Oil Friday at mid-day traded down $2.05 to $39.65 per barrel. Oil has fallen an astounding $100-plus since hitting a record high of $147.27 in the summer of 2008. In current dollars, oil has cycled between $20 and $100 per barrel three times since 1973.

Dawson says market absolutists have asserted that 'the free market' has been the most effective mechanism for price discovery and product delivery in oil, but the reality is far from that. In fact, he says, the market has created wild, unpredictable boom-and-bust cycles that have disrupted -- and in some cases ruined -- exploration operations, and economic growth in the United States. And, of course, this year 'the free market' created a leverage-assisted bubble that pushed oil to ridiculous levels -- $147 per barrel -- and helped choke-off the U.S. economy, before the price of oil collapsed when the bubble burst this fall.

"Under the free market, we've let the world's economies, include the United States economy, be vulnerable to wide, volatile, arbitrary swings in the price of its most important commodity, oil. It's pretty absurd, when you think about it," Dawson said. "It's no way to plan, and it's hard to believe we'd let a $14 trillion economy be subject to such a volatile, unpredictable variable."

Smoothing out oil's ups and downs

Dawson argues he has a better way: an oil price shock absorber.

Here's how it would work: the federal government sets an optimal level for the price of oil, for example $50-70.

When the market price rises above $70, the government, on a graduated basis, starts paying subsidies to consumers and starts taxing oil producers to both cushion the effect, or 'shock' on consumers and redirect windfall profits from oil companies to societal goals.

Conversely, when the market price falls below $50, the government, on a graduated basis, pays a subsidy to oil producers, to support their income, and raises taxes on oil at the consumer level (gasoline, diesel, heating oil, etc.) to maintain and encourage conservation.

The benefits? Oil producers receives a set price for their product, and can formulate long-term research and exploration budgets with confidence -- without fearing a sudden oil price collapse like the one that occurred this year. Consumers are also protected from gasoline shocks if oil rises above $70, and society maintains conservation levels by ensuring that gasoline prices do not drop to very low levels.

Economic Analysis: Like economist Dawson, the view from here argues that the U.S. economy would be better off with an oil price shock absorber at $50-70.

One could argue that a free market price for oil leads to the best outcomes, if you believe executives and consumers can effectively plan for oil between $30 and $110 per barrel.