But the bank forecast oil prices to rise to $100 again in 2010 as economies recover and supplies stagnate on increasing costs. The high uncertainty for the US economy in the months ahead, especially after the House voted the first bailout down, will be reflected in continued oil price volatility. If an eventual bailout plan succeeds, oil may stay in the triple digits. But if a deep recession comes, some producers may have to cut back to keep prices above their marginal costs, as Chesapeake Energy just did for domestic natural gas.

News of Hurricane Ike recovery inching along and Azeri oil cuts due to pipeline problems that total more than one million barrels per day in lost supply are drowned by the dim economic news. This Wednesday will probably bring one more bullish oil inventory report as most fuels look likely to drop. But next week may usher in numbers that begin to rebalance the system and mitigate the fuel shortages that have plagued many southeastern communities.

While our financial system may or may not provide the necessary lending for a rush of new solar and wind systems in the months ahead, it is clear that energy efficiency can reduce costs and help American households get their finances back in order. Aggressive efficiency can get our per capita energy use more in line with our peers in Europe and help us achieve post-Kyoto emissions reduction targets such as 25% below 1990 levels by 2020. The climate and our wallets agree on this strategy, so let’s get to it.

Other bullish news came from the Gulf, as less than 25% of its oil production has returned post-Ike. We are almost 10 days away from Ike’s landfall and crude and gasoline inventories will probably continue to slip into extremely low territory for at least another week. Shortages look to persist through the week for areas in the Southeast. Wednesday’s oil report should be an alarming sight…

And last but not least, Mexico reported that their national oil output fell further last month. The rapid fall in production at Cantarell and other old fields shows little sign of slowing as Mexico oil exports risk falling more than 40% over the next two years.

The overall situation is a supply side that is struggling matched by an almost equal stagnation in demand that leaves oil prices reaching up and down for an equilibrium point somewhere around $100 until the next major event shifts demand, supply, or the value of the dollar.

Onwards to a sustainable energy transition that brings more stability to these volatile energy markets-