OIL JITTERS….Oil prices are up again today. The Associated Press explains why:

Oil prices climbed nearly 3 percent to finish at a record above $61 a barrel on Wednesday and analysts warned of an imminent spike in the retail cost of gasoline as storm-related power outages disrupted some oil production and refining operations in the Gulf of Mexico.

The refinery snags caused by Tropical Storm Cindy were minor and temporary, and with petroleum producers preparing for another possible hurricane, the flow of oil from the region was reduced by almost 200,000 barrels per day.

In the short term, oil prices can do anything. They may well go down later this year depending on winter weather forecasts and the state of worldwide inventory levels.

Still, this is disturbing news. Oil is already at $60 a barrel, but even so the price is spiking upward because of a trivial supply disruption in the Gulf of Mexico ? an area where summer hurricanes are hardly a surprise. Spare capacity is now so close to zero that the mere threat of a small and fully predictable disruption is enough to send prices heavenward.

So: what would happen if the market suffered a slightly larger disruption? Nothing enormous, just one of the normal kinds of things that happen periodically but weren’t a big deal back when other suppliers could increase production to fill the gap. For example, how about another strike in Venezuela similar to the one that cut off 2 million barrels of oil per day for several months in 2003? Something like this is bound to happen in the next year or so, and if a shortfall of 200,000 barrels can spook markets, a shortfall of a million barrels will scare them out of their skins. $100/barrel oil could look cheap before long.

UPDATE: William Dudley, chief U.S. economist at Goldman Sachs, has the answer: a supply disruption of “a couple of million” barrels a day could send prices to $105. Indeed it could. Elsewhere, Sheikh Ahmad Zaki Yamani, a well-known face to anybody who lived through the 1973 oil embargo, says that $100 a barrel oil “isn’t far-fetched.” And December options priced at $80 have already become disturbingly popular.

To be honest, the recent runup in oil prices smells a little bit like a bubble to me. There are reasons to be concerned in the medium and long term, but $80 by December doesn’t seem justified. Still, as Yamani says, it wouldn’t take much to make it justified. All it needs is “the help of a political event or a military adventure, like attacking Iraq.” Or perhaps another country: “A surprise in the oil market would be if the U.S. attacks Iran.” Yes, that would do it, all right.