OIL IS CHEAP, RELATIVELY

The price of oil seemed to go on vacation for awhile, dropping to around $50 per barrel and making heating oil and gasoline seem much more affordable. But the price has risen again to around $60 a barrel, and businesses and consumers can’t help wondering where it will go next.

No one knows, of course, but the price seems likely to hold steady for a while. The Saudi Arabia oil minister, Ali al-Naimi, said in Tokyo recently that his country’s policy was to maintain “moderate prices.” And a week earlier, in New Delhi, he ruled out an emergency meeting of the Organization of Petroleum Exporting Countries, sought by some members when the price dropped briefly below $50 a barrel. Saudi Arabia carries a lot of weight, since it is OPEC’s largest producer and usually sets the cartel’s agenda.

High prices boost earnings for all producers, but the $77-a-barrel spike last July pushed U.S. gasoline up to $3 a gallon, arousing resentment of motorists, damaging the American automobile industry by driving people from American gas guzzlers to foreign imports, stirring demands for alternative energy sources, arousing fears of an economic slump or recession, and slowing the growth in global oil demand from a peak of 4 percent in 2004 to 1 percent in 2006.

OPEC’s manipulation of the world price of oil, while not always successful, has worked effectively in recent years to raise the price from less than $18 a barrel in the 1990s. The New York Times has quoted Sadek Boussena, a former OPEC president from Algeria, as saying: “High prices are not in the interest of Saudi Arabia. We’ve all seen what $70 does. It attracts alternatives, it reduces demand. On the other hand, I don’t think the Saudis want oil below $50. They need the revenue.”

The Times recalled that a Saudi analyst suggested in a Washington Post article late last year that Saudi Arabia was actively seeking to depress oil markets in hopes of crippling Iran’s economy. It said the Saudi quickly dismissed the claim.

Vice President Dick Cheney’s mysterious trip to Saudi Arabia in November for a meeting of a few hours with King Abdullah continues to spark speculation that he was trying to get his help against Iran by lowering the world price of oil. Neither side had much to say about what the two men discussed in their few hours together.

Still, the oil price went down, Iran’s oil revenues are hurting, and gasoline at the pump here at home is a good bit cheaper than last summer. It may be that a stabilized price will be in place for a while.