There are some tell-tale signs that supply-demand issues are causing some big players to resort to desperate measures to try and rectify the current oil situation.

2 weeks ago the 5 largest oil consuming nations (U.S., China, India, Japan, and South Korea) urged the oil producing nations of the world to boost their output to offset cost. Perhaps they do not understand the nature of the problem, but their actions seem to suggest that supply, not speculation, is the root cause of price.

Now, the G8 is making waves and is asking for increased production from Saudi Arabia, others. Again, production seems to be the central theme here. The timing couldn't be worse in that worldwide production of oil has been flat for the last 3 years @ 85 million/bbls per day. The Saudis are unlikey to be able to sustain an increased output of 500,000 bbls/oil per day. The Russians are reporting that for the first time in a long while, their oil/natural gas production actually declined this last year.

In taking a balanced approach here, I do think speculation has a bit to do, but not much to do w/ current prices. I don't think oil prices will come down much for 2 very basic reasons: 1.) The obvious driving force behind the rise in oil prices are basic supply concerns. Supply issues will continue into the future, unabated. Global demand will stay strong despite strides made in our country to curtail use. 2.) The future of the American dollar does not look good. If there is some truth to speculation and that the weak dollar is driving this speculation, then the prognosis is not good as most analysts, including Warren Buffet, are banking on the dollar's continued weakening.

The most realistic outcome that could result in oil prices falling dramatically will me a massive worldwide recession or depression. This event would significantly curtail worldwide demand and would obviously put some downward pressure on prices. Of course, oil prices in this situation would probably be the least of our concerns.

As far as the ailines are concerned, you either learn to adapt to the prices, or you don't. I wouldn't want to be working for an airline w/ a management team that was banking on the price of oil coming down significantly.