This reminds me of the California electricity shortages a few years ago. Has demand for oil risen so fast in such a short period of time?

Oil rises jump almost $7, closing in on record

(AP) Oil prices shot up nearly $7 a barrel Friday, extending big gains from the previous day and racing toward an all-time high after a Morgan Stanley analyst predicted prices could hit $150 by the Fourth of July.

A further weakening of the dollar helped keep prices high by enticing overseas buyers armed with stronger currencies and other investors looking for a hedge against the greenback.

Light, sweet crude for July delivery jumped as much as $6.96 to $134.75 on the New York Mercantile Exchange, before easing slightly to trade at $134.40, up $6.61.

Prices pushed sharply higher Friday after Morgan Stanley analyst Ole Slorer said he expected strong demand in Asia could drive prices to $150 by Independence Day, when millions of Americans are expected to take to the roads. Shipments from the Middle East are mimicking patterns seen in the third quarter last year, when Morgan Stanley based its "oil price spike" predictions on falling supplies in the Atlantic, he said.

"We made the same call using the same parameters, but now we are starting from much lower inventory levels," Slorer said.

Friday's surge builds on a $5.49 gain Thursday, which was the biggest single-day price increase in the history of the Nymex crude contract. That spike came as the dollar fell after the European Central Bank suggesting it could raise interest rates.

"We had a rally of something like $12 in about 24 hours. It makes no fundamental sense," said Stephen Schork, an analyst and trader in Villanova, Pa. "With oil pushing back up to the mid-$130s, it's the make it or break it point. If we go past that, we set the course for uncharted waters and head up toward $150."

Meanwhile, U.S. gas prices at the pump continued to hover just shy of an average $4 a gallon, easing only 0.3 cent from Thursday's record.

Drivers are now paying an average of $3.99 for a gallon of regular gas nationwide, according to AAA and the Oil Price Information Service; in many parts of the country, consumers are already paying well over $4. Retail diesel slipped a penny overnight to $4.76.

Pump prices are bound to rise even further if oil sustains its advance. James Cordier, president of Tampa, Fla.-based trading firm Liberty Trading Group, predicted prices could rise to $4.25 as early as the end of the month.

"Unfortunately, drivers cutting back isn't going to lower the price of gasoline any time soon," he said.

The dramatic reversal in what had been a weakening oil market began Thursday after ECB President Jean-Claude Trichet suggested the bank could raise interest rates and the euro climbed against the dollar. When interest rates rise in Europe, or fall in the U.S., the dollar tends to weaken against the euro.