I think Krugman does have some valuable things to say. Good article Mulp.

Here's what I 'got.'

Supply and demand is all fine and dandy, and yes, China is becoming a bigger consumer of oil but what Krugman does miss here is the ME oil cartel of OPEC. OPEC sets production---prices, and the rest of the market basically follows. The oil, energy producing countries of South America are trying to organize into a cartel also so to wield this type of power.

Remember when Mr. Bush met with the Saudis just recently? He begged them to raise production to help the US out. They basically laughed in his face. One of the biggest underlying factors in terms of oil production and open market 'worth' is the fact that a long, ongoing war in Iraq still exists. There is no better excuse for high prices of a specific commodity than war. Oil is essential and oil is the commidity of the ME, Iraq sits squarely in the middle of those oil producing fields/countries. It is no surprise that oil has gone through the roof during the years since the invasion of Iraq in 2003. Dick Cheney (et al) truly fooled himself into thinking Chalabi was right and the invasion would create no mess; the oil fields would be safe and in control by friendly allies. It just has not worked out this way at all, it was not going to. Notice that Clinton never took on a task of invading Iraq or any ME country this way, the price of oil never rose this quickly during his 8 years in office...he knew the realities of starting a war over there and how it would be linked to the U.S. dependence on oil.