Gas prices to soar once again...

[waltky]

Playing into OPEC’s hands...

The Triumph of OPEC
Mar 7, 2008 | For nearly half-a-century, the organization has been a cartel in name only. Now it may be the real deal.

For much of its 47-year existence, the Organization of the Petroleum Exporting Countries (OPEC) has been a cartel in name only. It could not, in practice, control oil prices because many of its members regularly breached the production quotas that were intended to regulate the market. So OPEC generally followed oil prices up and down, as supply and demand conditions shifted. But now OPEC may be the real deal: a cartel that works. If so, that's bad news for us.

Look no further than last week's OPEC meeting in Vienna. Oil ministers declined to increase production despite a fairly obvious case for doing so. Not only were oil prices fluttering just above $100 a barrel, but the United States is either in or near a reces*sion and much of the rest of the world faces a noticeable econom*ic slowdown. The OPEC ministers were unmoved. Indeed, they indicated that they might actually reduce production if weak de*mand—presumably reflecting weak economies—threatens to de*press prices. Not good.

What's wrong is that a fall of oil prices is one of the mecha*nisms by which a recession or economic slowdown corrects itself. Lower prices for gasoline, home heating oil and diesel fuel improve consumer purchasing power. They muffle inflation and in*crease confidence. In this sense, they're an important "automatic stabilizer" for a faltering economy. If the automatic stabilizer is disarmed—or, worse, transformed into an automatic "destabiliz*er"—then the slowdown or recession may get worse.

Oil producers don't much care. High prices have been good to them. Since 1999, annual oil revenues for OPEC countries have more than quadrupled, to an estimated $670 billion in 2007, says energy economist Philip Verleger Jr. What's less clear—to ex*perts, at any rate—is whether OPEC has merely benefited from good luck (tight oil markets) or has acted as a true cartel, restrict*ing output and raising prices. The right answer is: both.

More Samuelson: OPEC's Triumph | Newsweek Voices - Robert J. Samuelson | Newsweek.com

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Oil steady above $105, supported by U.S. cold snap
Mon Mar 10, 2008 - Oil was steady above $105 on Monday, supported by a bout of cold weather in the United States and a sliding U.S. dollar, but prices stayed below Friday's record high above $106 as supply disruptions in Mexico eased.

U.S. light crude for April delivery was up 11 cents at $105.26 a barrel by 12:49 a.m. EDT. London Brent crude rose 10 cents to $102.48. "The re-opening of the oil ports in Mexico has taken away some of the bullishness but the cold snap in the United States is still supportive of prices," said David Moore, a resource analyst at the Commonwealth Bank of Australia.

One of Mexico's three main crude oil ports, Dos Bocas, reopened to shipping, the transport ministry said on Sunday, after a three-day closure because of bad weather in the Gulf of Mexico. Mexico, the world's No. 9 exporter of crude oil and a top three supplier to the United States, has seen its crude exports repeatedly disrupted in recent months, often resulting in its crude shipments being halted for days at a time.

A late-season winter storm slammed into the Ohio Valley on Saturday, with freezing rain, ice and sleet forcing flight delays and cancellations at airports and forecasters predicting the storm to head towards the U.S. Northeast.

MORE

[Martin]

End of the world near ?

Oil spike to last through 2008: OPEC president: Financial News - Yahoo! Finance

Oil spike to last through 2008: OPEC president
Monday March 10, 4:47 am ET

ALGIERS (Reuters) - Oil prices will stay at current high levels for the rest of this year due to speculation and geopolitical tensions, Algerian state media on Monday reported OPEC President Chakib Khelil as saying.

Prices could retreat in 2009 with a recovery of the U.S. dollar in foreign exchange markets following the election of a new U.S. president, and as fundamentals reassert themselves as major market forces, he was reported as saying by government newspaper El Moudjahid and state news agency APS.

"Just like the current surge in oil markets, the (world economic) crisis, will last until the end of the year," he was quoted as saying by El Moudjahid.

"The oil market will stay above $100 during the current financial year, according to the assessment of Mr Khelil," APS said in a report on his remarks to Algerian reporters on Sunday.

It was not immediately clear which fiscal year APS was referring to.

Khelil, who is also Algerian Energy and Mines Minister, said the factors driving the market at present included "speculation, geopolitical tensions, particularly due to the Iranian nuclear affair and the crisis between Venezuela and ExxonMobil," APS reported.

The world economy could get some help with the arrival of a new U.S. president, and possibly a new economic policy, "and with this new situation it is very probable that the dollar will start to recover and thus permit a readjustment of the (oil) market," El Moudjahid quoted him as saying.

OPEC members meeting in Vienna last week decided to hold production flat, insisting markets were well supplied and blaming record prices on factors outside the group's control, including speculators and what Khelil called the "mismanagement" of the U.S. economy.

Speculators have piled into oil and other commodities as a hedge against the weaker dollar and inflation as the U.S. economy slows due to a credit crunch, the mortgage crisis and high energy costs.

Khelil said OPEC had left output unchanged because it wanted to assist global economic growth, El Moudjahid and APS reported.

The group made its decision in the knowledge that demand was expected to dip by 1.4 million barrels per day (bpd) in the second quarter of the year and that stocks in consuming countries were at comfortable levels, Khelil said.

"If we had increased our production given all these factors, you wouldn't have been able to miss the impact on prices," he said, suggesting prices would have slid.

"We left our output unchanged so as not to disturb the market further and to help the world economy resume its momentum of growth," El Moudhajid quoted him as saying.

$107

Gas Prices Near Records, Following Oil: Financial News - Yahoo! Finance

Gas Prices Near Records, Following Oil
Monday March 10, 12:17 pm ET
By John Wilen, AP Business Writer
Gas Prices, Following Oil's Recent Surge, Are Close to Surpassing Last Spring's Record

NEW YORK (AP) -- Gasoline prices were poised Monday to set a new record at the pump, having surged to within half a cent of their record high of $3.227 a gallon. Oil prices, meanwhile, surged to $107.44, a new inflation-adjusted record and their fifth new high in the last six sessions on an upbeat report on wholesale inventories.

The national average price of a gallon of gas rose 0.7 cent overnight to $3.222 a gallon, 69 cents higher than one year ago, according to AAA and the Oil Price Information Service. Last May, prices peaked at $3.227 as surging demand and a string of refinery outages raised concerns about supplies.

That record will likely be left in the dust soon as gas prices accelerate toward levels that could approach $4 a gallon, though most analysts believe prices will peak below that psychologically significant mark. In its last forecast, released last month, the Energy Department said prices will likely peak around $3.40 a gallon this spring; a new forecast is due Tuesday.

Retail gas prices are following crude oil, jumped 24 percent in a month on its way to setting new inflation-adjusted records four times last week. On Monday, crude prices surged to yet another record after the Commerce Department said wholesale sales jumped by 2.7 percent in January, their biggest increase in four years, according to Dow Jones Newswires.

The strong sales report suggested to oil traders that the struggling economy may be doing better than thought.

Light, sweet crude for April delivery rose $1.73 to $106.88 on the New York Mercantile Exchange after earlier setting a new trading record of $107.

Energy investors shrugged off a relative stabilization of the dollar and a cooling in tensions between Venezuela and its neighbors Colombia and Ecuador.

Many analysts believe speculative investing attracted by the weak dollar is the primary reason oil has risen so far so fast in recent months. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling.

"We've got a Fed(eral Reserve) meeting on the 18th that could see a sizeable rate cut," said Brad Samples, an analyst with Summit Energy Services Inc., in Louisville, Ky. "So, it's not over."

Indeed, while the dollar fluctuated against the euro on Monday, many investors believe the greenback is likely to keep falling as the Fed continues to cut rates. Many analysts believe the rise in crude prices is not supported by the market's underlying fundamentals, noting that supplies are generally rising while demand is falling.

"By gobbling up everything in sight, (investors) are pushing food and fuel prices to ruinously high levels," said Peter Beutel, president of the energy risk management firm Cameron Hanover, in a research note.

Investors shrugged off a weekend cooling of tensions in South America, where Venezuela said Sunday it was restoring full diplomatic ties with Colombia after they were broken off following a cross-border Colombian attack on a leftist rebel camp in Ecuador.

Last week, rebels shut down a Colombian oil pipeline in retaliation for the Colombian raid into Ecuador. Venezuela threatened to slash trade and nationalize Colombian-owned businesses, and Venezuela and Ecuador briefly sent troops to their borders with Colombia.

The potential for conflict involving Venezuela, an OPEC member and major U.S. oil supplier, helped push oil higher last week.

"The Venezuelan production was at risk there," Samples said.

Other energy futures were mixed Monday. April heating oil futures rose 2.05 cents to $2.9675 a gallon while April gasoline futures rose 0.37 cent to $2.698 a gallon.

April natural gas futures slid 2.6 cents to $9.743 per 1,000 cubic feet.

In London, Brent crude futures rose 95 cents to $103.33 a barrel on the ICE Futures exchange.

Associated Press writers Pablo Gorondi in Budapest and Gillian Wong in Singapore contributed to this report.

[waltky]

I had a dream that gas prices would hit $4.17 a gallon.

At the rate its going, I don't doubt it.

[Martin]

Originally Posted by waltky

I had a dream that gas prices would hit $4.17 a gallon.

At the rate its going, I don't doubt it.

lol, no doubt.

Oil Prices Near $110

Oil prices break fresh record high near $110

Oil prices struck a record high of 109.72 dollars per barrel on Tuesday after the dollar hit a fresh all-time low against the euro and amid persistent energy supply concerns, traders said.

New York's main oil contract, light sweet crude for delivery in April, soared to the historic level, beating the previous peak of 108.21 dollar that was set on Monday.

Also on Tuesday, Brent North Sea crude for April hit a record high 105.82 dollars on barrel, beating the prior high of 104.42 dollars touched on Monday.

In the foreign exchange market, the European single currency surged to a record high 1.5495 dollars.

A weaker US currency tends to increase demand for dollar-denominated oil as it becomes cheaper for buyers using stronger currencies.

Oil prices are also heading higher because investors are seeking a safe place for their cash amid fears of rising inflation and a US recession, analysts said.

"Crude futures held firm (on Tuesday), extending yesterday's rally and reaching fresh record highs in both London and New York, still underpinned by strong demand for dollar-denominated commodities and with oil seen as a good hedge against inflation," said Sucden analyst Andrey Kryuchenkov.

"Inflation fears are still very strong, outweighing prospects of a slower growth in the US and lower seasonal demand for oil in the second quarter."

At the same time, the oil market is under intense pressure from stretched supplies and demand from the United States -- the world's biggest energy consuming nation -- and Asian powerhouses China and India.

In recent days and weeks, oil prices have blazed a record-breaking trail, smashing through 107 and 108 dollars in New York on Monday alone.

"Currently concerns over a weakening US economy are leading investors to find a haven in commodities as the dollar weakens on expectations of further cuts in US interest rates," energy consultancy John Hall Associates wrote in a note to clients.

"This is outweighing the impact of fundamentals" of supply and demand, they added.

In Paris on Tuesday, meanwhile, the International Energy Agency warned that high prices were here to stay.

"We are in an era of higher oil prices," the IEA said in a monthly market report.

The IEA trimmed its monthly estimate for world oil demand this year to 87.5 million barrels per day "with downward pressures from weaker economic growth in the OECD mostly offset by stronger former Soviet Union (FSU) projections."

Oil demand was forecast to increase by 1.7 million barrels per day in 2008 or 2.0 percent from demand in 2007, which grew by 1.1 percent.

[waltky]

Inflation rears its ugly head...

Surge in energy prices stokes inflation
Tues., April. 15, 2008 • Economic slowdown normally tames prices, but these aren't normal times

When the economy slows down, the resulting drop in demand normally takes some of the pressure off inflation. But these are not normal times: Even as the economy is slumping, oil prices are rising and food prices are jumping. All of which could spell more trouble for consumers in the coming months. Tax filers this week can look forward to some relief from a massive government rebate program. But that one-time shot in the arm won’t help consumers — or the economy — if energy and food prices keep rising.

On Tuesday, oil prices surged to a new high, passing $113 a barrel, and the government reported that prices at the wholesale level jumped 1.1 percent in March. “These are going up way too rapidly,” said economist Joel Naroff of Naroff Economic Advisors. “This is the money that the average person has to spend, and as a result they don’t have a lot of money left over for other things.”

Food and energy prices tend to move up and down more quickly than other goods, but lately they’ve only been moving in one direction. In the last three months, gasoline prices are up by a third and food prices are up 10 percent. Analysts take some comfort in the fact that the so-called “core" inflation rate has — so far — remained in check. The hope is that higher food and energy prices haven’t yet spilled over into the prices of other goods.

But if you break down the list of those goods, the price increases have been mildest in so-called capital goods — business machinery and equipment. Price of consumer goods other than food and energy are up 5.5 percent in the past three months. Analysts are expecting that trend to show up in the Consumer Price Index due out Wednesday.

More Surge in energy prices stokes inflation - Eye on the Economy - MSNBC.com

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U.S. seeing worst food inflation in 17 years
Tues., April. 15, 2008 - Food vendors are forced to explain higher prices; poor squeezed

Steve Tarpin can bake a graham cracker crust in his sleep, but explaining why the price for his Key lime pies went from $20 to $25 required mastering a thornier topic: global economics. He recently wrote a letter to his customers and posted it near the cash register listing the factors — dairy prices driven higher by conglomerates buying up milk supplies, heat waves in Europe and California, demand from emerging markets and the weak dollar.

The owner of Steve’s Authentic Key Lime Pies in Brooklyn said he didn’t want customers thinking he was “jacking up prices because I have a unique product.” “I have to justify it,” he said. The U.S. is wrestling with the worst food inflation in 17 years, and analysts expect new data due on Wednesday to show it’s getting worse. That’s putting the squeeze on poor families and forcing bakeries, bagel shops and delis to explain price increases to their customers.

U.S. food prices rose 4 percent in 2007, compared with an average 2.5 percent annual rise for the last 15 years, according to the U.S. Department of Agriculture. And the agency says 2008 could be worse, with a rise of as much as 4.5 percent. Higher prices for food and energy are again expected to play a leading role in pushing the government’s consumer price index higher for March.

Analysts are forecasting that Wednesday’s Department of Labor report will show the Consumer Price Index rose at a 4 percent annual rate in the first three months of the year, up from last year’s overall rise of 2.8 percent. For the U.S. poor, any increase in food costs sets up an either-or equation: Give something up to pay for food.

More U.S. seeing worst food inflation in 17 years - Stocks & economy - MSNBC.com

[waltky]

Granny says, "Get out the vasoline, dey gonna stick it to us again!"...

OPEC chief al-Badri says oil prices could go higher
21 Apr 2008, Secretary-General Abdullah el al-Badri said Sunday oil prices are likely to go higher and that the group was ready to raise production if the price pressure was due to a shortage of supply - something he doubted.

"Oil prices, there is a common understanding that has nothing to do with supply and demand," al-Badri said on the sidelines of an energy conference in Rome. Oil prices reached a new high Friday at US$117 a barrel.

A host of supply and demand concerns in the U.S. and abroad, along with the dollar's weakness, have served to support prices, even as record retail gasoline prices in the US appear to be dampening demand. Crude prices have risen as much as 4 percent last week.

The OPEC chief said the group "will not hesitate" to increase production if the group thought the higher prices were due to shortages. But he said more oil will not solve the high prices. OPEC's production levels were just one of many factors, he said.

"But how much higher it will go, of course it depends on a number of things: the political situation, whether there is a natural catastrophe, whether there are speculations in the market, whether there are strikes in certain producing countries. So there are many other factors other than OPEC production," al-Badri said.

Source

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Oil Soars to New Record, Nears $120
April 22, 2008 - Oil Closed Above $119 a Barrel as Supply Worries Persist

Gas and oil prices pushed further into record high territory Tuesday, with retail gas reaching a national average of $3.51 for the first time and crude nearing $120 as the dollar fell to a new low against the euro. At the pump, the national average price of a gallon of regular gas rose 0.8 cent Tuesday to $3.511, according to a survey of stations by AAA and the Oil Price Information Service. Prices for diesel -- used to transport most food, industrial and commercial goods -- also rose overnight to a new record of $4.204 a gallon.

Gas prices are nearly 66 cents higher than last year, when they peaked at a then-record of $3.23 in late May, and have prompted many analysts to raise their estimates of where gas is going to go. "I wouldn't rule out the possibility that we could get to $4," said Antoine Halff, an analyst at Newedge USA LLC. Other analysts are less certain. Fred Rozell, retail pricing director at the Oil Price Information Service, thinks gas prices will rise only another 10 cents to 20 cents nationally. That would mean they would peak near $4.15 a gallon in California, where prices are typically highest, and around $3.50 in New Jersey, where they're typically lowest.

Gas prices are rising for many reasons, including oil's record run. Light, sweet crude for May delivery rose to a new trading record of $119.90 before retreating to settle up $1.89 at a record $119.37 a barrel on the New York Mercantile Exchange. Many investors see commodities such as oil as a hedge against inflation and a falling dollar. Also, a weaker greenback makes oil cheaper for investors overseas.

More ABC News: Oil Soars to New Record, Nears $120

[waltky]

Up, up and away...

Oil Surges Above $120 Per Barrel
Monday, May. 05, 2008 — Oil futures surged to a new record over $120 a barrel Monday, raising concerns about higher prices for gasoline and goods and services throughout the economy.

Retail gas prices fell more than a cent over the weekend, but oil's advance increased the likelihood that pump prices would resume their climb. Supply threats that emerged overseas and a weaker dollar sent light, sweet crude for June delivery to a new trading record of $120.36 a barrel on the New York Mercantile Exchange before futures retreated slightly to trade up $3.59 at $119.91.

Oil's sharp rise this year has driven gas prices to unprecedented levels, prompting consumers to reconsider summer vacation plans and limit daily excursions; they're also spending less at malls and shopping centers because they're paying more not just for fuel, but for all kinds of goods and services. Americans are also being pinched by tight credit conditions, a sluggish jobs market and a downturn in the housing market. "American consumers are being hit hard financially from a bunch of different directions," said Troy Green, a spokesman for AAA.

If oil prices continue climbing, gas prices could rise as high as $3.75 a gallon on a national basis, Green said, though, "in some places, it's already above $4 a gallon." In most years, gas prices peak in May or early June, then mostly decline for the rest of the year. But oil at $120 — and rising — may force the experts to rewrite their rulebook.

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Fearless W say it not gonna get any better sometime soon...

Bush: No short-term fix for oil prices
WASHINGTON, May 5,`08 -- The rocketing price for a barrel of crude oil underscores the need for the United States to become less dependent on foreign oil, the White House said Monday.

Crude prices hit $120.36 a barrel Monday before throttling back to settle at $119.95 per barrel. "We have here, in this nation, resources that we are not utilizing," said White House spokesman Scott Stanzel. Oil reserves in the Arctic National Wildlife Refuge are one example of unused resources and refineries haven't been built in 30 years, Stanzel said.

"We also have to do more in terms of weaning ourselves off of that foreign oil by expanding the use of alternative sources of fuel, not only corn-based ethanol but other types of ethanol that we're investing heavily in, cellulosic ethanol, as well ... battery technology, hydrogen fuel cell technology," Stanzel said.

Oil exploration and alternative fuel development are not short-term relief, Stanzel said. "If we don't want to go from short-term Band-Aid to short-term Band-Aid to short-term crisis to short-term crisis again and again and again, leaders in Congress should start to look forward and think about our long-term energy strategy," he said.

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[waltky]

Granny says, "Send ol' Jimmy to Nigeria - see if he can lower the price of oil...

Nigerian Militants Say Carter Could End Attacks on Oil Companies
May 6, 2008 - Carter Center: Former President Would 'Seriously Consider' Mediating If Invited by Both Militants and Nigerian Gov.'t

The attacks on U.S. and European oil facilities in Nigeria could end if former U.S. President Jimmy Carter mediates peace talks, the spokesman of a Nigerian militant group said today in an e-mail message to ABC News. "President Carter represents transparency, impartiality, humility and integrity; four key ingredients critical in the mediator recipe towards ensuring a genuine and enduring peace process for the region," said Jomo Gbomo of the Nigerian rebel group Movement for the Emancipation of the Niger Delta (MEND).

MEND, which claims it is fighting for a more just distribution of the country's billions of dollars of oil revenue, has attacked several pipelines since the start of this year. The group is responsible for kidnapping more than 100 foreign oil workers last year and has repeatedly attacked oil facilities in the Niger Delta region since late 2005. Carter would "seriously consider" mediating between Nigerian militants and the Nigerian federal government if he was invited by both parties, according to Carter Center Vice President John Stremlau, who was asked by Gbomo in an e-mail if Carter would help facilitate peace talks. "President Carter is a man of peace. He was involved in the Nigerian Delta in 1999 and knows how important it is to resolve this conflict," said Stremlau.

He said Gbomo's statement today, which implied that Carter has already accepted an invitation to mediate in the Niger Delta conflict, was "premature." "Carter would seriously consider undertaking a mission if he were formally invited by all relevant stakeholders in the Niger Delta conflict. In addition to MEND, this would include the federal government of Nigeria and others whose interests would have to be represented in such a negotiation," said Stremlau. But so far the invitation has come only from MEND. The group said it will call off all hostilities and hold a temporary cease-fire in honor of Carter should the Nigerian government accept Carter's initiative.

More ABC News: Nigerian Militants Say Carter Could End Attacks on Oil Companies

[waltky]

Congress gonna fix it...

Congress takes on gasoline prices
May 7, 2008: House Judiciary Committee debates solutions to record pump prices.

Gas prices are expected to keep up their record rise this spring, soaring well past $4 a gallon in some areas. Now Congress wants to know what to do about it. In an effort to better understand the nation's fuel crisis, House leaders heard testimony from truckers, consumer advocates and energy industry analysts Wednesday.

The hearing was held by the House Judiciary Committee's Task Force on Competition Policy and Antitrust Laws. It was delayed more than an hour due to prolonged votes on the House floor, according to a Judiciary Committee spokesman. Gas prices have risen more than 18% so far this year. Retail gasoline hit a record $3.62 a gallon on average nationwide on May 1, according to AAA, the auto group.

"This is not just any industry we're talking about, it's the key component of a modern industrial society," said Rep. John Conyers, D-Mich. "Oil impacts every aspect of our economic life." Much of gas' jump can be attributed to crude's dramatic run up. Crude prices hit a record $123.56 a barrel Wednesday, a day after a Goldman Sachs analyst predicted oil could rise as high as $200 over the next six months to two years.

The Department of Energy said Tuesday it expects gas prices this summer - when prices usually peak - to be higher than originally forecast. It forecast that the national average price for a gallon of gas in June will be $3.73, up 11 cents from April's estimate. The Energy Department also said it expects gasoline to average $3.52 a gallon in 2008, which would be 71 cents above last year's average.

High costs hurt the little guy

[waltky]

Granny says dey's all in cahoots with one another...

Oil's Broken Record, Surges Above $126
May 9, 2008 - Traders Fear a Fight with Venezuela Could Stop the Flow of Oil

Oil rose above $126 a barrel for the first time Friday, bringing its advance this week to nearly $10, as investors questioned whether a possible confrontation between the U.S. and Venezuela could cut exports from the OPEC member. On Friday, The Wall Street Journal published a report that suggested closer ties between Venezuelan President Hugo Chavez and rebels attempting to overthrow Colombia's government. Chavez has been linked to Colombian rebels previously, but the paper reported it had reviewed computer files indicating concrete offers by Venezuela's leader to arm guerillas. That appears to heighten the chances that the U.S. could impose sanctions on one of its biggest oil suppliers.

"If we put on sanctions, I'm sure Chavez would threaten to cut off our oil supply," said Phil Flynn, an analyst at Alaron Trading Corp. "Obviously that would have a major impact on oil prices." Light, sweet crude for June delivery vaulted to a new record of $126.20 on the New York Mercantile Exchange before retreating to settle up $2.27 at a record $125.96.

Oil prices also were boosted Friday by the dollar, which declined against the euro. The European Central Bank said it was unlikely to consider interest rate cuts to cool the strong euro against the slumping dollar. Investors often buy commodities such as oil as a hedge against inflation when the greenback falls. A weaker dollar also makes oil less expensive to overseas investors. Many analysts believe the dollar's protracted decline has much to do with the doubling in oil prices since this time last year. Another school of thought thinks tight global supplies of oil, driven by growing demand in countries such as China, Brazil and India, is the primary factor driving oil higher.

More ABC News: Oil's Broken Record, Surges Above $126

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World begins to smart from oil's too rapid rise
Fri May 9, 2008 - From the poorest of Africa to the United States and big business, a breakneck rally that could take oil to $200 a barrel is likely to inflict pain on everyone.

The world was remarkably resilient to a series of record prices in 2007, but a roughly 30 percent rise since the end of last year, with predictions of more to come, is harder to absorb. "The key issue is the rate of change. The recent exponential rise is unhealthy for everyone," a senior executive from a major oil company said. He declined to be named.

On the first trading day of 2008, oil prices hit the $100 a barrel level, which once seemed unimaginable. The price topped $125 a barrel on Friday, making a rise to $150 probable and to $200 possible, according to OPEC ministers and investment bankers alike.

"If current conditions continue, reaching a period when oil is supplied at $200 a barrel is not out of reach," Iran's Oil Minister Oil Minister Gholamhossein Nozari said this week. Investment bank Goldman Sachs said the possibility of $150-$200 a barrel over the next six-to-24 months was "increasingly likely." The bank was one of the first to point to a triple-digit oil price more than two years ago.

More World begins to smart from oil's too rapid rise | Special Coverage | Reuters