As gas prices near $4 a gallon across America, oil companies have announced record profits.

According to The Washington Post: “US oil major Exxon Mobil reported $8.4 billion in first-quarter profit yesterday, as members of Congress outraged over high gasoline prices hastened to propose measures that would boost taxes on oil firms, open new areas to drilling and provide rebates to taxpayers but would not necessarily alter prices at the pumps.”

This puts Exxon Mobil on track to break the whopping $36 billion record profit it made last year.

Oil companies’ profits outside the US are also surging, with Shell and BP postiong combined quarterly profits of $14.3 billion.

The record profits come as US crude futures rose to a record $119.93 yesterday.

“Forget the bleating about pain at the pump,” says Manraaj Singh in London, “the rising price of black gold should be a shot in the arm.”

“Here is what is happening,” says Peak Oil expert Byron King. “The world oil supply has become very tight. Demand is rising. The price for oil would ordinarily be going up to clear the market. But with all the “extra” money creation coming out of the U.S. Fed, oil prices are going up even faster (this is what the chart above shows). And I should add that just the expectation of loose money is also inflating the price of oil. There is probably $15-20 worth of “speculation premium” built into every barrel.”

Byron has unearthed a very interesting chart that shows the correlation between the increase in M3 money supply and rising oil prices.