The $100 barrier was broken due to the same factors that lead to $97-a-barrel price levels this past Thanksgiving week. First, world demand continues to escalate. The International Energy Agency projects that oil demand will increase by 2.5 percent in 2008, with growth driven by China, India, and other lesser developed nations.
Second, the latest bout of political instability in Nigeria–the source of 1.1 million barrels per day of U.S. imports–contributes to uncertainty about the security of supplies. And third, speculators hoping to profit from future instability bid up the price on future deliveries of oil.
All of these factors are likely to continue throughout in 2008. Yet in the wake of these near record prices, oil industry allies are likely to haul out the lobbying equivalent of a Christmas fruit cake. They will once again push for more oil drilling off U.S. coastal areas and in the Arctic National Wildlife Refuge. These tired proposals have been rejected time and again because they would do little to reduce the price of oil in the short run or offset higher demand in the long run….