Oil is now $91 for February Delivery (in reality, that means late January).
We appear to be crossing that strange boundry where monetary stimulus drives Oil prices to the point where they tank the economy... or maybe its just a coincidence and this is what Peak Oil Imports looks like either way.
The American political response? Extend and pretend. Extend those benefits, and pretend that the Oil is is not wracking the American economy (along with credit issues and a population insidiously addicted to social programs that will absolutely, positively not be there as expected). Pretend that things will get back to "normal" and we will all live happily ever after in our mortgaged McMansion, with our Borderline Personality/silicon-enhanced-trophy-liability keeping us company in our champagne filled hot tube. Yep, and "you are not getting older, you are getting better..." (I fantasize of pushing the Ad exec that came up with that one down an elevator shaft in a tall building along Madison Avenue... just kidding... sort of. One of my Boca friends told me that 50 is the new 30! Holy smackers! The human capacity for denial is hyperventilating! He's in great shape... but hair implants, botox, and silicon ain't youth... but who am I to burst his bubble...).
The liquid petroleum system is now priced for perfection - nothing - no wars, attacks, hurricanes, earthquakes, "watered-outs", or, MOST WORRISOME, an exporter coming to its senses... can happen, or Oil is $200 per barrel, and overall supplies to the U.S. economy have dropped by 5mm barrels per day.
In my opinion, one of the above mentioned issues is a "when", not an "if".
As always, we will be looking for someone to blame. Remember in 2004, when the media and the political establishment were blaming the high price of oil on "speculators"? Thankfully, no innocent investors or traders went to prison as a sacrifice to the mob (so far). The problem was Peak Oil, not those "speculators", and our government knew it (remember the "Hirsch Report"? Well that was commissioned in 2004, and must have been in the works somewhat earlier). Still, many a "speculator" feared for his life. Welcome to 21st Century Rome.
Still, this run-up might be just another run thru. Deflation has been beaten back... but is it beaten? Stay tuned.