By Kevin McElroy

NEW YORK (

TheStreet

) - Fellow resource prospector, you might remember the "vanity" trade back in the early 2008. One as-of-yet named trader infamously became the first person to buy a barrel of oil for $100 simply by paying too much.

What you might not know is that he (or she) paid $600 for the privilege. That's because oil contracts trade in units of 1,000 barrels, so in order to pay even 10 cents more per barrel, it will cost you $100. The "unnamed trader" paid 60 cents per barrel more than he otherwise had to spend, so it cost him an extra $600 just for the privilege of owning the $100/barrel trading slip.

But that's not where the story ends.

Because this summer, the

Securities and Exchange Commission

fined the unnamed trader an additional $12 million for manipulating the price of oil. The SEC said that the trade caused a "non-bona fide price" for benchmark U.S. crude futures, which apparently is a big no-no.

Some folks tacitly accuse the unnamed trader of pushing a domino that eventually boosted oil prices to $147 a barrel later that summer.

But that's clearly nonsense. I was working as a researcher that summer for

Stansberry Research

, and one of the first things I learned while studying the oil markets, is that no single person can manipulate the price of oil for very long, if at all.

In any event, as we know now, it will cost you an order of magnitude more to manipulate the price of oil than you're ever likely to make back in any profits from the manipulation.

I've talked before about the incredibly, mind-numbingly huge nature of the daily oil market. It's truly staggering.

As I wrote back on June 3, 2010:

"Back in April of this year, a new daily volume record was set on the Intercontinental Exchange (ICE) for West Texas Intermediate Crude (WTIC) contracts - with an astounding mark of 464,381 contracts traded in just that one day. Each contract trades 1,000 barrels of oil.

"With oil prices around $84 that day, each contract was worth about $84,000. So, it means that over $38 billion worth of oil contracts traded hands in that one day alone.

Granted, that was the daily record, but the WTIC futures regularly bypass the $30 billion mark on an average day. To put it in perspective, $38 billion is more than the annual earnings of

Wal-Mart

(WMT) - Get Report

, the world's largest corporation."

So, if I can make my point any clearer: Oil is so big, so important and so all-encompassing, that it's kind of silly to fine someone or even accuse someone of manipulating the price. It would be like Greenpeace blaming one person who drives too much for melting the polar ice caps.

I've been thinking about the enormity of oil in my life, and to even conceive of how I might survive without oil is nearly impossible.

There's a book out called

A Year Without Made in China

about one family's effort to live their life without buying anything made in China.

That's a tall order -- and I've been thinking about how someone should write a book called

A Year Without Oil

-- but after giving it just a few minute's thought, it became clear to me that such a venture would be almost impossible.

Even the act of writing a book is oil intensive. I mean, unless it was released on E-books only, getting a book from the publisher to book stores requires a huge amount of oil.

Currently, life without oil is almost unheard of. So while we're again on the eve of non-vanity-trade $100 oil, think about how you're going to protect your nest-egg from higher oil prices. Think about how you might want to set yourself up to profit from higher oil prices.

Take a few minutes before the New Year comes to think about whether you're currently set up to benefit or suffer from the eventuality of higher oil prices.

Good investing,

Kevin McElroy, editor of Resource Prospector

At the time of publication, McElroy did not have a position in any of the equities mentioned.

Wyatt Investment Research, founded in 2001 as a publisher of newsletters, offers independent investment research of financial markets, stocks, bonds, ETFs and mutual funds to about 250,000 individual investors. The company is led by founder Ian Wyatt, who serves as publisher and chief investment strategist.