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Are Soaring Oil Prices a Bubble Set to Pop?

June 12, 2008

By Louis Navellier, Editor, Blue Chip Growth

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Louis Navellier

Louis Navellier

Louis Navellier is one of Wall Street's renowned growth investors. Investing for over 27 years, he has earned a national reputation as a savvy stock picker and portfolio manager. The New York Times called him "an icon among growth stock investors."

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It seems like every time we fill up our gas tanks, we're paying more, thanks to record fuel prices.

How did things get this way?

Well, a big part of it is the age-old theory of supply and demand. For a variety of reasons, there's not enough oil to fill the appetites of consumers.

Because of this, some sectors are cashing in on the record prices of oil futures by playing a role in the ever-intensifying quest for new oil sources.

And many subscribers to my Blue Chip Growth service and other savvy investors are reaping the rewards! (In fact, three of my Top 5 Stocks for June are energy stocks. Click here for details on all 5 of this month's picks.)

But there are some grumblings out there that the bottom is about to fall out of these high prices and that these sectors will give back much of their gains.

I've been in the investing game for more than 27 years straight, and trust me when I say you shouldn't worry about this shift coming anytime soon.

There are many reasons for this, and here are a few:

Reason #1: No simple way to increase supply

If you're looking for relief from gas prices, it probably won't be here until after Labor Day when the summer driving season ends.

We are now entering the peak season for worldwide demand, and supplies of crude oil, are being stretched even thinner.

But if people are driving less and buying more fuel-efficient cars, how can that be?

Unfortunately, there's no quick or easy way to get more oil and current changes in habits brought on by fuel prices haven't been drastic enough to make much of a difference.

Goldman Sachs (GS) recently rattled markets with its dire prediction that a $150 to $200 per barrel price for crude oil is now possible within the next 24 months.

Traditional sources like Mexico, Norway, Russia and Venezuela…