Oil as a price index

 

And oil say we should be deflationary. We are shaking off 12 years of supply disruptions.  $40 seems like a normal price.

Oil volatility jacked up a lot of prices and having that oil back to normal means a lot of prices will drop.

About two things cause that volatility, 1) Doing oil deals with Arabs 2) Impeding cross capital flows to neutralize the oil deficit.   Both are disruptive, the second because oil sources are concentrated.  When sources of oil are concentrated, then capital flow neutralization directly impacts the value of oil in the ground.  Other words: It is easy for OPEC to go on strike.