Bill Bonner, back in London:

*** Oil supplies are backing up. Refineries can't keep up with it.

While the price of gasoline rises, the price of oil may fall in the near future. But what's ahead for oil in the long term?

T. Boone Pickens describes the oil situation as "A treadmill you just can't keep up with." The oilman invested $2,500 in Mesa Petroleum back in 1956. Now, it's one of the world's top independent producers. Said Pickens:

"Global oil production is 84 million barrels a day. I don't believe you can get it any more than 84 million barrels. I don't care what Saudi Crown Prince Abdullah, Premier

Vladimir Putin, or anybody else says about oil reserves or production.

"I think they are on decline in the biggest oil fields in the world today and I know what it's like once you turn the corner and start declining. It's a treadmill that you just can't keep up with.

"84 million barrels a day times 365 days is 30 billion barrels of oil a year that we're depleting. All of the world's (oil) industry doesn't even come close to replacing 30 billion barrels of oil."

*** The other major influence on the price of oil is the currency in which it is quoted. As we saw last week, in terms of gold, oil is expensive. Either gold is too cheap or oil is too dear.

But it is in dollars that oil is usually quoted. And while the oil industry struggles to replace used up supply, the world's central banks have no such problem. They can create as many dollars as the world requires and more.

*** A friend comments on the availability of credit in America, circa 2005:

"I still carry some significant balances, mostly because the card companies are so accommodating. Here's an example of how accommodating they can be. We carry four cards issued by the same institution. They allow us to move lines around to capture the best rate available on any one of their four cards at that time. In August 2004, we had almost $100,000 on one of their cards at a rate of 1.99%.

"Then another one of their cards came out with a rate of 0% fixed for 12 months! That's it. We paid off the card with the higher balance, transferred the lines over to the other card a few days later, then tapped into the new unused line with the 0% rate. For 12 months we had to pay $15 per month of the balance. That rate expired and we paid off that balance ten days ago. I just got off the phone to see what they could do for me. They are getting more demanding. We now have to pay off 1% of the balance each month, but we also got a rate of 0% until June of 06! I'm not kidding."

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.