This week anyone with a car is telling the same story: Where were you when you saw regular unleaded at less than $2 a gallon? (New Market, Virginia, in my case.) People are talking about it like they were Noah catching sight of Mt. Ararat--the flood of high prices is over. Except, well, it's not. According to a new report by the International Energy Agency, over the last year investment in oil and gas exploration has tanked, resulting in a $60 billion shortfall. The decline in investment is the other shoe in the recent drop in prices--without income, state-run oil companies, which are expected to account for 80 percent of investment and production over the next 20 years, are suddenly strapped for cash. The IEA also issued revised predictions for long-term growth in world energy demand--slightly lower, thanks to the global economic downturn, but still frighteningly high: 1.6 percent annual increases between 2006 and 2030, an almost doubling of current consumption. And almost all of it will come from developing countries.

This means that, as another, forthcoming IEA report predicts, oil prices will soon be on the rise again, averaging $100 a barrel between now and 2015, and up to $200 by 2030. To many analysts, dropping oil prices are simply the result of a burst bubble, resetting to reasonable numbers. And that may be partly true. Remember that the price-per-barrel is not a direct reflection of demand, but rather it’s filtered through a market. Expectations of continued demand, not the demand itself, drove oil prices to unrealistic levels. When it looked like that demand would drop temporarily, investors fled. But current prices are unrealistically low, a sort of concave bubble, and regardless of demand they’re set for yet another correction. In the long run, the brute facts will adhere: dwindling supply, skyrocketing demand, and a failure to develop a coherent alternative global energy strategy. If I had some extra cash, I’d be buying myself some crude oil right now. Sweet, sweet crude.

--Clay Risen