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Fundamentals may still appear weak, but gas and oil prices are going up regardless – and that’s looking more like a long-term proposition.

Overall, oil has rebounded from under $35 a barrel at the beginning of the year to about $60 per barrel

My guess is the that the recent spike in energy prices has as much to do with leaving the bad news behind us and looking ahead. While 2008 was a lousy year for the oil industry, 2009 looks to be about the same — or worse – the Organization of Petroleum Exporting Countries estimates that 2009 will produce the weakest demand for oil since 1981.

There is a burgeoning feeling that the worst might well be behind us, in terms of lagging oil prices, similar to the mindset that afflicts Wall Street. Since last September, each 50-point-plus upward move in the stock market has triggered an accompanying $7 billion uptick in the price of West Texas Intermediate crude oil. Of course, in the short term, any drag in the stock market may well mean a drag for oil prices. Says Adam Sieminski, chief energy economist, Deutsche Bank, Washington, DC, “Oil analysts should stay focused on the potential for lower equity markets given the very strong positive correlation recently between oil prices and the Standard & Poor’s 500.

That’s the short term and I’m here this week to talk about the long-term trends in the oil industryдивани – trends that I believe are favorable to the industry, unless adversaries in the federal government use their leverage to gum up the works. I’ll get to that a little bit later, but most industry analysts fully expect the price of oil to keep increasing.

First, PMV Oil Associates predicts that oil will approach $63 dollars per barrel in the coming weeks and will rally to $78 within the next six months. I think that $78 could be a charitable estimate, especially if the six-month winning streak on Wall Street comes to an end.

Going into 2009, there was a great deal of anxiety among oil industry insiders over how serious an Obama administration – plus a Democrat-controlled Congress – was in demonizing oil and gas on the mantle of climate change. Only four or five months ago, predictions were dire: price caps on oil, onerous taxes on industry companies, and a carbon cap-and-trade bill that would change the way that businesses and individuals pay for their energy costs.

Virtually, those threats to the energy industry have not come to pass – and likely won’t anytime soon. Right now, economic realities seem to be trumping any move to energy policies that would harm the oil industry. The political reality is that powerful politicians in states that have close ties to the oil sector (for example, Michigan, Ohio and Alabama for the auto industry and Texas, Louisiana and Oklahoma for the oil drilling sector) aren’t buying into the climate change argument – at least not enough to penalize oil companies or auto makers who are committed to providing jobs and giving consumers (i.e. “voters”) the products and services they want. For proof, look at the in-house squabble among the White House’s auto industry task force over how to steer car makers into laws and regulations that would theoretically reduce greenhouse gases and heighten fuel efficiency capabilities.

Washington insiders say that the U.S. Treasury Dept. and National Economic Council swatted down attempts from the Environmental Policy Administration to tighten regulations on carbon emissions and penalize industries that sold oil and gas-dependent products like airplanes or cars. That would alienate average Americans and threaten the status quo in Washington. Not a viable option for the realists in the halls of Congress.

Right now, there seems to be no political appetite for curbing oil production, or for instituting policies that penalize industries that use or make oil and gasoline for their products. The economy continues to be in the tank and the realities of an energy economy that reduces oil in favor of wind or solar solutions, which have increasingly been exposed as inadequate or just plain unable to handle any energy vacuum left by a reduction in oil use, aren’t exactly optimistic for oil industry critics.

Investors know this, and oil-producing countries know this, too. That’s one big reason why oil prices should continue to climb incrementally, even though the fundamentals for the industry right now (i.e. weak demand and under capitalization) aren’t so vibrant.

We’re not out of the woods yet, but the landscape is clearing. With no major offensive from Washington coming down the pike against the industry, we remain on the path to a stronger, healthier oil industry.

Great news! A recent study out of Colorado State University is predicting a mild hurricane season for 2009. Since their methodology has approximately a 78% accuracy rate, this is truly good news. For more, visit my blog at Investor’s Insight.

While it may be a popular PR move, adding $80+ billion in taxes to the oil industry’s plate is bad for consumers. This doesn’t seem to be a problem for many politicians, though. When higher taxes result in higher fuel costs they simply hold a congressional hearing to “look into” the matter, then propose some new taxes and the cycle continues. Can the U.S. oil industry survive? Check out my online casinoblog at Investor’s Insight.

While the merits of capitalism are under fire in the U.S., countries that rely on oil revenues to fund socialist agendas are experiencing significant hardship as a result of current oil prices. Always willing to help (for a price), Western oil producers are now poised to acquire desireable new contracts that were unavailable to outsiders just last year. For more on this visit my blog at Investor’s Insight.

OPEC officials representing Algeria and Liberia say the new target price for should be around $60 bbl and the majors are  withdrawing oil from storage. For thoughts on how these and other weekly events will affect the oil markets, check out my blog at Investor’s Insight.

In an apparent attempt to prevent the global recession from deepening, OPEC announced at it’s  most recent meeting that quotas will stand pat. Meanwhile, U.S. drilling activity is dropping off in the face of projected supply shortages. For more information visit my blog at Investor’s Insight.

Oil and gas supply shortages are “inevitable” unless major developed and developing states undertake a massive production expansion effort, says a new report from the U.S. Pentagon. Terrorism and organized crime are compromising the productivity of sector-specific oil markets around the globe, leaving a supply gap that could hit the market by 2012. For more on this visit my blog at Investor’s Insight.

I’ve been writing about the Obama administration a lot lately, and this week is no different. Washington is planning to levy a massive tax increase against domestic oil companies. For three reasons why this is a very bad idea, visit my blog at Investor’s Insight.

The Obama administration announced this week that it will be conducting “stress tests” to determine the financial health of top U.S. banks. Oil refineries in the U.S. are undergoing a similar test, and it is no dry run. For more on the precarious position some refineries are in and their possible effect on an oil rebound, check out my blog at Investor’s Insight.

China is stockpiling oil at bargain basement prices. OPEC cuts its demand forecast and signals that another cut in production is not far behind. Japan’s GDP is at the lowest point since 1974. For thoughts on how these factors are affecting our market-driven economy, check out my blog at Investor’s Insight.

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