Oil at $139/barrel

Last week Iranian President Ahmadinejad said Israel would disappear.  It's not the first time he's said Israel would be wiped off the map.  But this time, the Israeli Transport Minister responded, saying Ahmadinejad would disappear before Israel did.

If Israel (or the United States) attacks Iran, $139 oil will seem like a bargain.  Overnight we could see $200 or ever $300/barrel oil.  That's what the Strategic Petroleum Reserve is for.  In case our leaders are stupid enough to start a war in the middle east (I mean ANOTHER war, besides the one we already have.)

I'm not sure what the price of gasoline would be.  Maybe $10, or more likely $15/gallon, if you could find it.  The gas lines of the 70's are nothing compared to the shortages we would see if the Strait of Hormuz closed.  For that matter, I think it is only a matter of time before we see gasoline rationing.  Maybe not this year or next year, but it is coming.

If cooler heads prevail, and the current crisis is averted until we can get George F. Bush out of the White House, the price of oil should drop back toward $100.  So I wouldn't be buying oil at this point; there's too much of a war premium built into the price.  In any event, I think natural gas is a much better play.  On a BTU basis, oil should sell for 6 times the price of NG.  Currrently NG trades for $12-13, and should be over $20 based on the price of oil.