I like to think of the oil market as an opera, where big dramas get played out by colorful outsized characters ranging from OPEC, China and Russia to currency hedgers, militias in Nigeria and choruses of American commuters, among others. The opera metaphor also works to explain how the market gets carried away on symphonic swirls of emotion that lead to a price of $145 a barrel in July before falling to below $50 a barrel. (continued ...)

Cue a piccolo solo. It's melodramatic and somewhat irrational, but it has its own internal logic.

The issue is that the price of oil is now suddenly low and everyone wants to know where it is going. The answer has arrived in the form of the yearly International Energy Agency forecast. Until recently the IEA has tended to offer soothing portraits of the future. Not this time. The Eurocrats are flipping out. Most striking is their analysis of increased energy demand and massive greenhouse gas emissions.

Yeah yeah, but how much is oil going to cost? The forecast mentions that output from older oil fields is declining rapidly (especially in non-OPEC fields) but low crude prices mean that many oil producers are not investing in new production. And that means, while the economy is bad, oil prices are likely to keep bouncing around until suddenly and symphonically the world economy kicks into gear. And then, once again, our demand will hit a wall of limited supply. Cymbal crash: high prices.

Obviously, we need to stop relying on oil prices to make our energy policy. And we need to get to work-reducing consumption, increasing efficiency, producing products that the world wants to buy when oil is expensive.

If you're a closet wonk, here's one idea I have for a stimulus program that will reduce energy use.

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Lisa Margonelli writes about the global culture and economy of energy. Margonelli is a fellow at the New American Foundation and the author of "Oil On the Brain: Petroleum's Long Strange Trip to Your Tank" (2008).