From Reuters……

U.S. grains and oilseed futures markets caught fire on Friday, with corn notching an all-time high above $7 a bushel, caught in a frenzied broad-based commodity rally led by soaring crude oil, traders said.

Further boosting corn and soybean prices were worries about the young U.S. crops. Torrential rains pummeled the American heartland this week, increasing prospects for a yield drag on both.

h/t R-Squared

From the New York Times.…

Companies that make hard goods using raw materials derived from oil, like tires, toiletries, plastic packaging and computer screens, are watching their costs skyrocket, and they find themselves forced into unpleasant choices: Should they raise prices, shift to less costly procedures, cut workers, or all three?

The Goodyear Tire and Rubber Company is trying to adapt. Its raw material of choice now is natural rubber rather than synthetic rubber, made from oil. To sustain profits, it is making more high-end tires for consumers willing to pay upwards of $100 to replace each tire on their cars.

These steps have not been enough, however, particularly now that the cost of natural rubber is also rising sharply, along with that of many other commodities. So Goodyear has raised the prices of its tires by 15 percent in just four months.

The article goes on to talk about how other companies are dealing with the high oil prices.

From CNN….

“It’s an epidemic, gigantic problem,” Reed said. “In Kern County alone, we’re getting reports of five to seven diesel thefts from farms a week. It’s happening in other parts of the San Joaquin Valley, too.”

The crooks work around the clock, searching during the daytime for irrigation pumps run by diesel engines and supply tanks filled with diesel or gasoline, police and farmers say. They return at night, with their headlights off, to steal hundreds of gallons of fuel at a time.

What are the thieves doing with the stolen diesel?

Reed suspects that they’re selling the fuel to truckers who’ve been hit hard by skyrocketing prices. With the national average of regular unleaded gasoline at a record high of about $4.00 a gallon and more than $4.75 per gallon for diesel, according to AAA, Reed says it makes it even harder for them resist the temptation of cheap fuel.

“It’s going to cost him $500 to fill up, and he can fill up [on stolen diesel] for $200,” Reed said. “What’s he going to do?”

Belluomini’s operation outside the farming town of Arvin, California, got hit hard recently; he estimates that thieves took more than 900 gallons of fuel from several sites, valued at more than $4,000.

From Yahoo News….

Oil prices shot up more than $11 to a new record above $139 Friday after Morgan Stanley predicted prices would hit $150 by the Fourth of July. The unprecedented jump is all but certain to drive gas prices well past the $4 mark in the coming weeks.

Oil’s meteoric surge, which pushed prices more than 8 percent higher in a single day, added to a huge increase Thursday to cap oil’s biggest two-day gain in the history of the New York Mercantile Exchange. The burst higher — which also came on rising Middle East tensions — also raised the prospect of accelerating inflation by adding to already strained transportation costs.

That gloomy outlook sent stocks tumbling, taking the Dow Jones industrials down more than 300 points.

Brad Setser says…….

Call me surprised.

If you had asked me two years ago if oil could come close to $140 amid a US slowdown in the absence of a major interruption in supply, I would have hedged a bit, but ultimately said no.

From Time Magazine….

For a while it looked like a boneheaded move. At the end of 1998, the price of oil fell below $10 per bbl. Regular gas sold for 90¢ a gal. While Internet billionaires were being minted to the right and left of him, Rainwater was getting poorer by the day.

You can guess the rest of the story. The dotcoms imploded; the price of oil climbed, climbed and climbed some more–and Rainwater’s energy bet came to look like one of the better investment calls of our time. It has netted him about $2 billion, vaulting him from the mid-200s on Forbes magazine’s 1999 list of the 400 richest Americans to No. 91 last summer (with $3.5 billion overall).

So guess what Rainwater did a few weeks ago, right after oil prices topped $129 per bbl. for the first time? “I sold my Chevron,” he says. “I sold my ConocoPhillips. I sold my Statoil. I sold my ENSCO. I sold my Pioneer Natural Resources. I sold everything.”

This news, disclosed here for the first time, is a big deal. Lots of Wall Streeters–loudest among them the hedge-fund legend George Soros–have been warning lately that speculation has inflated oil prices into a soon-to-pop bubble. But talk is cheap–this is something more. One of the biggest oil winners of the past decade has decided to get out.

Econbrowser has a chart showing how much cheaper oil if you buy it in euros. (h/t Naked Capitalism)