One of the most controversial proposals for dropping the price of oil is to allow drilling in protected parklands and in restricted off-shore areas. Since there are deposits of crude and gas in these areas, it is also one of the more sure-fire ways of adding to production.

It now appears that the waters off Florida are among the most promising. According to the AP, "The early activity here stems from a 2006 Congressional compromise that allows drilling on 8.3 million acres more than 125 miles off the Panhandle."

The promise of the Florida coast is both good news and bad, depending which side of the debate one is on. A find of any real significance is likely to be proof of the fact that opening protected lands will yield results.

For the "green" crown, it could mean the the government will be encouraged to drill of near protected beaches. There may even be wells in Yellowstone.

Douglas A. McIntyre is an editor at 247wallst.com.

World leaders, hedge fund managers, and oil ministers are all in the Saudi kingdom trying to dope out why crude prices are so high. Early news out of the meeting is not good.

The head of Shell told Reuters that the meeting was a waste of time, saying "What I've heard so far are basically all good ideas, but it will probably not change the price tomorrow morning."

The Saudis did day that they would increase oil production.

The summit is a fine example of how too many cooks spoil the soup. Investors have a different agenda from the oil companies. The oil companies have a different agency from the exporters.

The importers just want lower prices.

Douglas A. McIntyre is an editor at 247wallst.com.

It has finally occurred to the Saudis that the world knows that they and their friends in OPEC are the cause of high oil prices.They like the money too much.

There have been theories that hedging and a weak dollar should take some of the blame for crude prices. But, the hedge people are being investigated by the federal authorities. That keeps them out of the market. And, the dollar is going up.

But, the price of oil is not coming down.

The princes of Saudi Arabia admitted that they are part of the problem without coming right out and saying it. According to The New York Times, the kingdom will export an extra 500,000 barrels a day. "The move was seen as a sign that the Saudis are becoming increasingly nervous about both the political and economic effect of high oil prices," the paper writes.

While their greed may have gotten the better of them, the Saudis would still like to have one or two friends around the world. It would be wise to have the U.S. on that list.

Douglas A. McIntyre is an editor at 247wallst.com.

OPEC has repeated what it has said before, but with a little twist. It will not raise supply before its September meeting. That means that relief from $130 plus crude prices may not be coming.

But, the small addition to the group's comments is that "OPEC has no plans to meet to discuss oil's surge to a fresh record, and would need to see a real supply threat to gather before the next scheduled meeting," according to Reuters.

While it is not entirely clear what that means, it probably includes disruptions of oil production in areas that have little political stability, especially Nigeria and Venezuela.

In general, OPEC says that speculation and a weak dollar are driving oil up. That is a convenient excuse for a cartel that is making hundreds of billions of dollars while gasoline prices move toward $5.

Douglas A. McIntyre is an editor at 247wallst.com.

When oil was at $65 a barrel, almost no one believed it would double. There were a few nuts making the case, but they were ignored like Galileo was when he said the Earth moved around the sun.

Now, it is hard to find analysts who do not believe oil is going to move over $140 a barrel, and, perhaps above $200. Their reasoning is sound enough. Demand in emerging nations like China and India is still increasing. While crude use in the U.S. may be off slightly, it's not off enough to matter. Supplies may be drying up as fields in the Middle East, Mexico, and Russia age. A political catastrophe in Nigeria or Venezuela could cut production.

Against all that, a case for a sharp drop in oil prices is quietly forming and its logic is powerful but poorly understood.

The first argument that oil is too high is that it has been pushed up in part by speculators rushing to cover bets that crude will fall. It is a bit like a "short squeeze" in stocks. Once the "covering" is done, oil prices will face less pressure on the upside.

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.

As if there were not plenty to worry about, Goldman Sachs (NYSE:GS) is forecasting oil prices to hit $150 to $200 in the next six months to two years. According to Bloomberg, a note from one the of the bank's analysts said:``The possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months, though predicting the ultimate peak in oil prices as well as the remaining duration of the upcycle remains a major uncertainty."'

Observers do not need help from Goldman to make the case. Recent problems with production in Nigeria and political unrest in the Middle East have already moved oil above $120. That situations could continue and move into other unstable countries such as Venezuela.

The theory that a slowdown in the global economy would drop oil prices has not borne out. China, India, and other major developing nations continue to push demand higher. Even in the US where gas prices are now over $3.50, consumers have not cut back use enough to move pricing down.

Some new fields will come online. Brazil just made a major discovery off its Atlantic coast, but production will not be up and running there for several years. During that time, exports from large producers like Mexico and Russia will continue to fall due to aging of their fields.

Nuclear power looks better every day.

Douglas A. McIntyre is an editor at 247wallst.com and the author of the Ten Stocks Under $10 letter.

Exxon Mobil Corp. (NYSE: XOM), whose huge profits have made it one of the most vilified companies in America, was brought down to earth today after posting disappointing earnings.

Net income at the world's largest oil company rose 17% to $10.9 billion, or $2.03 per share, from $9.3 billion, or $1.62 per share, a year earlier. Revenue rose 34% to $116.9 billion. Analysts had expected profit of $2.13 on revenue of $124.4 billion, according to Thomson Financial. Shares of the company fell.

Just because oil prices remain above $100 per barrel doesn't necessarily mean everything is going Exxon's way. For one thing, high oil prices resulted in "significantly lower" refining margins, which pushed down downstream earnings by $746 million to $1.16 billion. Lower margins also pushed down profit in Exxon's chemical business by $208 million to $1.03 billion. Moreover, spending on capital and exploration projects soared 30% to $5.5 billion "as we continued to actively invest in projects to bring additional crude oil, natural gas and finished products to market."

The problem is that's proving to be difficult. For one thing, production at the company's oil wells dropped as did natural gas production in the Middle East, The U.S., Canada, South America and Asia. This is happening as surging demand from the developing world is keeping oil prices at record levels. Exxon is "having trouble raising production, and that's not a good sign,'' Leeb Capital Management's Stephen Leeb told Bloomberg News.

The Saudis will shortly open one of the largest oil fields in the world for production. That would seem to be good news, but it may be the last big deposit of crude left in the country. And, getting it online has cost $15 billion.

According to The Wall Street Journal, "Even in Saudi Arabia, home to more than a quarter of the world's known recoverable reserves, the age of cheap and easily pumped oil is over."

In a period where oil now sells for $117 a barrel, the largest single question is whether global oil production has peaked. There are very few new, large fields being found now. Recently, Brazil said it has discovered one off its coast, but that is in very deep water. Getting to the crude will be expensive, and some of it may be beyond reaching at all.

Part of the rise in oil prices probably has nothing to do with current supply, but it may well anticipate a fall-off in crude production in years to come. Developing nations like China and India are still increasing their consumption. Without large new deposits to develop, there is every reason to expect that oil reserves may start to fall a decade from now.

There is nothing to replace that.

Douglas A. McIntyre is an editor at 247wallst.com.

Large emerging market countries will use more crude oil than the US for the first time ever. According to Bloomberg, "China, India, Russia and the Middle East for the first time will consume more crude oil than the U.S., burning 20.67 million barrels a day this year."

While OPEC says that higher oil prices are the result of a weak dollar and speculation, that viewpoint is clearly wrong. Demand for oil is moving up and moving up quickly. At the same time there is evidence that supply may drop. Saudi Arabia has indicated that it will soon stop investing in more oil production facilities. The Wall Street Journal says that "After 2009, the kingdom is putting a brake on new projects, because it fears rising output and consumption of biofuels and other non-fossil fuels will erode crude-oil demand."

Anyone who believes the Saudi excuse for cutting investment is a oil production is a fool. By dropping capital expenditures on new facilities, the country can increase the tens of billions of dollars in profits it makes on $116 oil.

The war between consuming nations and producing nations is entering a new and more dangerous phase. Oil needs to rise 30% to hit $150. Based on the price increase over the last year, that number is not beyond the realm of possibility. Nor is the idea that gas prices could top $5 a gallon.

Oil. More consumption and less supply. Ugly results.

Douglas A. McIntyre is an editor at 247wallst.com.

On an almost weekly basis, OPEC makes its case that increasing oil production will not bring down the price of crude. And, almost every week oil consuming countries see the statements as self-serving. While the members of the cartel bring in tens of billions of dollars with oil hitting $116, there is absolutely no economic incentive for them to pump on additional drop of the black gold.

Bloomberg reports that OPEC's chief says, "Any increase in production now will not have an impact on prices because there is a balance between supply and demand." The statement is laughable on the face of it. While speculation in price and a falling dollar have contributed to some of the rise in crude, so has demand from countries like China and India. Demand has also not fallen in the U.S., Europe, and Japan, which have traditionally been the largest markets of oil.

Unfortunately, consuming nations have very little leverage with OPEC. The U.S. does offer military security to many Arab states in the Middle East, but it does not seem to be willing to use that as a bargaining chip.

Too bad.

Douglas A. McIntyre is an editor at 247wallst.com.

As Joseph Lazzaro wrote earlier today, oil prices were surging once again in today's market, and traders set a new record, pushing prices up as high as $114.08 today.

Fueling today's rally were concerns over global supply, as news spread that Russian oil production has fallen this year. This is the first time in a decade that Russia is seeing a decline in its production.

Russia is not the only country making headlines. We were also given the news that China had a massive jump in its diesel oil imports last month of a remarkable 49%. So, we are being given both the news that Russia is producing less, while China is demanding more; the perfect recipe for a strong day for oil prices. Other oil producers, Mexico and Nigeria, announced that they had temporarily shut down some of their production as well.

OPEC continues to squeeze the American economy. That does not seem to matter to the cartel. It is making too many billions of dollars on oil prices, which seem to be locked above $100 a barrel.

The current administration has asked OPEC to increase supply, but oil producing countries want no part of it.

According to Bloomberg, OPEC will not even examine the issue of output until September. The news service quotes the oil minister from Iran as saying, "The Organization of Petroleum Exporting Countries, which supplies 40 percent of the world's oil, will maintain current production levels to preserve the oil price at $100 a barrel."

Unless the U.S. intends to take the oil by force, there is little it can do. Demand for oil in emerging markets is not falling off. China is the most extreme example. It not only consumes massive amounts of black gold, the government underwrites the cost of gas and diesel, keeping them low so that cars and trucks can operate without burdening consumers and businesses.

For oil and gas buyers, it will be a long, hot summer.

Douglas A. McIntyre is an editor at 247wallst.com.

Under most circumstances, a drop in demand in the US would bring oil prices down some. The recession should cut the amount of oil consumed here as drivers, airlines, and other big markets for oil-based products shrink.

It may not be that simple. Many analysts now believe that the amount of oil available is not quite so large as was hoped. Older fields are pumping less crude. There are fewer discoveries of large, new reserves, even off-shore. OPEC is not increasing production. Oil exporters are keeping more crude to power their own increasing number of cars and trucks.

According to The Wall Street Journal, the Bush administration now believes "prices will remain buoyant well after speculative investors head elsewhere, as the cost of finding new sources of oil continues to soar and demand in Asia and the Middle East climbs." If the view is right, even if interest rates fall, the US economy faces a multi-year problem with the pricing of its most critical commodity.

Oil prices have already beaten up the airline and car industries. Similar problems will begin to move into other sectors. Retail sales depend on buyers getting out and about. So does the tourism industry. Petrochemical-based products are used in everything from lubricants to plastics.

The Fed and Treasury can solve a lot of problems. Oil prices are not among those.

Douglas A. McIntyre is an editor at 247wallst.com.

It seems like everyday we are seeing new highs for oil, and today is no exception, with prices hitting a high today of $106.42, and are currently trading up $0.84 to $106.31.

It is not surprising that as we see oil continue to head higher, we also have the other side of the coin that shows the dollar falling to new lows. As the market continues to push the dollar lower, you have to wonder just how high oil is headed? It took so long for oil to break through the psychological $100 barrier, and now, as Joseph Lazzaro pointed out earlier, there is already talk of a $100 floor for oil.

Last night we saw oil close at an all time of $105.47, and judging by the looks of things right now, we are going to be setting yet another record close again today. For now it looks as though there really is not too much that could turn the recent price surge around.

This week the market was impacted by a surprising decline in U.S. inventories, and the official (albeit expected) announcement from OPEC that it would not be lifting production quotas. Look for oil prices to remain strong at least until the middle of next week, and depending on next week's inventory report we could easily be looking at $110 oil. Scary... but definitely not out of the question at this point.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.