With oil setting yet another record high Friday of $127.43 per barrel and Goldman Sachs renewing traders concerns about inadequate oil supply growth, economists and business executives are becoming increasingly concerned about gasoline prices in the quarters ahead.

U.S. gasoline prices are already up more than 100% since 2004 to a national average of about $3.78-3.83 per gallon. (Many high-cost zones, such as New York, Boston, San Francisco, and Los Angeles, are already experiencing prices well over $4 per gallon.) By any gauge, gasoline's surge is one for the record books - - rapidly approaching percentage increases registered during the first two oil shocks, in 1973-74 and 1979-80.

Given the run-up, how much higher can gasoline prices rise?

First, some may ask, why the emphasis on gasoline prices? In a nutshell, economists obsess over gasoline prices because, unlike the rest of the developed world, the United States has out-sized per capita energy consumption. That's econospeak for 'Americans use many more gallons of fuel to commute to work, do errands, etc. than their counterparts in Europe and around the world.'

Are the world's major central banks signaling an end to interest rate cut cycle?

Officials from three of the four major central banks - - all except the Bank of Japan - - have recently signaled their concern about rising inflation stemming from rate cuts implemented to stimulate demand following the credit crisis, Bloomberg News reported Friday. The U.S. Federal Reserve, Bank of England, and European Central Bank have commented, in various phraseologies, their concerns about prices and business costs.

Economist David H. Wang told BloggingStocks investors/traders can ignore comments out of the ECB, but not the Fed's or the BOE's - - which translates to at least a rate cut pause.

"[ECB President Jean-Claude] Trichet has been on the wires commenting on the need to contain prices, but he's been doing that since, I think, 1962, so ignore that," Wang said. "But the Fed comment blitz we had earlier this week and the Bank of England comments about rising prices I think are clear signals of a rate cut pause. The central banks have implemented enough monetary stimulus, for now."

Oil prices rose to a record $127.43 Friday morning amid new concerns about supply and after Goldman Sachs increased its forecast to $141 per barrel for the second half of 2008.

Goldman upped its forecast by 32%, saying oil prices will average $141 in 2008 and $148 in 2009, citing supply constraints and the lack of scalable substitutes, Bloomberg News reported Friday.

Oil surged on the news before easing back to $127.33. The other major energy commodities also jumped in early Friday trading. Heating oil added 5 cents to $3.67 per gallon, unleaded gasoline jumped 6 cents to $3.22 per gallon, and natural gas climbed 13 cents to $11.53 per million BTUs.

Economist Glen Langan told BloggingStocks Friday that Goldman Sachs' increasingly bullish outlook for oil is not good news for consumers or the U.S. economy.

"This is the first time that I can recall that a major investment bank has mentioned the supply dimension to oil. Up to now, we've been talking about emerging market demand, but if in fact supply will not increase at modern-day historical rates, this is not a good sign for U.S. GDP growth," Langan said. "We're counting on ample supply growth to contain these already high oil prices."

Langan said he expects oil production to grow at least 1.5-2% per year, while Goldman sees it at 1% per year. "If Goldman is correct, prices will rise to over $140 per barrel in the quarters ahead this year, and probably higher, that would put the average price of gasoline in U.S. easily over $4.25 per gallon," he said.

Oil driller Transocean, Inc. (NYSE: RIG), whose shares have probed, but have been unable to move and stay permanently above $160 -- may have received the catalyst it needs to reach loftier price levels.

Transocean's shares jumped $8.34, ending at $155.54 after Bloomberg News reported that Petroleo Brasileiro (NYSE: PBR), Brasil's state-controlled oil company, leased about 80% percent of the world's deepest-drilling offshore rigs to explore prospects. That included the Western Hemisphere's biggest discovery in decades, the Tupi field. Further, the activity of Petroleo, also known as Petrobras, is forcing up day-rates for oil rigs. PBR also closed higher Thursday, up $2.00 to $68.27.

Further, Petrobras is in talks with Transocean to extend leases as much as three years ahead of expiration, Robert Long, chief executive officer for the Houston-based RIG, told Bloomberg News. Also, Petrobras plans to start pumping oil from Tupi in Q1 2009. Tupi is the largest oil find in North America since the 1976 Cantarelli field discovery in the Gulf of Mexico.

Reuters reports that ExxonMobil (NYSE: XOM) CEO Rex Tillerson went on The Today Show this morning to discuss the price of gasoline. Why? I think it's because he wants to diffuse political pressure to raise taxes on oil companies. Tillerson said that the price of gas is so high that people are using less of it.

But the subtext, in my opinion, was to put a face on the industry in the mind of the public so that it would be harder for politicians to harness public anger into higher taxes. Some big oil companies now have "too much" money coming in, with oil prices as high as they are. One of them has recently been in low-level debates with investors over what to do with all their cash as in "they can't spend it fast enough," an irony when gas prices are so high.

But as I posted yesterday, not all oil companies think that they have too much money coming in. Many such as Exxon and Valero Energy (NYSE: VLO) have reported disappointing earnings in the first quarter because the price of a barrel of oil has doubled while the wholesale price of gasoline has risen only 39%.

Oil is treading water at a near-record $125 per barrel after a U.S. Energy Information Administration report indicated that weekly crude oil inventories rose a considerably smaller-than-expected 200,000 barrels. Economists surveyed by Bloomberg News had expected crude oil inventories to increase by 2.25 million barrels last week.

Gasoline supplies fell 1.7 million barrels.

The modest increase in oil inventories had little affect on oil prices, for the moment. Oil was down 87 cents to $124.93 per barrel in Wednesday morning trading. The other major energy commodities were also virtually unchanged. Unleaded gasoline fell 1 cent to $3.18 per gallon. Heating fell about 2 cents to $3.66 per gallon. Natural gas gained 10 cents to $11.52 per million BTUs.

Meanwhile, refineries operated at 86.6% of capacity for the week ended May 9, 2008, the EIA report indicated, up from 85.0% in the week ended May 2, 2008.

A bright spot: Refinery utilization

Independent energy trader Jim Dietz told BloggingStocks Wednesday the increase in refinery utilization was the report's lone bright spot.

Oil prices are down a bit after trading up close to $127 a barrel yesterday on fears that production cuts could be coming out of oil rich Iran.

While the chatter out of Iran could be just that, idle chatter, there was still enough of a reason to spook investors into pushing crude oil up significantly Tuesday, leading to a closing price last night of a pretty remarkable $125.80. Prices hit a high Tuesday of $126.98.

One of the main factors that has led to the current record high prices is the weak U.S. dollar. Yesterday, the dollar actually rose a bit, but traders looked past that data and instead decided that any sort of production cut rumors coming out of Iran warranted more attention.

It was only a few weeks ago I was thinking, how much higher can this one go but sure enough, Precision Drilling Services TR (NYSE: PDS), the Canadian Trust went higher. In my last report, PDS announced its monthly dividend distribution. The current yield is 5.6% down from the 10% range it was paying when I first recommended it, but still a good return.

Today PDS closed at $28.04, a new 52-week high, now 81.24% above the $15.47 it was five months ago. During the trading day it touched on $28.12.

Last month Precision reported a 33% loss and still the share price is moving up. This supports all the reports that keep popping up regarding the price differential between natural gas and oil suggesting the the NG prices are going up and that drilling companies like PDS will be swamped. Although PDS has had a rough trailing 12 months, creating the buying opportunity, the stock price is clearly being lifted by anticipation of a bright future.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of PDS.

Consumers are really going to be feeling the pain next weekend when they hit the road for Memorial Day weekend.

Gasoline prices have risen to yet another new high today, climbing to a national average of $3.73 as the summer driving months are on our doorstep.

Sadly, gasoline prices are showing no signs of cooling, and many analysts have already predicted $4 a gallon by the middle of the summer. At the current pace, $4 gasoline may seem cheap before it is all said and done.

The main reason for the price acceleration is, of course, crude prices. Oil prices have doubled over the past year and sent gasoline prices through the roof. Oil prices are still showing no signs of cooling off either, and are still trading above $125 a barrel. This is causing many analysts to question whether this year we will see the typical gradual decline of oil prices through the summer.

One oft-repeated phrase from Washington is that there is "no magic wand" that can lower oil prices. This has proven to be comedic gold for some. But for people who find themselves paying nearly $4 a gallon to fill up their tanks, the joke is not so funny. After all, with an "oilman" in the White House, it should come as no shock that the price of a barrel of the gooey stuff has risen 5-fold since January 2001 -- hitting a record $126 today.

I noticed that every time the Fed cut interest rates, the dollar dropped in value and the price of oil rose. As I posted, this dynamic is as sure of a bet as you can get in the real world. That's why traders are shorting the dollar and going long oil. And they're betting enough on that trade to drive up the price of oil consistently. As I discussed last night on New England Cable News (NECN), the European Union decided yesterday to keep its interest rate at 4% to fight inflation. Ours is a mere 2% so investors are selling dollars and buying Euros.

This brings us to how Washington can cut gas prices fast. All it has to do is to raise interest rates. This little move requires no Congressional approval and the oval office occupant doesn't have to sign a bill. If our Fed got serious about fighting the rampant inflation it has unleashed, it would raise the Fed funds rate, the dollar would strengthen, the price of oil would drop, and you would pay less at the pump. It's as simple as that.

Many people are saying that the rise in oil prices is the result of loose monetary policy. They say that there is an easy solution to the problem. Raise interest rates substantially, and the problem will be solved. Since the rise in oil is also the primary cause of rising inflation, the inflation problem will be resolved as well.

There are several problems with this line of reasoning. Oil continued to rise as the Fed began to increase interest rates in 2004. Prices doubled as the Fed substantially tightened monetary policy. Europe also has the some of the same inflation issues that we face despite the refusal of the European Central Bank (ECB) to lower rates.

Then, there are the big questions. Why are oil prices rising? What is the short-term solution?

I believe that the main reason for the rise in oil prices is the rise of the developing world. The two nine hundred pound gorillas in this equation are India and China. Automobile demand is increasing in these countries and is likely to continue in the near future.

This is similar to the rise in oil prices in the late 1960's and early 1970's. After World War II, the United States was the primary industrial power. As the world industrialized, demand for oil increased. The United States was not the only nation driving cars extensively. Supply constraints were also introduced in the mid to late 1970's with the Arab oil embargo and the Iranian revolution.

I know that last thing you probably wanted to hear this morning was that oil prices moved even higher, but that is exactly what is taking place, as oil rose as high as $125.98 and is currently trading at $125.60.

Leading the charge today is the weak dollar as investors continue to seek refuge from the falling U.S. currency in commodities -- most notably, oil. The dollar has fallen today against the euro, the British pound, and the Japanese yen. The euro was sitting at $1.5404 last night, but has moved higher today, up to a current price of $1.5466.

The market is also concerned about the upcoming peak driving season for Americans. With the season getting under way, oil prices will definitely continue to rise, and if gasoline stockpiles continue to fall, you can be sure that gasoline prices are also going to keep moving higher over the next couple of months. Will we see national averages of $4 or greater? I don't think so, but at the current rate prices are moving, nothing is out of the question right now.

An OPEC official said Friday the cartel may meet to boost output ahead of its September 2008 meeting if crude oil prices keep rising, Reuters reported Friday.

"If the price keeps going up, OPEC may consult on an increase in production before it meets in September," the OPEC source told Reuters Friday, speaking on condition that he not be identified. He added that the increase "would have to be more than 500,000 barrels per day" to have an impact.

Oil Friday hit another record high, increasing $2.20 to $126.20 per barrel Friday morning, before easing back to $125.25, on concern about production in Nigeria amid civil unrest, and on emerging market oil demand growth, particularly in China and India. Further, institutional investor demand for oil as an asset class is also contributing to oil's record rise, many analysts agree.

'Two years, $75 late'

Economist Glen Langan told BloggingStocks Friday talk of a potential OPEC action on production is two years too late. "OPEC is two years, $75 late, I'm sorry to say," Langan said. "OPEC knew for two years that higher production was needed to help meet unprecedented emerging market demand, but they failed to act in the interests of the global economy."

As serious as the oil issue is in the United States, the west, and globally, considering its impact on economic development, circumstances could become even more challenging, in the quarters ahead, if present trends continue.

That's because, due to emerging market growth and per capita energy consumption rates in the United States - the oil -producing world "could be in a position of unprecedented pricing power," according to economist Glen Langan.

Langan says "could be" because the pricing power oil producers currently have, while significant, is not absolute. And oil-consuming nations still have time to regain some control over their oil bills. Oil Thursday reached a record high of $123.74 per barrel before closing slightly lower.

Here's the current global oil supply / demand landscape, as Langan sees it: daily global oil supply exceeds demand by the smallest of margins. It's the major reason the price of oil has been trending up for more than 5 years, but oil-consuming nations can increase that margin, via conservation, increased efficiency, and alternative sources of energy.

The stock market was down without much conviction in the early going with the DJIA off 40 to 50 points. But someone must have pulled the plug somewhere as it has been dropping fast from about 2 p.m. and the Dow was down over 180 points as I pecked away at the keyboard.

What the heck changed overall market sentiment so suddenly? Some say it's oil prices drifting higher. That's always a good scapegoat and probably has something to do with it. It might also be a connected issue with the raging conflicts in the middle east and Africa.

There is always the negative sentiment about housing, employment, last night's democratic primaries in Indiana and North Carolina just muddling on. It might also be our current president just muddling on, or it might just be that all of these things just prompted some profit taking after weeks of appreciation.

Maybe it is my pal Warren's negative sentiment about the financial sector and the years of pain that may still need to be worked out of the system. Whatever it is you can be sure that after the market closes the Wall Street pundits will discuss all their presumptions as if they were facts...

UPDATE: The DJIA closed at 12,814.35 down -206.48, or -1.59%

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money.