It is appropriate that crude oil hit an all time new high today and that WTI futures closed at their highest level ever - - $83.69 bbl.  The second round of baseball playoffs is under way, and despite the early exit of my beloved Yankees, I will again use the pastime metaphor.

   First, a word from our sponsor: Some readers erroneously concluded that I was on vacation recently,  since my picture (and the link) for this blog disappeared from the OPIS home page (www.opisnet.com)   I’m still here and if you set www.speakingofoil.com as your primary link for this screed, it is the best way to access the comments. And no, it’s not that my picture frightened people away from our company website, although one prominent oil analyst’s visage (that I won’t mention here now, but you know who it is!) could crack Chinese lead paint.

    I believe that we are in the last inning of the 2007 crude oil rally. That’s the good news. The bad news is that the game is being played in the financial equivalent of the Rockies’ Coors Field. I don’t believe the inning will be long, but it could still lead to that $85-$91 bbl peak cited in past columns.

   But recall that wholesale gasoline prices are nowhere near the highs they visited in May and June. Gasoline futures closed at $2.0851 gal today, or $87.57 bbl. That compares with a 2007 high of nearly $103 bbl ($2.45 gal or so) in May.

   Today’s nationwide average price for gasoline is $2.76 gal, and that is 51cts gal higher than where motor fuel was a year ago. The average price for diesel is $3.09 gal, and that is 39cts gal above the 2006 number.

   I am scheduled to deliver one of my always popular and highly entertaining keynote speeches next Tuesday (FYI: I believe in not taking oneself this seriously) at the North and South Carolina petroleum marketers’ annual convention at The Homestead in rural Virginia. The audience will be made up of distributors who buy wholesale gasoline and sell it at the pump.

    It will be difficult to give a motivational and uplifting presentation - - even Tony Robbins would have a hard time elevating the spirits of the citizens of Pompei during the lava season, and the timing is similar. Profits are scant for those that don’t produce crude or refine products, and a “blame the messenger” mentality is pervasive.

  But that said, I thought I’d use today to summarize some of the points that I plan to make. Some examples:

   Where were you in Autumn 2000?    I ask that question because it has been seven years since bullish sentiment in the oil markets (as tracked by a company called Market Vane at www.marketvane.com) was as high as it is now. Some 85% of trading participants are bullish about crude oil. Cries in an echo chamber are initially amplified but they will die out.

   Demand is not what some bulls believe it to be. I don’t have time to do an historical search, but this week’s Department of Energy report (www.eia.gov) noted that the four week average for gasoline demand is lower than it was a year ago.  Not all that much lower - - about 0.4% - - but lower, nonetheless.  This is a rarity in a growing economy and I suspect that this may be the first time that a four week chunk of gasoline demand is negative to last year.

   Refiners don’t need welfare checks.  Yes, several refiners warned about disappointing third quarter profits early this week. Gasoline currently fetches less than $4 bbl more than sweet crude.

  But the renaissance continues for diesel fuel and heating oil, which bring in anywhere from $11 bbl to $25 bbl over sweet crude, depending on which U.S. bulk market one looks at. And gasoline for next Spring is currently quoted at a handsome $15 bbl above sweet crude, a number which until 2004 was in the realm of fantasy.

   Alcohol may sober up the 2008 driving season. Ethanol is spreading into markets where it hasn’t been witnessed since the Carter Administration. I believe that a 10% ethanol/90% gasoline blend will be the standard in Florida and some other southeastern states this Winter. The motivation isn’t Green - - it’s pure economics. Ethanol supplies are coming, and they will displace significant gasoline demand in 2008.

   The Big Chill.   I thought that 1980’s yuppie movie was a pretentious bore but the term accurately describes the 2007-2008 heating oil price outlook. If you use heating oil, you can expect to pay $2.75-$3.00 gal for your first delivery. If we get an extreme cluster of degree days in December, January, and February, we could see 25-50cts gal increases at light speed. But between now and then, the market should cool off a bit.

  Lou Dobbs may pop a vein. Everyone talks about China and India and worries about the demand that these countries may generate in the next three years. But we are now less than one year before the debut of what will be the “mother of all export refineries” and the birth of another major oil company. For details, see the story on the OPIS website (www.opisnet.com) that for now doesn’t scare you with my picture. The reference to Lou is of course homage to his crusade against exporting jobs to the third world and the fear of cheap imports from the same venues. India will be a prominent supplier of U.S. fuel by 2009.

   And finally, this week, we heard news that BP would be reorganizing its structure. Our talented reporter for Oil Express - - Ms. Carole Donoghue - - covered the story in her own imitable style this week. Herewith, I give you the lead:

   When the bandages come off from BP's latest facelift, the major should look more like a svelte ExxonMobil than a ponderous British matron.

   I wish I had written that.