The Hunt brothers had made a fortune in the oil business, but in the 1970’s they tried to corner the market in silver and ran the price up to $50 an ounce. The bubble burst and the metal fell to a few dollars an ounce and never recovered to the bubble highs. Even today it has only risen to a bit over $10 an ounce- thirty years later.

Yet today people think it is inevitable that oil will quickly return to $150 a barrel, as if that price is somehow the right price and the current price today of under $40 is ‘artificially’ low.

We now realize that the price of oil was more a product of Wall Street and the same kind of ‘innovative’ financial products that created the housing bubble.

When oil was painfully high, Congress blasted the oil companies and accused them of controlling the market for their own financial greed. No less than Hillary Clinton and Nancy Pelosi threatened to take the excess profits away from the greedy oil companies. Oil executives testified that the prices were all market driven.

It never made sense. If the oil companies could control the price of oil then why would they drive the price up NOW and why did they not do it years ago? And why did they allow the price to drop so suddenly?

And the demand explanation also made no sense. Did the number of autos or drivers double in only a few months? Of course not.

Yet if the market had continued a little longer and if a single party had been in control the oil companies would have been the victim of a punitive tax or energy policy and Congress would be taking credit for bringing oil prices down. Congress often takes credit for solving problems that were already solving themselves.

The oil bubble, like the housing bubble, demonstrate how poorly Congress understands markets, how quickly they would be willing to respond with wrong policies, and the danger of reactionary economic policies.