For those that had the fortitude to pull the trigger, shorting crude back in early July when all the perfect storm conditions for $200 per barrel oil were on the horizon ... and had the stones to stay with that trade ... made a killing.

This is one of the greatest reversals for any major market of any kind that has ever occurred. And it clearly shows how the crude oil market was being manipulated by speculators and hedge funds.

The impact was fatal for hundreds of small airlines and small- to medium-sized trucking companies, along with thousands of other companies that didn't hedge against the price explosion in energy.

The price of crude, which topped out at $147 per barrel in July 2008, crashed to $35 per barrel by Dec. 18 -- a 76% haircut -- before getting a bid that got the price back above $40 on the eye-popping headline that OPEC would slash daily production by 4.2 million barrels.

This June, Houston was the most economically attractive place in the country. That was when oil was climbing to its peak of $147 a barrel. Back in those glory days for the offshore oil patch, 81% of oil trading was conducted by speculators who were long oil and short the dollar. But that trade has lost its appeal and now Houston is suffering the effects of a 56% drop in price as the dollar booms 25%.

With the 40% decline in stocks this year and a financial crisis upon us, it looks like New York and Houston -- two cities which are culturally apart -- will both be suffering but for different reasons. Houston is going to suffer due to an expected oil demand slowdown. Despite OPEC's decision to cut its production quotas by 1.5 million barrels a day, crude still dropped $3.39 to close at $64.15 on Friday. Since oil trades in dollars and the world is buying up our Treasury bills due to a belief that the U.S. is a safe haven, the dollar is rising which means it takes fewer of them to buy a barrel of oil.

But despite an apparent slowdown driven by the economic crunch, official forecasts still forecast growth in demand -- albeit at a slower rate. For example, Paris's International Energy Agency (IEA) now predicts global oil demand will average 86.5 million barrels a day this year, up about 440,000 barrels a day from 2007 -- it previously forecast 940,000 barrels a day. This is making Houston's energy sector nervous. Why? The IEA reported that some analysts expect a big proportion of "global drilling rig orders will be canceled."

It wasn't too long ago that oil prices seemed destined to be on their way through the psychological $80 barrier, but the past week has put the brakes on rising oil. Why? Well... you can blame , or thank (depending on which way you were betting) the slowdown in oil prices on the subprime mortgage market.

That's right, you read it correctly. The weakness (meltdown) in the subprime mortgage market has made its way into oil prices. It was really only a matter of time before a connection and traders have finally decided to connect the dots. After all, the first domino to fall will be consumer spending, which in turn will result in lower oil demand by both consumers and corporations and thus lead to lower oil prices.

This impact is even more dramatic by the fact that we are also seeing rising oil supplies. These two facts combined are painting a more bearish picture than we have seen in a long while. For example, during the month of July, OPEC oil production rose last month by the most since September 2004.

What we are seeing so far today is oil dropping by $1.16 down to $74.32. Even though this is a decent $4 drop from the $78.77 high that we saw last Wednesday (a 5.6% sell off) this is still, by all standards, very high prices for oil. I don't want to put out the impression that oil prices are falling though the floor or anything, but we are seeing a decent drop in prices considering we are only talking about 3 days.