responsible for trying to manage the world market. They underestimated demand and they overestimated non-OPEC supply."

To get the full context for OPEC's cut, we need to go back to the fall of 2006, when the world was a very different place. The price of oil was falling fast, from a high of $78 in August to below $60 by late October. Hedge funds were reportedly piling into the market and driving the price lower. The poo-bahs of OPEC probably had flashbacks to the mid-1980s oil-price collapse. The cartel decided it was time to act.

On Oct. 20, OPEC voted to drop production by 1.2 million barrels per day.

That day may have been the last time OPEC had control of the oil market. By mid-January, oil bottomed at $51 permajor consuming countries are at comfortable levels. This should point away from the direction of current price levels."

In recent weeks, while Congress has been holding dozens of hearings to try to figure out who to blame for the rude price of crude, the Secretary-General and his colleague Chakib Khelil, the president of OPEC and head of Algeria's oil ministry, have offered a variety of explanations. Khelil has cited the falling value of the U.S. dollar, referenced tensions between the U.S. and Iran, and pointed the finger at hedge fund speculators. (It's hard to argue with the first two, but I generally side with my colleague Jon Birger in believing that it's bogus to blame speculators.) Saudi Arabia called an emergency oil summit last month, the main purpose of