Where are oil prices headed from here?

High oil prices — and the billions in profits that they have generated for private oil companies — should be encouraging more exploration and discovery of new sources of crude. But, with many oil-rich regions torn by war or controlled by governments hostile to western investment, new oil discoveries have been slow in coming. The IEA recently forecast an increase in non-OPEC supplies this year of less than 1 percent.

Meanwhile, demand is expected to rise by 2.5 percent next year, according to the IEA. One reason high oil prices haven't slow the growth in demand is that the global economic impact has been somewhat muted by the weakness in the value of the dollar compared to other major currencies. Since oil is priced in dollars, the dollar’s slide makes oil cheaper for buyers paying with stronger currencies.

Oil prices have also been pushed higher by another wave of investment in the futures market by money managers who are convinced the recent run-up is oil prices will continue. Investors this month at New York Mercantile Exchange's oil pits boosted their “long” positions — betting that prices will rise — to record highs.

As usual, market watchers are divided on where process will go from here. With underlying strong demand and tight supplies, some see the market poised to break $80 a barrel — and possibly move higher from there.

"(Oil prices have risen) without any geopolitical events and without any real actual weather events that would hinder any supply disruption,” said John Person, president of NationalFutures.com. “If we get any type of event right now that would cause such a supply disruption for a very short period of time, this market is on the verge of a pop at least over $80, $85 in the next few weeks.”

But not everyone is convinced process will continue to rise. Last year, a huge flood of speculative investment sharply reversed course when prices began to drop, accelerating the decline.

Over the longer term, some analysts maintain that high prices will encourage conservation and slow the growth in demand. And high prices should eventually increase investment in new production, according to Beutel.

“I believe in the capitalist system,” he said. “ So I believe that the price mechanism will encourage supply, and will discourage demand. That's why I think, long-term, that this price will come down."

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