To the greatest extent in the history of oil futures trading, oil prices are now in continuous contango--that is, oil futures get progressively more expensive each year into the future. Does this mean that Peak Oil, as a meme, has "tipped"? Our latest oil price poll suggests that well over 70% of the sample (N>3000 now) thinks that oil will at least stay above $114 a barrel for the next two months--and almost half think it will hit $140 a barrel in that timeframe. Search volume on Google for the term is up dramatically in the past month, as is traffic at The Oil Drum. The following graph shows the dramatic swing from backwardation to contango over the last 6 weeks:

(Note: permissioning issue for poll vote should be fixed) As 2007 draws to a close, not only did we observe a large increase in oil prices (approx 50% over 2006 year end), but we had a large absolute range in prices (approx $50). As mentioned in last weeks (less precise) poll, it is likely that many divergent forces will impact oil prices in 2008 (and in different directions). Oil rallied over $2 today, apparently on news of bombing in Iraq, this time from Turkey. Below the fold is an open thread to discuss upcoming volatility (or lack thereof) on oil prices in 2008. This poll will be followed by an end of year price forecast poll later in the week. But for a holiday appetizer, let's guess the volatility for 2008. Place your vote directly in the poll and put a comment with your vote and brief explanation in the thread - winner (if female) receives a date with highly eligible bachelor Professor Goose. If male, a congratulatory pat on the back...

[editor's note, by Super G] From the contributor formerly known as thelastsasquatch.

Fossil fuels comprise the largest commodity markets on the planet. In a world facing an upcoming date when it will have used 50% of its oil (and natural gas), interest in energy futures will continue to increase. And, as energy becomes more precious vis-à-vis dollars, the activity in the futures markets, particularly for crude oil and natural gas, will have increasing impacts on society. Indeed, the amount of finite oil that can be financially controlled by a near infinite amount of money is enormous. The following is a basic primer on energy futures and will be one of several foundational posts linked to a longer upcoming story, "Peak Oil, Investments, and Diversification". I will outline the basics of an oil futures contract, and discuss the risks and rewards of investing in energy futures. The post will conclude with a discussion of the growing paradox between money and energy.