One thing is clear, production is inflexible, not demand.

The oil industry has become much more concentrated, with the great bulk of production in the hands of a few dozen national producers. An oil minister's worst nightmare is for his country to cut production - for any reason - and watch prices rise as a result, with his adversarial neighbor reaping a windfall. Meanwhile, his own country becomes more and more vulnerable, because its income has been reduced because of low production.

As a result, the countries pump as much and as fast as possible. 85 million barrels every single day is a lot of oil. That oil has to be sold and however low the price must go to clear that day's market, it will be cleared. If the production does not leave the country, the outcome is the same as a cut in production, so sales strategy and promotion are a part of the production process as well.

Of course, there are unintended consequences, some of which are well known. The low price reduces investment in new production, repairs and maintainence or petro infrastructure and the production of alternative energy sources. A less well considered outcome is the loss of income to our suppliers; these countries are the source of much of US stimulus and bailout funding, as well as customers for USA- made goods and services. The highly valued dollar becomes an additional difficulty. The possibility that declining revenues might result in domestic unrest - and Al Qaeda attacks on oil infrastructure - also increases.

What is infuriating is the deleterious effects could be avoided by the government placing a floor under oil prices or, at least gasoline prices. $4 dollar per gallon gas would give the government policy leverage with our suppliers and encourage conservation and help finance alternatives. It would demonstrate someone in Washington knows what they are doing and that hard choices can be made, rather than have the choices made for us by circumstance.