Soon, the fun begins...

By Carl


Not much to say about this event, except I told you so...

LONDON (Reuters) - Oil sped above $98 a barrel for the first time on Wednesday, closing in on the landmark $100 level, driven by a slumping dollar and worries over a winter fuel supply crunch.

Analysts said it was only a matter of time before oil hit triple digits, with evidence of tightening stocks aiding a nearly 8 percent rise over the past two weeks alone.

"We're going to get $100 before too long," said Kevin Norrish of Barclays Capital.

The only surprise in this story for me is that it's happening about two months earlier than I anticipated. I assumed that OPEC would keep the price down until after the Christmas shopping season, in one of their usual gestures to the Bush presidency.

Little did I imagine that China would become such an influential player so quickly this year, and that the Iran crisis would piss off even the Saudis so much.

The peak per barrel price (adjusting for inflation) came during the 1979-1980 oil crisis. Today, that per barrel price was $101.70. We ain't far away, and that crisis helped topple a President and helped create stagflation, the twin punch of inflation without economic growth, and interest rates at record highs (the prime ended up at 20%!).

Now, of course, our oilmen in the White House have this all figured out, right? I mean, these guys are the experienced pros in this area and they ought to be able to formulate some policy that will help lower prices.

Right?

"Oil prices are too high," said spokeswoman Dana Perino. Oil sped above $98 a barrel for the first time on Wednesday, driven by a slumping dollar and worries over a winter fuel supply crunch.

...as she turned slightly sideways to reveal her perky breasts to the press gaggle, and plotted to get away from the Three Bears. She sounds like Dumb Blonde Barbie here.

It's not like this was an uncertainty, $100 a barrel. In fact, it was inevitable based on the laws of supply and demand. On The McLaughlin Group, Mort Zuckerman, a fairly astute businessman, all but said we are heading for a depression the likes of which this country has never seen.

Let me repeat that last bit: the likes of which this country has never seen. That says a lot. Zuckerman is no raving maniac in the desert of finance. He owns US News and World Report and the New York Daily News. I think we can assume he's somewhat conservative in his thinking.

And it's starting to be seen at the pump. Gas is up 16 cents over the past two weeks, averaging just under $3.00 for a gallon of regular. Just in time for the holiday season, the time when retailers make their profit margins for the entire year.

This is not going to be pretty. The lag time between oil spikes and gasoline spikes is now in motion. $3.75 a gallon is a nasty Christmas present.

(Cross-posted to Simply Left Behind.)