The most ironic aspect to the lately falling oil price is that it comes amid great unrest in the Middle East. Which---consistent with what you are at this moment saying to your computer screen---speaks to all that production occurring right here in the U.S. But that's not the whole story.
Some blame (or credit) the recent plunge in oil prices on a cooling---or anticipation of a cooling---global economy. Okay---my optimistic lean notwithstanding (there've been enough recent non-US indicators to question my view)---I'll concede to that as a possibility. But that's still not the story.
While the graph below (click to enlarge) doesn't suggest perfect negative correlation (two things moving in different directions) between the US dollar (the currency oil is traded in worldwide) and the price of a gallon of oil, you can clearly see the relationship.
While fewer dollars buying the same stuff is a wonderful thing for you and me, our export industries like it like a toothache. I.e., a stronger dollar means weaker foreign currencies, which makes U.S. goods more expensive for foreign customers. While you and I get to buy more stuff from foreign producers...
Back to oil, and why I love the market process: The lower the price of oil, the more the discretionary income for you and me. The more the discretionary income for you and me, the more the other resources we can bring to bear. The more the other resources we bring to bear, the better the economy. And of course, ultimately, the better the economy, the more the use of energy products. And the more the use of energy products, the greater the price of energy products---and so on.
More simply put: lower prices beget higher demand (and lower production), higher demand begets higher prices (and higher production).
So why the higher dollar? Well, as I've reported of late, the U.S. economy ain't doin so bad---while, other central banks, in their efforts to stimulate their own economies (they ain't doin so good), are printing (or looking to print) money like mad, as the U.S. central bank prints less and looks to raise interest rates in the not too distant future. It's an utter no-brainer that the dollar rises in this environment. So then, does this mean oil crashes to $50 as the dollar pounds the pound, the euro, the yen, etc.? Uh.... no, I don't think so. Don't forget, markets---
Time will tell...