Last week, OPEC failed to cut production quotas – though it did reveal its own irrelevance.

Now, for the first time since 1972, oil prices are being set by the free market, not by a producer cartel. That means much lower oil prices, along with some surprising winners and losers.

On top of that, we’re seeing a bit of market turmoil, which is always dangerous for long-term-oriented income investors.

Luckily, there are ways to profit from the turbulence…

Traditionally, lower oil prices were thought to be an unalloyed good thing for the U.S. economy, as they reduced imports and put more money in consumers pockets. But that’s no longer the case .

You see, the fracking revolution made the United States more self-sufficient in oil… but the country is now a generally high-cost producer. And fracked oil, along with oil from tar sands in Canada and deep offshore oil, becomes unprofitable if oil prices drop to the $60 to $65 level and stay there.

While the United States is mostly neutral on oil prices between about $75 and $100 (above $100, the damage to consumers exceeds the benefit to oil producers), the U.S. economy is damaged by prices below $75.

Low prices mean lots of bankruptcies. Marginal oil producers go bankrupt, and their debt weighs down the bond markets and the financial system. At the moment, about 15% of the outstanding junk bond debt (rated BB or below) is derived from the energy sector, a percentage that has doubled in recent years.

As Austrian economists put it, a prolonged period of low oil prices makes energy sector investments into malinvestments that must be liquidated, causing destruction in the overall economy.

Where in the World to Invest

For income investors, the implications are clear: We must pull our money out of investments such as energy production master limited partnerships (MLPs) that require high oil prices to do well.

Midstream MLPs involving pipelines should be closer to neutral on the oil price decline, since their profits are simply a flow-through from energy production. On the other hand, as I mentioned a few weeks ago, refinery MLPs benefit from lower oil prices and should be seriously considered – although their cash flows and incomes fluctuate wildly.

The most interesting refinery MLP is probably Northern Tier Energy LP (NTI ), which pays a truly spectacular current yield of 16.7%, based on the last four quarters of dividends, and appears able to justify that based on current operations.

NTI made $1.04 per unit in the third quarter and distributed $1, compared with $0.30 in the same period of 2013. Its next dividend will be paid around February, based on fourth-quarter operations. All in all, it looks like an income gamble well worth taking.

For the less speculative, a European investment makes sense, as lower oil prices have brought that continent much better prospects than here in the United States. Of course, there’s one complex risk in the euro system: It includes successful economies, such as Germany, as well as basket cases like Greece, in the same currency.

To avoid that risk, look to Sweden, which isn’t a euro member. The center-left Swedish government has just resigned and called an early election for March, but analysts don’t expect significant economic changes. Sweden is still expected to grow 2% in 2014 and 2.4% in 2015. The iShares MSCI Sweden Fund (EWD ) is a good way to invest in this industrially oriented country. The fund carries a yield of a satisfactory 3.7% and a low expense ratio of 0.48%.

Domestically, income investors can take advantage of the surge in consumer spending that should result from lower gasoline prices. To capitalize on a potential Christmas splurge, consider the toy company Mattel, Inc. (MAT ). MAT is trading at 15x current earnings and 14x expected earnings, and yields a very satisfactory 5%, based on its current $0.38 quarterly dividend.

Finally, lower oil prices could lead U.S. consumers back to the auto dealers to test out gigantic new SUVs. Here, the likely beneficiary and best dividend payer is General Motors (GM ), which is trading at only 8x expected 2015 earnings, with a dividend yield of 3.6%.

Bottom line: As income investors, we should adjust our portfolios to fit the new reality.