Monday will mark the two month anniversary of crude futures’ late August 2007 swoon. The closing price on August 22 for WTI crude futures was $69.26 bbl. Today, crude oil settled at $89.47 bbl, some $10.53 bbl short of Boone Pickens’ unbiased (dripping sarcasm?)target level and $20.21 bbl higher than the price about 60 days ago.

   In this space and in various interviews in September and early October, I suggested that the likely top for crude was in the $85-$91 bbl area. I’m still alive, with that prediction, but acknowledge that it was not a range that calculated based on economic data or clairvoyance. Indeed, it may be tested in the next 24 hours or less.

   In the meantime, the disconnect between crude oil and retail gasoline is staggering. The raw cost of crude is up 48cts gal in 60 days; the average price of gasoline is up  . . . 1.5cts gal. Refiners that could count on making $30-$40 bbl profit when they ran crude this Summer are contending with margins closer to $2-$3 bbl. Gasoline retailers are scarcely making anything at all at the pump island, and can only hope that customers come in to the c-store and buy some beef jerky (thereby messing with the Sasquatch as a favorite commercial urges) as well as other high margin inside-the-store items.

   Those that find crude oil and bring it to market are doing quite well. There are many oil fields that bring a barrel to market for a cost of say $5-$10 bbl, so the profit margins are truly windfall-like in such cases.  But the greatest profits may be among the speculators and investors who bought crude oil futures contracts 60 days ago. A single futures contract (representing 1,000 bbl) has appreciated by some $20,000 in that time, a much higher return than I  have received on my passbook savings account.

   It’s been too hectic a week to put all of my mid-October thoughts into a lucid column. Accordingly, let me offer some tidbits:

·         The late January 2007 low for crude was $49.90 bbl and the intraday high reached today was $89.78 bbl.  The difference is $39.88 bbl. It took more than a century to see a $40 bbl absolute crude price; it has taken ten months to see a $40 bbl variation. Imagine the Dow reaching 25,000 by next August and you have an approximate equivalent.

·        Just over 700,000,000 barrels worth of WTI crude oil futures contracts were traded on the New York Mercantile Exchange (NYMEX) on Monday alone. U.S. production of WTI (West Texas Intermediate crude) is about 200,000 barrels per day. So, on Monday we traded about nine and one half years worth of WTI production.

·        Department of Energy data says that the most recent four weeks of 2007 saw gasoline demand that was 0.5 percent under demand during the same period a year ago. Anecdotal evidence from convenience store retailer and distributors, as well as from a few refiners, suggests that demand is indeed lower. Wall Street believes otherwise, but it may be tough to accurately gauge demand from the tinted windows of a stretch limo.

·        Nationwide diesel prices today hit $3.12 gal and this number will continue to move higher into next week. Diesel demand numbers are inconclusive, but most reports also put this year’s demand rate flat to 2006 at best. That could indicate that the commercial side of the economy is slowing as well.

·        As I write this, wholesale heating oil prices in the overnight trading session, have surpassed $100 per barrel for midwinter delivery.  I’ve said in previous columns that the WTI crude oil price is an abstraction. But a price of $100 bbl ($2.381 gal or higher) is very real to homeowners. Many use about 25-27 barrels of heating oil from October through May. Heating oil vendors typically operate with a gross margin of about 60-80cts gal, so retail heating oil prices for midwinter project to about $3.00-$3.20 gal.

    A final note. The Renewable Fuels Association today cited a quote by yours truly in an RFA press release about the need for fuel alternatives. The quote was accurate - - I told CNNMoney earlier this month that mixing ethanol with gasoline could cheapen the wholesale price (at the moment) by some 4-10cts gal.  This could change, and indeed, about fifteen months ago, ethanol cost more than twice what gasoline fetched in the bulk markets.

      I don’t take sides on these issues, however, and hope to avoid the crossfire between Big Oil and Big Agriculture. I would hate to reenact the Cary Grant race through the cornfields in North by Northwest, with either ADM or ExxonMobil in hot pursuit.

     Now if either company or their various associations issues a press release urging U.S. consumers to use less fuel and use it more efficiently, I’ll sign on.