Now that oil has finally hit $100 a barrel, investors are asking themselves how long can these prices last.

After all, the economies of China and India continue to push up demand. Hugo Chavez continues to threaten to cut off U.S. oil. And Rebels in Nigeria continue to undermine supplies from that besieged nation.

Most investors don't realize this, but this is the exact same situation we faced last summer when oil prices fell to $60 a barrel.

Could we see the same kind of price collapse we saw in the summer of 2007?

NO WAY!

Truth is, there are three powerful wealth-building trends converging on oil stocks that are so huge, even a pull out by hedge funds and traders couldn't collapse oil prices.

The reason is quite simple: The falling dollar combined with tight oil supplies and limited refining capabilities will continue to keep oil prices high and even make today's high crude prices look like chump change.

This is why on March 12th oil hit an all-time record of $110 a barrel– driven by a number of factors that will make the oil sector one of the top performing sectors of 2008:

1. The Federal Reserve's continuing rate cuts, which caused the dollar to fall near its lowest point in 15 years.
2. Rising oil prices driven by OPEC cutbacks.
3. Declining inventories that used to act as a cushion to rising prices.
4. The fear of tropical storms again hitting U.S. drilling and refining installations in the Gulf of Mexico, highlighting the severe supply and refining problems we have here in the U.S.

Most American’s don’t know this but at one point last September amidst the threat of Hurricane, not only was 62% of U.S. crude oil production shut down, but 30% of U.S. natural gas production was off line as well.

In fact, the hurricane shut down was so severe that it slashed Gulf production levels to nearly the same we saw in the aftermath of Hurricanes Rita and Katrina in 2005.

And while oil prices always back off at the end of hurricane season, one thing can be clear: We have finally entered the era of $100 a barrel oil and the fortunes of select U.S. oil companies are about to shoot through the roof.

The reason is simple: Oil and other petroleum commodities are priced in dollars, U.S. oil stocks look like bargains to overseas investors. It’s all because foreign currencies get stronger as the dollar falls. The end result will continue to put powerful upward pressure under the price of key oil stocks as the dollar continues to slide, supplies shrink, oil prices continue to rise and overseas investors pile into U.S. oil stocks.

And if the instantaneous jump in oil that accompanied the rate cut is any indication of what lies ahead in the oil patch, this is not only a situation that you simply can’t ignore…but one where fortunes are made.

Where the Big Money Will Be Made

Surprisingly, the biggest profits won't come from the big oil companies. That's because large integrated oil companies have much larger operations, and along with them come higher costs and lower margins.

As a result, increasing oil prices don't always translate to increasing profits and shareholder returns.

Truth is, in times when oil prices are skyrocketing, contract oil drillers and oil services companies lead the pack. How can this be? Because contract drillers are like the hired guns of the oil industry.

They specialize in one and only one thing: drilling for oil. As a result, they don't have to find the fields or pump, sell or refine the oil afterward.