The volume of a right circular cylinder is given by V = πr^2h, where "r" represents the radius and "h" represents the height of the cylinder.
Let's assume the radius and height of can X are "r" and "h", respectively.
The volume of can X is V(X) = πr^2h.
Now, let's consider can Y. The height and radius of can Y are each twice those of can X. So, the radius and height of can Y are 2r and 2h, respectively.
The volume of can Y is V(Y) = π(2r)^2(2h) = 4πr^2(2h) = 8πr^2h.
We are given that can X is filled to capacity and sells for $2.
Now, let's consider can Y. It is filled to only half its capacity. Therefore, the volume of oil in can Y is (1/2) * V(Y) = (1/2) * 8πr^2h = 4πr^2h.
Since the price is directly proportional to the volume, we can conclude that the oil in can Y will sell for 4 times the price of can X.
Therefore, if can X sells for $2, the oil in can Y will sell for 4 * $2 = $8.
Hence, the answer is (E) $8.