Market’s control of oil prices uncertain

Although $50-per-barrel oil is getting to feel normal, many U.S. policy-makers and other oil “optimists” still talk about high prices as a temporary spike lasting at most a couple of years. Oil prices, they tell us, are being driven mainly by those gouging Machiavellians at OPEC and are therefore relatively short term.

But the idea that the free market will once again step in to tame OPEC isn’t as convincing any more, and any country, company or consumer whose near-term plans depend on a drop in oil prices will probably be in for a surprise.

In the first place, for all of OPEC’s well-documented greed, today’s prices are being driven mainly by something less made-for-TV: a decline in “spare production capacity.”