OPEC rocks

Why are so many so glum about cheap oil?

For years, the complaint has been that the high price of oil makes life difficult for people. These include ordinary American families for whom a $65 fill-up at the local Exxon became routine, as well as the many industries that rely on petroleum for their products.

Well, prices are now coming down (in real terms) to levels we haven't seen in some time, and some people fret that this will be a bad thing.

The most recent price drops were precipitated by a decision by the Organization of Petroleum Exporting Countries, or OPEC, not to cut its oil production.

By declining to limit supply, OPEC in effect continued the drop in prices. How different this was from 1973, when an OPEC embargo sent prices soaring.

Now, it's true that, as prices go lower, it will put the squeeze on some less efficient oil producers, which may include newer American producers who have higher costs than longer established competitors.

But not necessarily. America's emergence as a big player in global oil markets has been built largely on technological innovations such as horizontal drilling and fracking that have made them relatively efficient.

Some may well be squeezed out. But the real hits will be taken by our biggest enemies, such as Russia and Iran.

These nations essentially run Beverly Hillbilly economies that are disproportionately dominated by the crude that comes up from the ground and the revenues it brings in.

Without these oil revenues, their governments lose much of their clout with the proxies and mischief they fund abroad, and could even face a backlash at home from their own people, who will take a hit as their currencies decline.

Our guess is that this is precisely what the Saudis were aiming at when they made their decision to keep the wells open and pumping.

For American oil producers, the equation is more simple. If the price drops make it uneconomical for them to drill and extract oil, they won't. But if prices rise and make it profitable, they will. Which is exactly the way the market should work.

The bottom line is that we ought to be cheering. The Post bets American producers are more than capable of meeting the challenge of producing oil in a market driven by prices.

In the meantime, the American consumer gets a big tax break, our companies pay less for a key component and our enemies are squeezed.

What's not to like?

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