The subject near and dear to my heart was mentioned briefly in the Republican candidate debate on Wed. night.

Michelle Bachmann noted that gas was $1.79/gal when Obama took office, and she says it’s possible to get back there. (News Flash Rep. Bachmann: Gas was $0.35 when I bought my first car. Kept hoping we would get back there, but..)

Don’t forget the day that President Obama took office, gasoline was $1.79 a gallon. It’s entirely possible for us to get back to inexpensive energy.

Gov. Huntsman from Utah said we are paying for more than just the gas of gas when we fill up our tanks. The price includes tax shipping and handling, so to speak.

When you add up the cost of troop deployments, when you add up the cost of keeping the sea lanes open for the importation of imported oil, the bulk and distribution and terminaling costs (ph), it’s $13 a gallon, so says the Milken Institute.

All agreed $2 gas would be better for everybody and better for the economy.

Get real people! $2, $3, $4 gas at a price over which we have no control or guarantee! I’d just like to know what it will be so I can budget and plan the rest of my life. Let’s hedge.

So much for Obama’s Strategic Petroleum Reserve move!

As PumpGirl noted, oil prices moved higher, perhaps in line with the (modestly) positive economic news from the ADP jobs report.

Meanwhile, gasoline futures at the NYMEX spiked higher by almost thirteen cents! The entire forward curve for the next year is up by more than ten cents. I looked at the bottom month in the next year and the implied pump price is about $3.50. The average is significantly higher.

For managers who are planning ahead, the window of opportunity to lock in prices may not be open for long.

Oil rose over $81/barrel – highest for the year. US supplies declined more than forecast. Dollar dropped.

analyst forecasts, in the week ended Oct. 16, according to the report.

“As long as there’s pressure on the U.S. dollar, there will be upward movement in oil,” said Rachel Ziemba, an analyst at RGE Monitor, an economic research company in New York. “We could see even greater climbs higher, which will put us even further out of whack from the fundamentals.”

Stocks, ExxonMobil and Chevron, are up big time.

Is oil the new hedging tool?

Professor David Enke of the University of Tulsa is an expert on risk management issues. At his excellent site he has pointed out how several airlines have experienced earnings hits from their hedging decisions.

Here is his key point:

So while hedging can help a company “lock-in” to a specific cost structure, if others within the same industry are not hedged, and those companies have pricing power, the hedged company can expect to see higher swings in profit margins and earnings, and subsequently a more volatile stock price.

Put another way, a company can control costs, but not earnings. If every airline engaged in hedging, then all customers would be protected against rising fuel prices, but would also exposed to falling prices.

Meanwhile, there are other hedging strategies. Our own approach differs depending upon the company. For some, locking in a current price is the best move. For others, there should be some protection against falling prices.

It is clear that the airlines did not use the most sophisticated hedging strategies.

Sunday night, Steve Kroft of 60 Minutes, presented a story intended to enlighten the TV audience about what exactly happened with those crazy oil prices.

Watch CBS Videos Online

Eddy Elfenbein of Crossing Wall Street wrote an excellent analysis of the piece for those who live in the real world.

According to 60 Minutes, the surge in oil prices was due to…(wait for it)…deregulation! Yes, it seems that “hedge funds” (cue Darth Vader’s theme) and “speculators” were buying oil in order to make money. If you just toss around these scare words long enough, people will think it makes sense. Somehow this was all due to deregulation. Of course, oil is traded all over the world, but logic doesn’t play a major role in this story.

It’s definitely worth your time to read the whole article.

60 Minutes seems to diss the idea of supply and demand having any influence on oil prices, but deregulation and Enron are prominently featured. Smallpox, anthrax anyone?

Here’s another look from Todd Sullivan, featured on Seeking Alpha. His cribb notes:

A Wall St. cabal controls oil markets that Enron set up to manipulate prices.

In his analysis, Sullivan uses the actual EIA data to set the record straight. (Read the whole article. Great charts and graphs.)

Now, reset your TiVo season pass for this program.