Slow growth here and in China—as well as a recession in Europe—is reducing demand for oil. Inventories in the U.S. are at a 22-year high. The Federal Reserve Board’s QEs that pumped paper money into the economy and drove up the nominal price of oil have come to an end. And the twelve OPEC oil cartelists, who between them supply 40 percent of the world’s oil, are producing 1.6 million barrels in excess of the agreed daily quota of 30 million barrels. As a result, U.S. benchmark crude oil prices are now closer to $80 per barrel than to the $110 they reached only four months ago.

OPEC’s hawks—Venezuela, Iran and Nigeria among them—want Saudi Arabia to rein in output. They need much more than $80 to cover their budgets, while non-member, fellow-traveller Russia needs closer to $90 to avoid a problem for its rouble. The Saudis feel they can finance their welfare state, their prince’s live styles and their clerics’ call for funds to spread their misogynistic anti-Semitic version of Islam around the world with $80 oil. So that’s the new floor — unless the Saudis decide U.S. production is becoming so great a threat that they cut prices to levels higher-cost American producers cannot meet, a real threat of which operators in the U.S. are well aware. Bill Maloney, who heads the vigorous North American development operation of Statoil, the Norwegian state oil company, told the Financial Times, “If it’s [a price drop] a flash event, the industry could withstand that. If it’s for an extended time, that is when you begin to think: ‘my gosh, what are we going to do here?’”