Oil and oil-related exchange traded funds (ETFs), like Jimmy Stewart in “Vertigo,” look up. Then they look down. They look up. Then they look down.

What’s going on? Early this morning, the situation was no different. The price of a barrel crept back up to $115 on the threat of Tropical Storm Fay, reports Stevenson Jacobs for the Associated Press. But then the threat eased, and oil went back down below $113.

A slightly weakened dollar is so far keeping prices from falling even lower.

Gas is continuing its downward trek, too, falling for its 32nd consecutive day. The average price for a gallon is now $3.741, reports Kenneth Musante for CNN Money. Prices are still 35% higher from a year ago.

Stacey Vanek-Smith for Marketplace gives some perspective on why oil continues to fluctuate so much and what can be done about it. One issue that’s been raised is that of drilling domestically. But Mark Bernstein, director of the energy institute at the University of Southern California, says that it won’t help.

We hit our peak oil production 30 years ago, and not much more is likely to be found, he says. And perhaps instead of tapping into what’s left now, it might be worth considering saving it as insurance for later.

Bernstein also sees more fluctuation in our future, because there isn’t much consumers can do in the short-term to affect prices that would really work in the long-term. What it’s going to take is a major, and lasting, behavioral change.

  • United States Oil (USO), up 21.2% year-to-date
  • United States Gasoline (UGA), up 6.3% since Feb. 28 inception
  • MacroShares $100 Oil Down (DOY), up 14.3% since July 22 inception
  • PowerShares DB Oil (DBO), up 24.6% year-to-date

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.