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ting funneled back into the price of oil and what goes on with Iran and Israel." Milne stated that if tensions calm and
the economy remains stagnant, prices will probably fall back into the $90 or even $80 range. As noted turmoil in the Middle East
could push prices much higher. Fuel Oil News recently interviewed the host of FOX Business Network's "MONEY with Melissa Francis" on the preparedness of the U.S. military to handle potential Iranian hos- tilities in the Strait of Hormuz (see news on page 14). Francis has just completed a tour of the region as part of a broader look at the ramifications of such an event. When crude prices were discussed, she noted: "The government General Accounting Office thinks that the price of oil would spike right away to $175 per barrel. I've covered energy so closely for a decade and you know that traders in the pits love to hop on news and bid the price up. I was talking to Fadel Gheit (managing director and senior analyst cov- ering the oil & gas) at Oppenheimer & Co. and he thought that $175 was ridiculous and it would only have a temporary impact because we would open it back up." Conversely, events could conspire to
dramatically reduce prices. The Chinese economy, one of the linchpins for the demand argument behind current prices, also seems to be slowing with speculation that a variety of stimulus related bubbles in the country are about to pop. Such a development could certainly shock crude futures (and correspondingly in short order refined product prices) in the down- ward direction. Also, Brent vs. WTI is primarily influ-
encing current prices. Brent, being fairly Euro-centric, is positively influenced by the perception that European nations are making positive moves to get their economic crisis in order. Should that per- ception change, Milne noted that Brent could drop hard and that the geopolitical risk will have a more immediate impact on Brent prices versus WTI prices because of the location. Richard Larkin, the president of Manchester N.H.-based Hedge Solutions,
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Inc. raised the following consideration. "On the crude side I think is we are going to be hanging out in this range of as low as $85 to $100 but, knock on wood, I do not see a lot of predictions for crude oil to hover above $100 a barrel over the next two quarters anyways," he said.
"You always have the geopolitical wild- card. What will be interesting between now and the election – I think you have the White House with its finger on the Strategic Petroleum Reserve trigger and I think they will use that politically to keep prices down."
