Mick Weinstein The Week's Best Stock Blogs

With oil prices spiking to more than $135 a barrel this week and having doubled over the past year, all discussion of where capital markets are headed seems focused on black gold. As bond expert blogger John Jansen put it, "In the near term, oil will remain the critical headwind against which all markets will labor."

This week, market bloggers provided terrific insight into what's responsible for the run-up in oil price, how long it's likely to last, and how an individual might invest in oil at these peaks. As always, click through for the full articles:

How Did This Happen?

Fundamentals: Many blame market speculators for artificially jacking up the oil price, but macroeconomist James Hamilton lays out a compelling case that market fundamentals really are the primary driver. While the world's developed economies "consume a disproportionate share of the world's energy," developing Asia and the Middle East account for the recent rapid growth in demand. "So yes, I do believe that speculation has played a role in the oil price increases, particularly what we've observed the last few months," says Hamilton. "But it's a big mistake to conclude that speculation is the most important part of the longer run trend we've been seeing."

OPEC: Yves Smith at Naked Capitalist, in a careful critique of an International Energy Agency report, sees the oil producing nations as a key factor in the oil price spike: "[I]f I were an OPEC member, I'd have every reason to foster the Peak Oil story, which undoubtedly is generally accurate, the question is how immediate. Second, I would not pump more if I could, or would make only token supply increases. Indeed, I'd be trying to restrict supply without looking like I was doing so, which makes the Iraq war and supply disruptions godsends. Put it more simply, the Saudis have every reason to leave their inventory in the ground," given various U.S. issues with the Saudis, Iraqis and Iranians.

It isn't OPEC's fault, says Ken Bell. "We think the oil just bubbles out of the ground" in OPEC countries. "The easy oil has been discovered. There is plenty of other oil still out there, but it's expensive to find and develop. It will take a high oil price to make this exploration and development economically viable, so trying to constrain oil prices isn't going to be encouraging the development of additional supply. As for our government, if they want to sue someone over price gouging, maybe they should go after Starbucks (SBUX). The price of my Venti mocha works out to about $1,075 per gallon. Keep that in mind the next time you're filling up your tank."

High rollers and Big Media: Trader Phil Davis disagrees however, and believes fundamentals - from the demand side or the supply side - are not the primarily driver of the ongoing rise in oil prices. Davis finds fault with big media for promoting a myth of scarcity to the benefit of big traders: "This 2M barrel a day shortfall does indeed sound shocking until you realize that what's really shocking is that it's repeated on CNBC two or three times a day and not once does a "newsperson" point out that both OPEC and the Oil Companies... say this is patently untrue. Also, wouldn't common sense suggest that if we were short 730M barrels a year that someone might have noticed it? This isn't just a lie, it's a massive fabrication aimed at inciting panic of a very profitable nature for energy traders and [CNBC] guests."

Washington: ETF expert David Fry is exasperated "regarding the lack of any energy policy in the U.S. since the first oil embargo in 1973. I mean, c'mon - 34 years of no action! No drilling off any coast anymore [thank you Nancy, Jeb & Co.], don't touch ANWR [thank you Dems], no nuke plants in our backyard [thank you Jane], no wind farms near Cape Cod [thank you Ted] and no more fossil fuels at all [thank you Al]. In the meantime, strategic interests owing to our own shortsightedness have us at war for the stuff [thank you George I and II]."

U.S. Michigan economist Mark Perry concurs that if we want lower gas prices, it's time to open up "access to plentiful oil and natural gas deposits beneath federal lands and U.S. coastal waters."

But economist William Ellard is peeved by politicians who claim sky-high oil prices are due to a lack of new supply in the U.S. "You can't dig yourself out of this scarce resource pricing issue. One needs to let economics work: prices need to continue to rise, until demand falls and alternatives are properly funded...The U.S. oil fueled economy is old and tired. A new vibrant U.S. economy is coming - if we start real investing in all the oil alternative technologies."

Whatever the source of the price jump, Bespoke Investment Group provides a remarkable news-overlay chart of oil since 1990 and concludes "it would be hard to draw a more vertical line since oil hit a low of $50.48 in January 2007.

Goldman Sachs analyst Arjun Murti, who has been spot-on quarter after quarter in predicting this big jump, recently predicted $200-a-barrel oil in the near future. Research Recap takes a closer look at Murti's call alongside others who believe a "super spike" to these levels is altogether possible.

San Antonio investment manager Frank Holmes, however, believes "oil is currently overbought and due for a short-term correction of $20 to $35 before resuming a longer-term price climb that could well reach $200 per barrel."

Brian Davis says the U.S. is a nation of "oil addicts. We cannot kick the habit." As a result, America will either start conserving resources or "let the oil addiction kill us. As an investor, it is critical to take advantage of the situation at hand. Look for a continued rise in oil prices."

How are Investors Responding?

John Jansen believes that traders and investors rushing into oil now is simply "the minnows rushing to the shallow waters." Given the huge run-up, "this does not seem to be the proper place to be establishing new long positions. The recent price action smacks of panicked short covering as well as the entrance into the market of those chasing the latest hot trend."

Portfolio manager Roger Nusbaum reduced his clients' exposure to an oil stock during this week's big spike.

Bespoke shows that the leveraged oil price ETFs - which move at twice the price of oil, up or down - saw big jumps in volume this week, as institutional and individual investors became more active in these funds.

While it may be tempting to short oil at this stage, Investor Sajal has some words of caution from the historical record.

If you think oil prices will just continue to rise - or if you simply want to hedge your growing gasoline costs, Hard Asset Investor describes two ETFs that allow individual investors to capture an ongoing runup.

William Ellard provides his top stock picks as we head into 'peak oil economics.'

Alternative energy stocks are another way that some investors are playing oil's runup, as these names tend to gain in value as traditional, carbon-based energy sources rise in price. Bespoke takes a close look at one exchange traded fund that holds a basket of green energy stocks.