60$ a barrel is a magic number. Our production can survive for a few months on prices below that before things go bad in the oil world here. In the meantime, for Iran, Venezuela, Nigeria, Bahrain, and a number of other less than friendly countries they _need_ the price of oil to be greater than 100$ a barrel for their governments to keep spending the way they want to and therefor keep functioning. So, if we can take the hit for a while the real crushing will happen to folks who already really don't like us, so screw them.. Also, folks like ISIS are very dependent on oil being up around 100$ a barrel again, screw them.. Finally, oil coal and natural gas are essentially the lubricant for the economy. Our economy has gotten pretty good at being lubricated at around 60 a barrel. The domestic wells can handle the price and the economy will flourish with those prices.. Also, lets keep in mind that a chunk of the cost keeping profitability on the domestic wells is the need to truck and train the oil around instead of using a pipeline. Come January I really expect that the pipes will finally actually get approved. Once the pipelines are in place the price of a profitable barrel of oil will drop a bit. We might even get it down a little under 50 a barrel.

A bit premature for Galt's engine, I think. Its value would still be looted.

Normally, a decline in production in one area spurs innovation and a rise in production in other areas. However, Saudi Arabia's power coupled with the enviro-freaks in America who are hell-bent on destroying our ability to use coal and who are the verge of stopping fracking, will combine to make America a non-producer of energy and hasten an economic collapse.

Time for Galt's engine to crush the cartel.

OPEC's goal back then - and is now - to keep Canada and the US out of the market, and they will crash the value of their own product in the short term to preserve their cartel in the long term. A one-year crash back in the early 1980s kept North America largely out of the oil producing business for 30 years.

How does this theory play out and what is the plan for economic advantage?

... assuming a free market.

Don't be fooled. The crash of oil prices is being done intentionally to keep North American oil and natural gas out of the market. It reminds me so much of the cratering of oil prices from $50 to $8 per barrel in the early 1980s to take out Texas and Oklahoma production.

Lower oil prices put more money in people's pockets, which will be spent, thus stimulating the economy. Certain states dependent on oil revenue might suffer, but overall it would be good for oil prices to continue dropping.

Unless the TBTF banks are overwhelmingly short and their customers are long. Especially since they now have the blessing of the G20 to seize all their customers deposits (in addition to the next set of bailouts.)

This is something to pay close attention to. It has been my belief for the last 3 years that we are headed for a crash in the last half of 2015. This could very well be the lead up to it. Of course I would pay to be wrong about the crash and while I may be wrong on the timing I don't believe we get by much longer without it. :(

Rising world economic production will lead to increased demand and prevent oil from dropping to historic lows.