I was on "The Call" today. We touched on so many things but since there is never enough time to expand on them I thought I would take up some blog space. I believe the key to lower oil prices in the short term is to strengthen the dollar. Fed Chairman Ben Bernanke has started to jaw-bone his way to this goal. Since oil is universally priced in dollars, a stronger dollar would bring about lower oil. And while it seems contradictory for the potential for higher interest rates (which Ben hinted at) to be beneficial for the economy, I believe the Fed cut the Fed Funds rate too much and lower oil would be far more beneficial than slightly higher rates would be harmful.
I think we are at a tipping point with the price of oil and demand destruction will be widespread. $4 at the gas pump will force conservation. We are seeing signs throughout the economy that, finally, the price is too high. Miles driven are down for the first time in years, airlines are cutting the number of flights and taking seats out of service, surveys show that travel plans are being canceled, TV sales are up as stay at home is the choice, and mass transit is reporting a surge in ridership. World wide supply/demand is precariously balanced and since the U.S. uses one-forth of the oil in the world, conservation here is imperative.