OJ,

This is but another example of what you, and now a lot of economists out there, term "The Savings Glut." It has become too apparent that there is too much money chasing financial instruments that aren't nearly as numerous as the money. Witness the price of Gold, lately for further evidence.

Oil, and Gold, are but mere financial instruments nowadays.

And yet, with oil at $70/barrel, the GOP Congress can't get ANWR passed.

AWW,

At this point and time, it has nothing to do with ANWR. It's all about oil/gasoline futures being a tradeable financial instrument. Ethanol futures are headed down this same road.

Drilling in ANWR would actually hurt that financial instrument's value, and by a considerable amount.

Brad - I understand your point but oil and gold are still physical commodities that are subject to supply and demand. An increase in supply or drop in demand will affect the price. The financial component of these commodities has pushed the price well above what supply and demand would indicate but at some point they will return to their equilibrium point.

AWW: No one cares about the price of oil. It's the price of gas that matters. And Americans are so rich and gas is still cheap enough that there's not an overwhelming demand to drill in ANWR.

Under the current political climate/congressional make-up, ANWR can't get drilled because there are not enough supporters in the GOP and it's not in the Democrats' interest in the run-up to the 2006 (or the '08) elections to either go counter to their environmentalists constituency and support Alaska drilling or to give Republicans a bill to show voters they are trying to do something to boost domestic oil and gas exploration.

As for OPEC, it's not in their interest to get prices above the point where alternative energy sources or research into more efficent use of current energy sources become cost-effective. They still haven't gotten there with the price in the mid-$2 range, but get it up around $3.50 a gallon where the pass-on costs of shipping goods at those prices starts to really hit other goods, and suddenly the high price of developing new technology to replace oil usage suddenly doesn't look like such a bad investment.

AWW,

It's "supply and demand" driven. Mainly by use of every piece of trivial/uselss information about gold and oil floating out there, some of it only tangetially having to do with "supply and demand" of the commodities in question.

There is a word for that, I believe. And something usually happens to people who engage in too much of what that word entails.

John,

Ethanol is now a tradeable financial instrument on the Chicago Options Exchanges. Which means if there is significant buying into ethanol, R&D will flow accordingly. And there isn't squat OPEC can do about it.

Brad -- What you're suggesting is that there is rampant inflation in petroleum prices; a rapid increase in prices because of an increase in the money supply.

David,

Yes. Only this time, the entire globe gets to play along. And only until India and China show themselves to be decent safe-havens for money, will this build-up for petroleum (and eventually, Ethanol) stop.

But if the world decides that China/India are safe, they may stop giving the US cheap goods in exchange for colored pieces of paper.

They aren't and can never be.