Get real!

Oil vs. Natural Gas

Oil prices haven't fallen as much as natural gas because oil still has geopolitical risk, which natural gas doesn't have. Oil supplies face risk of disruption by violence in Nigeria, Iraq, and the ever present saber-rattling between the U.S. and Iran, and the war of words between Bush and Venezuela's Chavez.
If Israel or George Bush bomb Iran, then Iran can cut off 40% of the world's oil flow by blocking the Strait of Hormuz, and we'll see $300 oil. If McCain becomes president, he's even more likely than Bush to "Bomb bomb bom, bomb bomb Iran," as he has sung about himself!
On the other hand, most of the natural gas used in the U.S., comes from North America (USA, Canada, Mexico), which avoids the geopolitcal risk that oil has.

Gold to Replicate Oil's Parabolic Move; 30-yr Treasury Yields to Soar

truthbetold says, "If we could produce 6 million more [barrels of oil] a day in the US or even 2 million, it would change things drastically."
Sorry to burst your bubble, but these numbers are impossible. For instance, even if ANWR (Arctic National Wildlife Refuge) held as much oil as in the oil companies' wet dreams, the most it would ever produce is 780,000 barrels per day, 20 years from now at its peak.
Remember, the U.S. consumes 25% of the world's oil, but we only have 3% of the world's oil reserves (and that includes ANWR and the Outer Continental Shelf). If we could produce 2-6 million more barrels per day, we would be the number one oil producer, more than Saudi Arabia pumps. Did you know the US is already the world's number 3 oil produceer, after Saudi Arabia and Russia, even though we only have 3% of the world's oil reserves? WE ARE SUCKING AMERICA DRY, EXTRACTING OIL SO FAST IT IS NOT SUSTAINABLE AT THE CURRENT RATE. Drilling more oil is like putting more straws in a cup -- it doesn't make your cup any bigger.
Any nation with 3% of the world's reserves of ANYTHING can never expect to continue consuming 25% of the world's reserves of that substance for long. Especting, as you do "Mr. truthbetold" that the US could be the number one oil producer if we just drill more holes, is like expecting that North Dakota will suddenly become the world's orange grower if they just plant enough trees -- North Dakota doens't have the climate for oranges, and the US has already used up God's allotment of oil through our relentless drilling over the past 150 years.
The only solution, like it or not, is conservation and energy efficiency (EE). You can put your head in the sand and pretend the US could produce more oil than Saudi Arabia "if we only tried," but that doesn't change geology or depletion rates.
Face it, the US is in for a load of hurt from our glutonous ways.

Oil's Gains Are Due to Fundamentals, Not Speculation

Junkyarddog thinks that $200/barrel oil means $10/gallon gas, and thinks "it's ludricous to think the economy can support a $200 oil barrel." Don't you remember that just a year ago, everyone thought it was ludicrous to think the economy could support $100 per barrel oil? And back in 2001, the first peak oil book I read predicted that oil at $40 per barrel would destroy the economy and lead to "demand destruction." Well, it turned out that $100/barrel oil barely caused a hiccup in demand, because in industrial (or industrializing) nations, oil is as much of a necessity as water. Here in NJ, the roads are just as clogged with SUVs as ever with gas at $4/gallon. Now there is even more traffic congestion with gas at $4 than there were when gas was $0.75 ! It turns out that gas demand is not elastic over the short term (meaning the 10 year lifetime of an SUV), and neither is heating oil demand.

As even Bush admitted, "We are addicted to oil," and when your pusher doubles the price of a fix, an addict sacrifices everything else to pay for that fix. If oil rose to $200, gasoline might hit $6 per barrel (not $10, see below), and Americans would cough up the $6, and sacrifice in other areas, because we're all addicts (except the Amish).

Your second mistake is assuming that if oil prices nearly doubled (from $135 to $200), then gasoline prices would actually double. FYI, even if it actually doubled (which would mean $270/barrel oil), gasoline prices would not double, because the price of oil is only one part of the cost of gasoline. Other parts include refining costs, pipeline costs, tanker costs, gas station overhead, federal taxes, and state taxes (which do not double when oil prices double, because voters would not allow it, so instead, taxes would actually fall by 50% as a percentage of the gasoline price).

Energy Sector Is Approaching Negative Seasonality

Babak wrote, "I don’t buy into 'Peak Oil.' We will either discover more oil, better extraction methods for existing reserves or move to alternative energy sources."

FYI, Babak, we would have had to "discover more oil" twenty years ago in order to start bringing it to market today. But that's not going to happen, because FYI, annual oil discoveries have been declinining each year for over 30 years! Of the three largest oilfields in the world, two are in steep decline (including Cantarell in Mexico), and the world's largest, Gawar in Saudi Arabia, is in its old age, after over 50 years of extraction, and is now producing more water than oil. Just to make up for the declines in production in Cantarell, the North Sea, and other mature fields, we need to discover new oilfields totalling the size of Saudi Arabia EVERY YEAR!

As for new extraction methods helping -- the U.S. uses the world's best, most technologically advanced extraction technology, but yet our oil production peaked in 1970 and has been declining ever since, despite Alaskan oil and deep sea oil brought online since then. Likewise, the British use the latest technology in their North Sea oilfields, but North Sea oil production is declining rapidly.

This analogy may help: think of an oilfield like a 16 ounce slurpee (drink). Better extraction technology is simply a "super straw" that sucks up the liquid FASTER, but it does NOT increase the amount you can drink, does NOT turn your 16 ounce slurpee into a 32 ounce slurpee! Or you could say better drilling technology is like giving an extra straw to your friend to share your slurpee drink -- two straws will sucks up the liquid twice as fast, but doesn't change your 16 ounce drink to a 32 ounce drink!

Economists are eternal optimists, however.