So, Bush signs a paper giving the oil industry everything they want and suddenly the price of oil plummets. It falls even though it will take years, if not decades, from the drill decision to the refining and distribution stage. That's not supply and demand, that's blackmail.

The oil industry recognizes that American reserves are exhausted, and even several big strikes, even though highly profitable to their investors, will be only a drop in the bucket compared to total US consumption. Supply and demand is not an issue unless we make a huge strike comparable to foreign reserves, and that ain't going to happen. Ask a geologist, not a business major.

Petroleum prices respond to world markets, as long as most crude comes from the middle east, and we are the world's greatest consumer, they will set the price of oil. "Our" oil will go to the highest bidder, just like Saudi and Venezuelan crude does. It's Republican political propaganda fantasy to think huge savings, or even guaranteed supplies, will be available to us. We will still pay the world price, minus a possible small saving due to cheaper transport costs.

Our oil companies are multinationals, not patriots, and certainly not nationalized; no matter how much crude we pump here it will not affect our price. Did North Sea oil give the consumers in Norway and the UK a break? Did prices go up when the North slope went dry? Oil is a world market. Oil produced here goes to the world, it will not be kept here for our SUVs and air conditioners just because of oil executive largesse, or Joe the Plumber's RV; unless, of course, the government forces the issue--and nationalizes our oil industry..

The oil companies have vast areas offshore available to them for exploration, they just want access to areas that are easier to get to and cheaper to exploit, that is, of greater environmental threat. It's that simple.

And by the way, compare that little commodities chart you posted with this, make sure you set the time range to 5 years and the chart settings/scale to "linear".

Chart Link

I think it is fairly clear oil prices respond to international financial conditions, and the DJIA is pretty much the single best indicator we have of that. The correlation is quite obvious. Smoothed over reasonable time scales, oil prices are set by markets, not by socialist governments or greedy monopolists. Isn't that what you've been yelling at us for years?

Of course, if you insist on explaining the oil curve as Obama's socialism, then you are forced to concede his socialism is doing wonders for the stock market.