United States Oil Fund LP (ETF) (USO)

Oil will hit 120 this summer.

I give credit to whichever business writer noted that a high price of oil has the same effect on the economy as an increase in tax rates. Consider, for a moment, what would happen if an increase in payroll withholding taxes, sales taxes, or a new VAT tax where suddenly created? Economic activity would go down. High oil prices have the same economic effect.
Oil at $80 a BBL makes sense if GNP and inflation were humming along at +5% per year. But we are in the second biggest depression in a century. What is propping up prices?
1) weak dollar
2) speculation
Whatever, a near term collapse in the price of oil seems to be in the cards. Once the Fed begins to raise rates, the dollar will strengthen, and the price of oil will shrink.
Besides: this journalist also noted, very cleverly I thought, that a high price of oil was followed in short order by a significant recession. The current price of $80 for oil is surely a drag on the US economy, and it won’t get better until the price of oil collapses.