A bubble of oil

I want to point this morning a column by Larry Kudlow. In it he discusses why there could be a drop in oil prices. I actually read this a day or two ago and agreed with almost everything Kudlow said. In fact, his evidence was my rationale for twice now predicting that we'd see a drop in oil prices. As it turned out, I was wrong both times, and the reason that I was wrong and also why Mr. Kudlow's thoughts may not come to pass is because we both neglected the 'fear premium' that is leading to the speculation that is supporting high prices despite rising inventories. As long as investors think that there is a chance the oil supply could be cut off tomorrow, next week, or next month, they are going to continue to buy into the commodity, even if we are swimming in oil.