We Will Drown in Barrels of Oil

The Dow streak was halted after three days of record closes on Monday as oil and gas shock hit the markets. Even the most well-heeled brokers and traders on Wall Street don't like gas at $3.00 a gallon, and for good reason. The high price of petro-energy threatens everything. The US economy - and to a large extent that of much of the civilized world - depends on fuel, not only for cars, but shipping, heating, cooling, industrial production and as a base element in many products.

The price of a barrel of light sweet crude ran up $1.78 to close at $65.89. The average price of a gallon of regular gas in the US, according to the most recent Lundberg Survey reached $2.87, and it's going higher.

Dow 12,919.40 -42.58; NASDAQ 2,523.67 -2.72; S&P 500 1,480.93 -3.42; NYSE Composite 9,660.56 -36.78

The big oil companies will be out with first quarter earnings reports this week. British Petroleum reports tomorrow, ExxonMobil on Thursday, Chevron on Friday. Expect gasps from the public, groans and grumblings from the monied class, and, of course, not a peep of derision from the complaisant wastrels otherwise known as our representatives in the US Congress. Big oil takes from all, but only greases the palms of legislators and others in the governing caste.

Nothing good can come from higher fuel prices unless you have a vested interest in the procurement, production or sale of those commodities. If anything can derail the economy all by itself, it's high energy costs, which have been a noticeable drag for the past two years at least.

If you're smart, you've already sold the SUV. If you're really smart and have some semblance of an environmental conscience, you've taken to

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walking or riding a bike - or motorized scooter - for short trips under one mile. Being that America has become the land of the fat, stupid and lazy, there aren't that many more bikes or scooters out there. We're doomed to drown either in debt, the cost of gas or from the coastal high tides of Global Warming.

It's all about the oil, the supposedly dwindling resource, even though almost nobody ever mentions the ongoing exploration, drilling and pipelining in North African nations by more than 70 companies. The Hubbard's Peak supply-demand scenario so frequently cited by the industry is a sham, an ersatz delusion perpetrated by the wealthy on the average and the poor. The more hand-wringing over global warming, the greater the demand for alternative fuels, the higher the price is likely to go. It's the unstoppable force of wealth, greed and power run amok.

To illustrate the illusory aspect of the oil scarcity argument, consider, on a day that oil rose nearly 3%, gold and silver - two elements which actually are scarce, barely budged. Silver rose 10 cents while gold lost $1.60 in value. Oil isn't scarce. The world is swimming in it and the oil barons are literally laughing all the way to the bank in armored limousines.

Volume on the exchanges today was close to average, with losers holding sway over winners by a slight margin of 5-4. New highs continue to flourish, with 474 of them as opposed to just 72 stocks making new lows. That imbalance is, and has been at the high range of historical charts.

If oil continues to rise in price, expect the market to react negatively, regardless of the quality of earnings being reported. Everyone and their brothers know that super high gas and oil prices are unsustainable in the long run and threaten to put an abrupt end to what has been a healthy run-up.