Still, the price decline is not without a downside, Dawson added. Oil exploration and production, particularly in higher-cost conventional oil fields, and in the oil sands and oil shale regions, is likely to be reduced, if oil's price remains below $50 for more than six months, he added. "Many oil companies will suspend high-cost projects and also decrease research and exploration budgets, which is not a good trend to see, long-term. That's why we don't want a too high oil price, but we don't want a too low oil price, either."

But what constitutes a fair oil price? "Market absolutists would say 'it's whatever the market will bear,' " Dawson said. "But that's not a credible argument. Does anyone think $147 oil was a fair price? It wasn't. It was a leverage-driven bubble that's now burst. Similarly, if we fall to a 'panic sale' price of $20 per barrel, that wouldn't be fair either. A fair price could be what allows for exploration, and a transition to renewable energy without jeopardizing U.S. and GDP growth. Perhaps it's around $30 per barrel."

But do not fret for Saudi Arabia, Dawson said. Although the kingdom does not release official production costs, many analysts say the Saudis can profitably pump most of its oil for a price of $2.50-7.50 per barrel. (So one can imagine what the profit margins were like when oil was above $100 per barrel.)

Oil / Economic Analysis: The American people will take the de-facto tax cut from oil's price drop: the nation can use all the economic stimulus it can get. But it should not deflect the Obama Administration and the new Congress from passing a major energy policy designed to end U.S. dependence on oil.