Oil well on the way

Oil continues to rocket up and media outlets, faced with reporting yet another record price, are finding more and more colourful ways to cover it. One news wire declared in the wee hours of this morning that oil had "smashed past 135 dollars a barrel". (It peaked at $135 and a decidedly un-smashing 4 cents). Still it's pretty worrying for anyone who needs oil for their daily life, which broadly includes everyone except the odd hermit or two camped out on the Shetland Isles.

For reasons that are far too boring to share, I was chatting with an oil expert in Singapore this morning. He said at $135 a barrel something had to give. So is the oil bubble about to burst? Don’t bet on it if this chap's analysis is right. He said one of two things has to happen for prices to drop; the first is OPEC releases more oil and the second is countries like India and China stop subsidising it and let prices go up at their pumps as they have at ours.

The chance of either of these things happening any time soon is surely remote at best. The question then is just where will it stop. Goldman Sachs has said oil prices could break through $200 a barrel by 2010. If it keeps going at the current rate that's very optimistic. A year ago oil was at $65 a barrel - less than half the current rate.

Maybe the hermit option isn't so bad after all. Room for a small one in your hovel, Mister?