, , , , ,

Oil is back over $100 a barrel; the average gas price is over $3.50 a gallon and according to many estimates it will top out over $4.00 a gallon this summer. Our economy must really be humming for demand to be outpacing supply like this.

Well, it turns out our economy isn’t doing great, unemployment is still high and the demand for gas at this time of year is the lowest it’s been since the 1990s. This run-up in price is due in part to speculation. Firms that play the futures market without taking delivery of oil are just trading on paper, and every American has to pay higher prices because of it.

Americans are driving less, and demand is so flat that Sunoco has shut down about a third of the Northeast’s refining capacity. They’re considering shutting down the Philadelphia refinery, and that would bring it to half.

Congress is considering limiting speculation, but the oil market is global and you’d need the International Commodity Exchange in London as well as the rest of the world to join the program. That’s never going to happen.

People also want to increase drilling, and I agree, but we don’t have enough oil reserves to affect the global supply and drive down prices, but I know who does. Iran.

Iran’s conventional oil reserves are second only to Saudi Arabia’s, and the country can produce about 4.2 million barrels of crude a day. That’s roughly a third of what we import, and I’m sure Iran would be willing to sign a long-term exclusive contract with us in exchange for dropping sanctions, signing a 20-year non-aggression treaty and for us to stop being such kill-joys about their nuclear program.

What do you say, Ahmadinejad? Let’s both sign a pact with the devil.