When the market is acting crazy and I need to clear my head, I get out and run or power walk. After 4-6 miles, my mind usually becomes much clearer and I can focus on the issue, trade, or whatever.

I'm in LA right now, trying to make sense of the oil market. I have done two 10 mile jaunts on back-to-back days. When I left home last Thursday, crude oil had just dropped $4.75 on word that China had raised fuel prices (by reducing subsidies) to most drivers.

Speaking on TV last week, I had suggested that we should lift the drilling moratorium in the Alaska National Wildlife Refuge (ANWR) and the Outer Continental Shelf (OCS) off of the U.S. coast. Noting these potentially huge reserves, the pension funds, hedgies and other speculative interests might bail on a maturing bull run in oil. Selling on top of selling might break the bull market's back and send prices south for now.

They Just Don't Get Oil!

A Congressman followed my segment and suggested that drilling wouldn't help for 10 years or more. I know this is absolutely untrue, so I called Transocean ( RIG), the biggest driller in the world. An officer of the company told me that depending on the location of the drilling, oil could be realized in as little as a year.

Ultra-deepwater fields might produce in 3-5 years. For the most remote locations, without any prior infrastructure support, that barrel may require a 4-6 year window. I suggested 8 years and he said that he could not envision a situation where it would require more than 6 years to bring a barrel out of the ocean floor.

Then oil reversed yet again on Friday. This time, it was a combination of news that pushed oil upward. First, there were "several unnamed U.S. Officials" who confirmed that Israel had conducted dry runs with F-15s for a potential attack on Iranian nuclear infrastructure. Iran responded with a threat to the Israelis and the U.S.

Oh, and Nigerian rebels were at it again -- cutting off some pipeline movements due to their continued unrest with oil profit distribution.

Putting a lid on some of that rally was the fact that the Saudi's were holding a summit in Jeddah. Many producing nations were in attendance, including U.K. Prime Minister Gordon Brown, and our own Secretary of Energy, Samuel Bodman. All in all, 35 countries, 7 international organizations, and 25 oil companies were present. Quite an impressive group!

As expected, the producers blamed speculators and surging consumer demand. All agreed that we can manage this crisis with cooperation.

Then, the Saudis offered to supply more oil almost immediately-- very impressive, by the way. They also added that current production of 9.7 millions of barrels per day (mb/d) would be boosted to 12..5 mb/d by next year.

Most importantly, the Saudis said they could produce 15 mb/d soon after 2009 and even outlined which fields would provide the additional oil. That's outstanding news for the world - just my $0.02

The world's supply of oil is in both great shape and capable of increasing by several times the growth rate of demand. That alone will drive oil prices lower over time.

I think there are a few things we need to do to slow demand and help the cause.

First, we should immediately drop the ethanol mandate. Even if the price of a barrel stays high, there is no reason to threaten our food supply by pushing us from food abundance to food shortage over ethanol- a fuel that requires massive amounts of our farmland to produce.

The end result is a product that contains so much water that it cannot be transported in a pipeline. It must be trucked or railed (burning diesel, coal and creating greenhouse gases) before it lands in a car. That car then runs on a fuel blend that has a lower octane (fewer mpgs) and is as corrosive to your engine as it is to the pipelines.

Second, we should open up ANWR and the OCS. We have access to 20-30 billion barrels of reserves if we do.

We should also drop the national speed limit back to 55 mph again. It was 55 the last time we had an energy crisis, and it saved millions of barrels of demand and tens of thousands of lives at the same time.

When the flows of money reverse out of the oil play, there will be blood in the street for those still in the energy trade. There will also be opportunities to capitalize by following the flow from oil to the next big trade. I will outline that in my next column. For now, sit tight and watch this thing play out. Oil needs to find its next move but taking a position now is crazy.

By the way, an interesting thing happened during one of my 10 mile runs. I passed a busy Mercedes-Benz of Beverly Hills dealership. It was curious that with the economy on shaky ground, a luxury car dealer could be so busy. It brought a smile to my face when I realized that the commotion wasn't over the big $120,000 models. Rather, it was the 35-45 mpg Smart Car dealership that was buzzing at 10:00 am on Sunday. I ventured in and was surprised to learn that Smart Car is a joint venture between the creator of Swatch (watches) and M-Benz. More on that to follow as well.

"Trade with your head, not over it"
At time of publication, Bolling had no positions in stocks mentioned, although holdings can change at any time.

Eric Bolling is a host on the new Fox Business Network. Bolling was one of the developers and original panelists (nicknamed "The Admiral") on CNBC's "Fast Money."

Bolling is an active trader specializing in commodities, resource trades and ETFs.

Bolling is a member of several exchanges including The New York Mercantile Exchange (NMX), The Intercontinental Exchange (ICE) and The Commodity Exchange of New York.

After spending 5 years on the Board of Directors at the NYMEX, he became a strategic adviser to that Board of Directors where he assisted in bringing the company (NMX) public. He has been included in Trader Monthly Top 100 in 2005 and 2006. Bolling was the recipient of the Maybach Man of the Year Award in 2007 for his contribution of philanthropy and willingness to de-mystify investing to Main Street.

Bolling graduated from Rollins College in Winter Park, Florida and was awarded a fellowship to Duke University. Bolling was an accomplished baseball player. He was drafted by the Pittsburgh Pirates where he played before his career was cut short due to injuries. He honors his baseball past by sporting the NYMEX trader badge, R.B.I.