The Psychology of Market Price Part 2: The Oil Trap

Why Rising Prices Can Be Dangerous

https://app.warera.io/user/699c276cb34e1837aa5a253acommented on my previous article, https://app.warera.io/article/6a3282a4123a0ef2fa154a3e , suggesting that players should start stockpiling Oil because its price would eventually rise.

Then I noticed https://app.warera.io/user/68ac8a1b7f2f3be4810c0e6f agreeing with the idea as well. That made me curious. So I decided to look at the data myself. And surprisingly... they might have been right.

Why Oil Is Rising

Looking through transaction history, one thing became clear:

Most Oil demand comes from Countries and Military Units (MU).

Oil is mainly consumed for its headquarters maintenance purposes.

Countries use it for maintaining: Bunkers, Military Bases and Pacification

Depending on the province, maintenance can require anywhere from 1 to 75 Oil per hour.

Now multiply that by hundreds of provinces across the map.

Military Units also consume Oil for headquarters maintenance, typically around 1 to 10 Oil per hour.

Again, multiply that by hundreds, or even thousands, of MUs.

Suddenly, the demand starts looking much larger than many players realize.

Meanwhile, Oil has risen from its long-term average of around 0.160 to approximately 0.180 today.

The Supply Side

Using Wealthrate, I found that Oil currently has only:

• 497 producing companies

• 235 workers

• Around 2,455 Automated Engine PP/hour

Since 1 PP = 1 Oil, that's only about 2,455 Oil per hour coming from automation alone.

Compared to many other commodities, Oil remains one of the least-produced resources in the game.

Don't Forget Petroleum

Oil doesn't appear from nowhere.

To produce Oil, you need:

1 Petroleum + 1 PP = 1 Oil

And Petroleum has been climbing too.

Its price spent a long time around 0.07, but recently rose to around 0.094, even briefly touching 0.10 on the market.

Wealthrate currently shows:

• 961 Petroleum companies

• 184 workers

• Around 3,246 Automated Engine PP/hour

Interestingly, the number of Oil producers has been steadily increasing.

Back in April, there were fewer than 300 companies producing Oil.

Today there are nearly 500.

Unlike Oil, Petroleum production hasn't grown dramatically.

Since April, the number of producers has mostly stayed around 900-1,000 companies, fluctuating before settling near today's level.

Demand for Oil is pushing demand for Petroleum higher as well.

Why I Call It "The Trap"

The current price increase makes Oil look incredibly attractive. And that's exactly where the danger begins.

Strong demand + limited supply = rising prices.

High prices attract producers. More producers create more supply.

More supply eventually pushes prices down. It's the same supply-and-demand cycle we've already seen with Paper, Woods and Mysterious Plants.

Today, Oil may be rising because supply is struggling to keep up with demand.

Tomorrow, supply may finally catch up.

That's why I call it The Oil Trap.

Not because Oil is a bad investment.

But because success attracts competition.

Final Thoughts

I'm not saying Oil will crash tomorrow.

The current rally appears to be supported by genuine demand from Countries and Military Units.

But the number of producers keeps growing, and that's something worth watching.

After all, we've already seen similar stories with Paper, Woods and Mysterious Plants.

As for The Psychology of Market Prices Part 3...

What commodity do you think will be next? 😆

Grain? Livestock? Or something nobody is paying attention to yet?

@maddd