Notes for Marketwatch

A Dow Jones Marketwatch reporter (Polya Lesova, she writes very well) asked me for my opinion on oil. My response ...

I’m not too worried about oil. See this chart:

Fundamental drivers going forward …

Gasoline demand: While growth in gasoline demand has slowed somewhat, it is still rising (up 1.5% year over year). Every time gasoline prices flatten, demand surges. This should keep upward pressure on gasoline prices, and that should keep upward pressure on light sweet crude, the easiest source oil to use for gasoline.

refiners are underutilizing their refineries. We’re below pre-Katrina rates. There are plenty of reasons, but they won’t matter beans if we have a bad hurricane.

Hurricane season is here -- and it should be a whopper! We already had two named storms by the official start of hurricane season on June 1. Experts at Colorado State University are looking for a whopping 17 named storms in the Atlantic this season, which runs from June 1 to November 30.

Plus, scientists say nine of the storms should become hurricanes, a stunning five of those major hurricanes with sustained winds greater than 111 miles an hour!

There’s also a 74% chance that at least one major hurricane will make landfall on the U.S. coastline. The long-term average is just 52%!

It’s likely that global warming will make things worse. For example, in the Persian Gulf, a killer cyclone (what we call a hurricane) shredded itself before slamming into the Persian Gulf country of Oman. Lucky for Oman -- but that was the first time in recorded history that a cyclone that strong hit that part of the Persian Gulf. Do you think it’s a coincidence this is happening just as the US National Academy of Sciences reports that global warming is accelerating three times more quickly than feared? I think not!

It sounds like we have the ingredients for a hot and potentially volatile summer in “oil rig alley” in the Gulf of Mexico … and that would bring the potential for much higher prices.

Of course, like everyone, I hope we are spared an active hurricane season. But the fact remains that even the hint of potential hurricane-related supply disruptions can send energy prices soaring.

Check out my new gold and energy blog at MoneyAndMarkets.com