Sound economic and business planning depends on lining up the invariables and making educated predictions on the variables.

So when the price one of the most important variables is chronically unstable, it makes planning increasingly difficult.

So it is with the price of oil which more than doubled from the fall of 2007 to a record $147 a barrel last July, only to fall off to a little over $30 in January. Then it started climbing to more than $73 a barrel less than two weeks ago before again falling off to $60 as of this writing, according to The Associated Press. Gosh knows where it will be when you read this.

Certainly last year's run-up had disastrous consequences for the U.S. auto industry as gas prices soared to $4 a gallon and consumer demand changed overnight.

SUVs and other large vehicles were ignored on dealers' lots as consumers sought out more fuel efficient vehicles. But when prices fell of, fickle consumers resumed their love affair with BIG and demand for smaller vehicles faltered.

But the winds of change were now blasting the world economy let alone the auto industry and consumer demand for any vehicle fell off disastrously, helping to send Chrysler and General Motors into bankruptcy just a few months ago.

Oil prices
To be sure, changes in oil prices can be interpreted as good whether they go up or down.

Higher oil prices are a good thing because they reflect confidence that the global economy is coming out of recession and thus the demand for oil will go up.

On the other hand, lower oil prices are a good thing because they result in lower fuel prices across the board and thus help stimulate the global economy.

The problem is not so much the price as the instability which has been so dramatic over the last 18 months.

The latest news indicates prices will continue to weaken. U.S stocks of gasoline are growing, according to the Department of Energy, while the Organization of Petroleum Exporting Countries (OPEC) sees demand for crude oil down sharply.

Cutting speculation
All well and good, but oil is the lifeblood of the modern world, underpinning almost everything we make and do and the government is apparently getting tired of betting the house on its price which jerks up and down largely based on supply and speculation.

Indeed, the Commodity Futures Trading Commission (CFTC) is currently proposing trading limits on "all commodities of finite supply, in particular energy commodities such as crude oil, heating oil, natural gas, gasoline and other energy products," according to Chairman Gary Gensler and reported by Bloomberg.

The volatile price of oil has been singled out as a motivating force behind such a move which is aimed at cutting excessive speculation.

In the meantime, enjoy the prices at the gas pumps which have fallen about a nickel a gallon over last two weeks. Who knows what they will do next week!

- Peter C.T. Elsworth