Yesterday on MoneyRates.com, Richard Barrington, a Senior Financial Analyst, wrote an article titled "7 Reasons to Worry About Cheap Oil."   As previously discussed in this blog, Barrington's article addresses several ways in which cheap oil may not be a long term benefit to the national – or world – economy.

I was struck, however, by one sentence in the article that summed up the general unease that I, and I'm sure others, have about the wild swings in oil prices:

Oil may well be the single most important commodity in the world. It says something disturbing, then, that something so important could be priced so inefficiently as to range from over $100 dollars a barrel to under $50 in the space of less than a year.

One industry-related website proclaims that the oil and natural gas industries directly employee 9.8 million people, and that wages paid by the industry in direct and indirect wages to U.S. employees were $200 billion and $300 billion, respectively.  In addition, it is impossible to even count the number of politicians, commentators and others who have asserted that oil production is vital to our national security.

Despite this huge impact, to a large extent, companies, governments and individuals whose incomes, tax bases and livelihoods are tied to oil prices are seemingly adrift at sea, at the mercy of fickle, oft changing winds.

What is the answer?  I'm not ashamed to admit that I have no idea.  I am dubious that additional governmental regulation would – or even could – smooth out these large swings; at least not without some significant unintended consequences.  It also seems the global socio-political-economic factors are going to continue to play a huge role in oil price fluctuations.

In the end, maybe I'm just searching for certainty or reliability where there is none.  Maybe I just would sleep better if I thought I had a better grasp on the future of the industry.

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