This is hastily written so forgive me if I don’t litter this post with classical references, witty attribution to pop culture, and the normal sense of humor that I generally sprinkle through these screeds.

   Crude oil prices closed at $123.57 bbl today, up $1.73 bbl on the day. There is some not-so-wonderful symmetry- - - the crude price on this day a year ago was $61.47 bbl, so we have now seen an increase of more than two-fold.  I continue to believe that this is largely the result of speculative excess, and I invite readers to revisit some previous posts for reference to that excess.

   But first, let me address what this means in terms of immediate consequences. Crude oil at $123.57 bbl translates this year into wholesale gasoline prices of between $2.99-$3.16 gal, or roughly $125.60-$132.72 bbl. Refiners aren’t beneficiaries of the higher crude values; they are largely victims. Every segment downstream of the wellhead is also feeling some pain.

   The price spike of the last four business days means that the pump prices will soon be between $3.60 gal and $4.00 gal, and I suspect the nationwide average will probably cross $3.70 gal in the next few days.

   A very well researched report issued by investment bank Goldman Sachs earlier this week warns of a “superspike” to $150-$200 bbl crude. I’ve been asked to detail how this might translate to a pump near you. Media types may have watched the DVD recently of SuperBad, which I predict will not be nominated for an Oscar.

    Here’s my best shot at providing guidance on retail numbers:

   A crude price of $125 bbl translates into about $3.70-$3.75 gal at the pump. We’re knocking on that door right now, and some of the more expensive locations like Chicago, New York, and California are higher - - in some cases over $4.00 gal.

  If refinery margins remain static - - they are actually quite depressed for gasoline, which is regarded almost as a byproduct in recent weeks - - each $10 bbl increase in the price of crude translates into a price increase of roughly 25cts gal at the pump.

   If we get above $130 bbl, it puts the $4.00 gal apocalyptic national average squarely in the cross hairs, as less of a rogue price, and more of a routine number. I have been calling for a peak of around $3.75 gal, so it would represent a market that has gone beyond the realm of what I thought might be predictable increases.

   The basic back-of-the-envelope metrics, given the assumptions that refining margins match recent levels are as follows:

  Crude Price                                Nationwide Retail Prices

  --------------                                ------------------------------

   $135 bbl                                      $3.95-$4.00 gal

   $150 bbl                                      $4.32-$4.37 gal

   $175 bbl                                      $4.95-$5.00 gal

   $200 bbl                                      $5.58-$5.63 gal

Note: These are just general ballpark numbers, and don’t take into account refining “events”, hurricanes, or other threats to U.S. refining infrastructure. The 2008 price rise hasn’t been about the U.S., and it hasn’t been about refining. It’s been focused on the perception - - not necessarily the reality - - that crude oil could be in short supply as the year progresses.

Footnote: Refining margins for diesel are much much higher than those for gasoline. A $125 bbl price for crude translates into a retail diesel price of about $4.30-$4.40 gal. Each $10 bbl increase in crude would tack on about 25cts per gal. So at $150 bbl, we would be looking at diesel prices on the threshold of $5.00 gal. It puts heating oil into the same neighborhood.