With oil hitting the $120/barrel mark today and local gas prices here in Rochester hovering around the $4 level, Dan Dorfman of the NY Post is predicting prices reaching $7-10 gallon by next year based on a move of oil prices over the $200 level.

A number of things reinforce this beyond those things he covers in his op-ed piece. First, much of the world’s oil production takes place in extremely unstable geopolitical regions. Exxon Mobil has shut down its 800,000 barrel a day Nigerian sources due to strikes. A UK union strike has shut down a BP oil pipeline that supplies one quarter of that country’s oil. Oil production in Iraq is corrupt and undependable due to the war, Iraqi incompetence and the US failure to modernize and repair war damaged facilities. Venezuala’s Chavez sees oil as a weapon to advance his nutty authoritarian agenda. And on and on.

Demand worldwide has skyrocketed and this will only increase. It appears that we have reached the tipping point on oil energy costs. A doubling of fuel prices means a doubling of the cost of virtually everything else except wages. And there is no going back.