$70 Oil: A Spill Or A Skirmish Away

When oil was at $72, it had been driven up by low gas supplies and tension between the US and Iran over nuclear weapons. At about the same time, oil analyst Charles Maxwell told CNBC that oil would go to $105. His reasoning?  "These terrible things like Iran, Nigeria, Venezuela are now happening on the geopolitical front with such frequency that they are becoming a permanent condition. We are caught in an energy crisis which may be 50 percent fear, but real nonetheless."

Oil is back at $60. It crept up on fears of tightening supplies from OPEC and a winter that eventually did get cold in the US. And, OPEC plans to cut production another 500,000 barrels a day.

It would not take much to push oil back toward $70. The BP Alaska pipeline and tensions in the Middle East have shown that. And, for the time being, the Middle East appears to be getting more tense. A tanker could run aground any day. The temperatures across the northern tier of the US could stay in the 20s. Or, all three could happen at once.

Much of the recent recovery in the airline industry has been based on lower fuel costs. And, sales of SUVs and pick-ups might have been even worse over the last few months if gas prices had not been down.

What goes around often comes around.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.