My explanation for high oil prices is the collapse of oil states. Arnold Kling argues that instead the problem is that investors fear the collapse of advanced states, so are reluctant to take their money.
My explanation is that oil states are increasingly short of the competence to pump oil, the ability to provide security to people pumping oil, and the credibility to make deals with people who are competent to pump oil — for example it is difficult for foreign companies to pump oil in Nigeria, because there are too many different bandits and terrorists to pay them all off, and difficult for foreigners to pump oil in Venezuela or Mexico, because the government cannot credibly promise not steal everything, and difficult for the Venezuelan government to pump oil, since it could not run a pie stand, plus the security situation in Mexico, though better than Nigeria, is deteriorating.
Arnold Kling, however, argues that the problem is the increasingly scary on book and off book debt levels of the advanced nations, in particular the US. Investors fear hyperinflation. Where to put their money? Answer: Buy commodities that are underground, and leave them underground.
