Oil Is Cheap

Oil is cheap.

Consider that at $100 a barrel oil is only $2.38 a gallon (and 24 cents a cup).

Consider that with $3 a gallon gasoline the U.S. economy keeps bubbling along.

Consider that even with a major war occurring in a major oil-producing state, a related war ongoing in a nearby country, nuclear threats from a neighboring major oil-producer, and massive growth in oil demand from two enormous and rapidly growing economies--i.e., India and China--oil price still has yet to hit the high achieved in 1980 from a simple oil embargo.

Consider that 75% of the world's crude oil is consumed by countries outside the U.S. in a price denominated in dollars, a currency which has recently lost half its value.

Consider that a good chunk of the world consumes oil at favored prices, provided for them by a nationalized oil company, e.g., those China, Russia, India, Latin America, and the Middle East.

Isn't this the crux of the problem? So much of the world's oil is being consumed at prices below what the market would set. If oil were no longer cheap for these favored customers wouldn't it become less dear for the rest of us?

Rigged: The True Story of an Ivy League Kid Who Changed the World of Oil, from Wall Street to Dubai