Recent trading in oil futures illustrates how markets tend to go to excess. Only weeks ago, futures traders had oil pegged to drop to $25/bbl, a figure that would have amounted to an 83% price decline in a matter of months.

Please, get the Zamboni out a clear the ice. The fear out there is so thick, who can skate through it?

And while the experts in the futures markets basically had the world coming to an end, the fact remained that economic forces already had gone to work to begin limiting supply.

$45/bbl oil means a great deal of exploration and development in both conventional and non-conventional (read Alberta Tar Sands) only go forward contingent on higher priced oil.

Moreover, the economics of new energy deals in Solar, Biofuels, etc. change dramatically with oil prices at current levels. There are really two major impacts of current oil prices for investors. First, low energy prices will keep certain future supply off the market. So when world energy demand accelerates, watch out.

Second, at  current levels translated into gasoline prices, "cheap oil" gives a massive tax break to consumers. Just how you quantify is up to you, but consider a family paying $800/month for gas last year, now paying half of that now. It's equivalent to a $400 per month tax cut, nearly$5,000 per year.

Combined with the huge monetary, fiscal and program stimulus from major governments, consumers around the world are goimng to have a lot more money in the near future.

And that, in turn, puts upward pressure on energy prices. Kinda odd that the folks in the futures market didn't figure that one out sooner, isn't it?