Oil hit nearly $140 a barrel today. Was it really only a few years ago that I was writing articles for The Economist questioning whether oil could stay above $40 a barrel for any length of time?

Unsurprisingly, the Dow did not like this news; it closed down nearly 400 points today, thanks to the combined oil/jobs whammy. Tonight we're going to party like it's 1979 . . .

Someone just emailed "If I had even an ounce of spine, I'd be shorting oil like crazy now." My reply: "The market can stay irrational longer than you can stay solvent." At these prices, though, we should be seeing broader exploitation of new sources like shale oil, the Alberta tar sands, and Venezuela's ample supply of oil-like sludge. They are not nearly as energy efficient as Saudi crude--the ratio of energy expended to energy produced is something like 1:2 or 1:3 on these types of projects. But at $140 a barrel, the finances look pretty appealing.

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