"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

London's UK Telegraph: Royal Bank says "brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.

London's UK Telegraph: Morgan Stanley warns of "Catastrophic Event".

Are you scared yet?

As far as catastrophic events go, the damage in financial sector is looking eerily similar to the NASDAQ in 2000.

On the oil front crude is down slightly this morning at $133.60. Consumers are frustrated with the high price of fuel. Some are filling up in Mexico, and others are stealing it.

California divers are going into Mexico to buy gas at almost half the cost- Read Article. Gas in Tijuana is selling for $2.54/ gallon, and diesel is $2.20/ gallon. Is being an American the acceptance that we were destined to get screwed? Its seems that way doesn't it? How about our health care costs?

An Orlando man rigged his pick up truck to hold 800 gallons of gas while using a device that disabled the readings on the pump meters- Read Article.

Speeders caught in Holly Springs, Georgia must pay a "fuel surcharge" on speeding tickets- Read Article.

To clamp down on oil speculators, Congress is considering tightening the requirements to trade oil futures. Proposals include limiting the number of contracts, and raising margin requirements.- Read Article.

Clearly, the 350% rise in oil prices since 2003 has surpassed the oil shocks of the 1970's. Consumer spending on energy is at a 20 year high, but demand is slowing as miles traveled on U.S. roads in March fell 4.3% on a year-over-year basis, the first decline since 1979. This is the steepest fall on record.

In my opinion oil prices are at or near a bubble. I base my argument on the fact that the total market capitalization of crude oil futures is less than half of the size of Exxon Mobil (XOM).

Crude speculators have caused a large increase in the price of oil because hoards of new money has moved into a relatively small market.

The market capitalization of crude oil futures is around $177 billion, while the market cap of Exxon Mobil is around $480 billion. In addition, new investments in energy from institutional investors has reached a new high.

Supply and demand has played a role in kick starting the boom in energy prices, but speculation is the major cause for the outrageous prices today. While no new oil fields (above 300,000 barrels per day) have come online since the 1980s, plenty of capped and untapped resources remain dormant.

If oil prices do not correct sharply by fall, I believe as the Royal Bank of Scotland says "Brace for a Crash".