted and people are a bit miffed but not overly angry is not going to get as many headlines as one that involves economic and political Armageddon," Jakob said.
It's like those people who claim to recall previous lives as members of Marie Antoinette's court, soldiers killed in battle, or plague victims—someone "picturesque" at one extreme or another. No one ever recalls being an overworked, underpaid accountant like Bob Cratchit. The same applies to folks who say they were abducted by space aliens—how come none of them report being tossed back as an unsatisfactory sample for testing? With fantasies, it's go big or go home.
"The second reason for the more apocalyptic oil outlooks is simply that they reflect and perhaps amplify significantly the tone coming through from macroeconomic outlooks of heightened macroeconomic risks and potential extreme outcomes," said Jakob.
Mayans menace markets
"However, for a third reason, we blame the Mayans, or rather we blame contemporary views of the Mayans," he said. There has been a flurry of TV programs and even a movie based on the Mayan "prediction" that the world will end Dec. 21, 2012, simply because that's the last date carved on a calendar centuries ago. That suggests "the oil market might look a bit weak as well," Jakob said.
Those who believe in predestination seem never to let facts stand in the way of a good scare story. Expiration of the Mayan calendar on a certain date is no more an indication of the end of time than is a stopped clock. "The reality is simply that the Mayan calendar as they devised it runs out of years in 2012. The only implication of that to 8th-century Mayans is that they knew that at some point in the following 1,300 years they would need to devise a new calendar," Jakob surmised. He theorized, "Somewhere in the ruins of Chichen Itza [in Mexico] there is the Mayan equivalent of a post-it note saying something like 'Remember to fix bookshelf. And devise a new calendar sometime, but don't worry, it's not pressing.' Indeed, as the last Mayan departed Chichen Itza, he or she probably thought 'Glad I didn't waste any time on that calendar thing because it doesn't look as if we are going to need it after all.'"
The demise of the Mayan culture that was buried by jungle and virtually forgotten for centuries seems to this reporter the best argument against the 2012 date for the world's end. If a culture went to the trouble of devising and carving an intricate calendar extending centuries into the future, surely its members expected that culture would still be around then. Yet the Mayan culture was snuffed out centuries ago, with no forewarning of its end from their wise men.
"In short, the Mayans did not expect the world to end in 2012, and neither do we. We expect that it might be economically very so-so, nobody will be particularly happy with growth outcomes, and the geopolitical backdrop might be volatile, but we do not expect Armageddon," Jakob said.
On the other hand, if the end does come those holding long positions in the market will look awfully silly.
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