The logic behind $200 per barrel of oil goes something like this:

1. Supply is growing at a fixed rate, approximately 1% a year.
2. Consumers of oil cannot consume more oil than supplied, therefore supply growth equals demand growth.
3. Since the world economy is growing, at around 4%, the price of oil must rise to depress demand such that demand growth equals supply growth.

And investment banks created models like the one below, from Goldman Sachs:

%ΔDemand = 1*(%ΔGDP - 2.0%) - 0.015*%ΔPrice

Do the math...

1%=1*(4%-2%)- 0.015*%ΔPrice

...and the price of oil needs to rise by more than 50% to balance supply and demand.

In addition to the model being extremely sensitive to inputs, the model ignores some important real world facts: 1) given the expected $500 billion investment in exploration and production supply will expand 2) Americans are cutting back mileage in response to high gas prices in a non-linear way (i.e. for every nickel gas goes up, drivers cut back more than they did on the previous nickel) and 3) GDP growth is dependent on cheap fuel. As oil spiked in the Q2 we saw an opportunity to reduce our exposure to energy prices.