the mechanism that has been pushing prices down is the same one that had been pushing prices up in the first part of the year (as I explained in this recent opus of the series: it's the marginal cost of demand destruction that matters, rather than thr marginal cost of production. Demand was driving prices up when it was strong, and it is now driving prices down just as brutally as it is now crumbling just as spectacularly (whether directly, finally, because of high prices, or indirectly via the economic crunch).
As I've said before, I think your explanation re marginal costs as setting the parameters for price setting is correct. My take on it - as a Bear of Little Economic Brain - is as a market swinging from being a "Buyer's Market" to being a "Seller's Market" and back again.
But whether it was "large volatility" (as you described it) or a "bubble" (as I saw it) the cause of the massive rise to $147.00 and fall back is IMHO the excessive gearing which results from borrowing; derivatives; or both.
It reminds me a bit of the effect of water on a RoRo ferry's car deck - except the inevitable capsize is still to come because the bow doors remain open...
Re Yergin, I've got a late invite to speak about "unitisation" of energy at the
13th IIES International Oil and Gas Conference in Teheran
where he's speaking. I could maybe find out the secret of his success... "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
