This is not all about the "demand" of China and India.

And it's not entirely about the falling value of the dollar either.

Bush has the power to push back against speculators, but won't. The
lowering of interest rates is absolutely ZERO solution to this problem!
At least Bush has not bitten on the gas tax moratorium nonsense.

But we're all headed into a depression, according to this article:

http://www.slate.com/id/2190516/

===========

Oil passes $122 on $200 oil prediction, supply concerns
Tuesday May 6, 11:41 am ET
By John Wilen, AP Business Writer
Oil prices rise to record over $122 a barrel on prediction of $200 oil,
supply concerns

NEW YORK (AP) -- Oil futures blasted to a new record over $122 a barrel
Tuesday, gaining momentum as investors bought on a forecast of much higher
prices and on any news hinting at supply shortages. Retail gas prices
edged lower, but appear poised to rise to new records of their own in
coming weeks.

A new Goldman Sachs prediction that oil prices could rise to $150 to $200
within two years seemed to motivate much of Tuesday's buying, although a
falling dollar and increasing concerns about declining crude production in
Mexico and Russia contributed, analysts say.

Light, sweet crude for June delivery jumped to a new record of $122.47 a
barrel before retreating slightly to trade up $1.29 at $122.26 on the New
York Mercantile Exchange.

Oil prices have nearly doubled from about $62 a barrel a year ago, which
Goldman sees as a sign that the world is in the midst of a "super spike"
in oil prices. Analyst Arjun Murti said in a research note released Monday
that prices would ultimately force demand to fall sharply.

Not everyone shares Goldman's view. Tim Evans, an analyst at Citigroup
Inc., countered Goldman's analysis with a note predicting that crude
prices could as easily fall to $40 a barrel as rise to $200 over the next
two years because supplies are, as Evans put it, comfortable.

James Cordier, president of Tampa, Fla., trading firms Liberty Trading
Group and OptionSellers.com, said Goldman's prediction isn't necessarily
new: "We've heard numbers like these out of Goldman Sachs, especially over
the last 12 months."

Indeed, it's not the first time Murti has espoused a super spike theory;
in an April 2005 note, he predicted the oil market was in the early stages
of an unprecedented rally that would send prices from a then-record of
about $57 a barrel to $105.

But some investors respond to such predictions by buying, Cordier said.

A falling dollar on Tuesday also gave traders reason to buy. Investors
often buy commodities such as oil as a hedge against inflation when the
dollar falls, and a weaker greenback makes oil cheaper to investors
overseas. Many analysts feel the dollar's protracted decline is the real
reason oil prices have nearly doubled since last year.

Cordier said investors are also increasingly concerned about falling oil
production in Russia and Mexico, which are both major oil producers. And
prices are still supported by the concerns about supply disruptions in
Nigeria and northern Iraq that first drove crude past $120 a barrel on
Monday. Militant attacks in Nigeria over the weekend cut some production
at a Royal Dutch Shell PLC facility. In Iraq, Kurdish rebels warned they
could launch suicide attacks against American interests to punish the U.S.
for sharing intelligence with Turkey after Turkey bombed rebel bases in
Iraq on Friday.

At the pump, meanwhile, the national average price of a gallon of regular
gas slipped 0.1 cent overnight to $3.61, according to AAA and the Oil
Price Information Service. Analysts are split over how high gas will go;
while prices have slipped lower since May 1, leading some analysts to say
gas is close to peaking, others predict the fuel will follow oil's upward
surge.

"You're going to see new highs for gas prices, probably for the weekend,"
said Cordier, who predicts an average price of $4 a gallon in the coming
weeks.

In other Nymex trading Tuesday, June gasoline futures rose 5.58 cents to
$3.1087 a gallon after earlier setting a new trading record of $3.1163.
June heating oil futures rose 5.32 cents to $3.3597 a gallon after rising
to their own trading record of $3.3634, and June natural gas futures rose
16 cents to $11.338 per 1,000 cubic feet.

In London, June Brent crude futures rose $2.59 to $120.72 on the ICE
Futures exchange.

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