Oil hits $117

The dollar gained some ground, which would normally signal a drop in pump prices (a stronger dollar makes oil less attractive to investors looking for a hedge against inflation). But the oil market has reached one of those zany zones where every reason for prices to drop is topped by two reasons for prices to go up. Today, it was concern over Nigerian oil supplies and better-than-expected earnings at a few bellwether U.S. firms. Never mind that the economy continues to stagger and demand has been falling. What mattered more – at least on this day – was a good quarterly report from Caterpillar (the Dow was up 228 points). As for gas prices, well, they're not about to fall anytime soon. From the SF Chronicle:

Many analysts say gas prices will have to climb even higher to reflect recent increases in crude oil's cost. Gas prices have risen 4 percent in the past month, while oil prices have jumped more than 8 percent. "If it caught up to crude oil, gasoline would cost a lot more," said John Kingston, who directs oil coverage for the Platts energy information service.

[CUT]

Gas supplies in California and throughout the United States have been inching down in recent weeks. As they drop, prices will have another reason to rise. And Americans typically drive more in the summer than during the other seasons, using more gasoline and pushing prices higher. Gas prices have climbed higher and faster in California this year than they have elsewhere in the country, partly because of the earlier spring maintenance schedule at the state's gasoline refineries.