Oil moved above $46 yesterday. According to The New York Times, "One year after crude oil eclipsed $100 a barrel for the first time, the new year's trading began Friday with prices roughly half their year-earlier levels, and some believe oil could be headed even lower."

It is hard to make a bull case for oil, but not as hard as some imagine.

The stock market yesterday signaled that investors think that the economy is making a bottom and that perhaps the second half of the year will actually bring a recovery. If oil traders buy into that, they will begin to trade futures up. It is a fair assumption that an improving economy will require more crude.

Another, more obvious, reason is that OPEC will cut supply until prices go up. Some oil producers, both inside and outside OPEC, need the money from crude sales to keep their economies from sharp contraction. Russia and Venezuela are high on that list.

People watching the news think the war in Gaza will push prices up by interrupting demand. This is only true if Iran becomes involved and its territory is attacked. That is a long shot.

The large exporter that is very likely to see political turmoil that will cut its production is Nigeria, which is almost never mentioned in the debate over oil prices. Rebels cut supplies there several times last year. Only last week, a well-know militant was arrested by the government. That act could certainly lead to growing rebel activity to hurt the government. Hitting pipelines is not terribly hard. Defending thousands of miles of them is impossible.

The price of oil? Watch Nigeria.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Since July 11, the price of oil has fallen 25% from $147 to $110. This has been terrible news for holders of energy stocks -- which have nosedived. But for people who need to fill up their tanks, prices at the pump remain relatively elevated -- having fallen about 10% (I remember paying $4.11 at the peak and now pay $3.69 a gallon).

Meanwhile, the New York Times reports that companies using oil in their products are keeping their prices high despite the oil price drop. These companies seem to be acting in unison to raise prices -- suggesting there is not enough competition in their markets.

Which companies are raising prices still? Those who believe they can get away with it as they try to recoup the lost profit resulting from the recent increase in the price of oil -- which is an important raw material in their products..

• Procter & Gamble (NYSE: PG) increased prices to retailers up 7% to 10% "for items made with ingredients derived from oil to 'recover costs already incurred,'" according to a Times interview with its spokesman.
• Dow Chemical (NYSE: DOW) raised prices by 50% for the oil-based raw materials that go into diapers and polystyrene. It "does not want to give up those increases until the company recovers its old profit margins since '[its] prices continue to lag [its] cost increases,''" according to a Times interview with its spokesman.
• Goodyear Tire and Rubber (NYSE: GT) has raised tire prices by 15% and is "still making synthetic rubber tires from oil-based feed stocks bought at relatively high prices more than three months ago [and it] 'could not consider canceling the price increase until it knew whether oil prices were going to stay down,'" according to a Times interview with its spokesman.

Back in April 2005, Eric Wahlgren of Business Week, wrote about the then unthinkable prospect of oil hitting $100 a barrel. In that article I suggested that Toyota Motor Corporation (ADR) (NYSE: TM) might benefit if oil prices rose. That's because it seemed to be taking the lead in making hybrid vehicles. Even though its Prius only accounted for a small portion of its sales, I thought it would keep pushing ahead of its U.S. competitors due to its higher quality, higher prices, and lower costs.

Today, according to The Associated Press, Toyota surpassed Ford Motor Company (NYSE: F) as the U.S.'s second largest vehicle manufacturer. Ford has been in second place since 1931. And the global sales tallies are yet to be completed, however, The Associated Press reports that Toyota -- which estimates that it made 9.51 million vehicles in 2007 will surpass General Motors Corporation (NYSE: GM)'s total of 9.284 million vehicles for 2007.

Since April 26, 2005 when the Wahlgren article was published, Toyota stock has risen 47% while General Motors stock is down 11% and Ford has fallen 35%. Concerns about Toyota overtaking U.S. auto manufacturers' global lead have persisted for about 25 years. Despite occasional efforts by GM and Ford to stop Toyota's inexorable advance, Toyota is now the world leader.

And its prescient response to $100 a barrel oil is helping Toyota to extend its lead.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

U.S. Department of the Interior officials may have deliberately removed provisions from offshore drilling contracts, giving oil companies a multibillion-dollar windfall, two Republican congressmen are charging. And the government may have already lost $2 billion in royalties owed and may lose another $8 billion yet on the term left on the 1990's leases, according to the Reps. Tom Davis of Va. and Darryl Issa of Calif.

The congressmen are demanding more information on the leases, which are for deep sea oil drilling operations, from the Secretary for the Interior. The Interior's inspector general has also opened an investigation.

Evidently, a provision in the leases that would have paid substantially increased royalties in the event of soaring gas and oil prices -- such as we are experiencing right now -- was left out of the contracts. And the congressmen believe there's indication that the omission was no mistake. They have "the impression" that Interior has been less than open -- by withholding emails and other evidence of the transaction.

The oil industry has certainly been embarrassed quarter after quarter of late, by news of unprecedented profits. Nah, I take that back, I don't know whether or not the oil industry is capable of feeling embarrassment at anything.