The reason for the crash in oil is simple: increasing production in the face of decreasing demand. What will happen in the not too distant future is that the Arabs will stop overproducing with the intent of killing off the US oil industry and limit production down to be commensurate with demand, or less so, and prices will begin to rise. It is a new dynamic for them, as the world is not as willing as it used to be to soak up everything they produce. The price will find a new equilibrium. My guess would be a US average price in the $2.50-3 range in today's dollars.
I am glad to see this new reality catching on. I think the huge run up in prices over the last five years was a mistake for oil in the long term. Alternatives to oil have finally gotten a strong hold with enough grunt to become cost effective. The challenge will be to keep our eye on the long term and not assume that cheap oil is here to stay. History has repeatedly proven that to be wrong. Unfortunately, American consumers and electeds are notoriously very short sighted.
The oil producers may well have sealed their demise through their greed. I certainly hope so.
