The New York Times on page one looks behind the inexorable rise in oil and gas prices the last few years and finds that despite economic models predictions, oil production isn’t increasing as expected, nor is demand falling.

A small decline in U.S. and other rich countries’ oil usage has been more than offset by increased thirst from developing countries, which could increase 35 percent over the next twenty years, the NYT says.

At the same time, oil-rich countries are muscling out foreign oil companies, making it less likely they’ll find and tap new oil fields. OPEC isn’t inclined to push exploration too much and non-OPEC countries, which have driven oil-supply growth in recent decades, are in decline, barring notable exceptions like Brazil.

The gloomy outlook is triggering predictions of $200 a barrel oil by 2012 and $7 a gallon gas, the NYT says. The Financial Times reports on page two that the OPEC president also said oil could hit $200 soon, noting that oil prices rise as the dollar falls.

Oil hit a record $119.93 midday after Nigerian pipeline attacks and a Scottish labor dispute with Exxon Mobil cut world production by 1.5 million barrels a day (out of eighty-seven million). Bloomberg says workers in Scotland are returning to their jobs.

GM axes 3,500

As high oil prices ripple through the economy, the papers say that General Motors is firing 3,500 workers, making what the NYT says inside Business Day is the “largest one-time cut in recent years” to its SUV and truck production. The paper says GM’s SUV sales tumbled 28 percent in the first quarter (from which time period it doesn’t say) and pickups fell 16 percent as high gas prices—they hit a record $3.63 a gallon yesterday—and the slowing economy hit Detroit hard. The Detroit News says the move is a “surprise” coming after a strike slowed production.

The NYT reports on A1 that the political pressure is making for strange bedfellows: Hillary Clinton and John McCain are calling for a gas-tax holiday this summer, while Barack Obama and President Bush bravely dismiss the idea.

Kerkorian a passive investor in Ford?

The papers go big with news that billionaire investor Kirk Kerkorian is accumulating more than 5 percent of Ford’s shares, betting on an incipient turnaround at the carmaker. The WSJ and NYT both say that unlike his unsuccessful activist stance with his GM stake three years ago and with Chrysler in the 1990s, Kerkorian plans to be a passive investor this time, largely because the Ford family controls 40 percent of the voting shares in the company.

The Detroit Free Press calls BS, saying Kerkorian

likely will become an activist shareholder at Ford—just as he did at Chrysler and General Motors after initially expressing confidence in their management—if his newest auto investment loses momentum…

The Detroit News expresses similar skepticism, saying he’s “making a play for the only Detroit automaker he hasn’t yet molested with a style that is, despite suggestions to the contrary, seldom friendly and seldom benign.”

The FT archly notes that Kerkorian, who is ninety, was ten years old when Ford quit making the Model T, and in a separate story agrees with the Detroit papers’ takes. While the NYT mostly takes Kerkorian’s word for it, it does mention his history of changing his tune. The WSJ doesn’t do that, perhaps because it didn’t have the space in its no-jump, 400-word B1 story.

Fed still in charitable frame of mind

The FT reports on its front page and the WSJ on A3 that the Federal Reserve is exploring new ways to increase the cash it can drop into the financial system—this time by paying interest on bank reserves. The Fed can do it starting in 2011, but may ask Congress to speed up that timeframe to deal with the credit crisis.

The Fed meets today, and is expected to drop interest rates a further quarter of a point. Markets are expecting that to be the last cut for a while, as the Fed tries to avoid boosting inflation further, but the WSJ’s Ahead of the Tape column says investors are “a little too eager to forget the economy’s ailments,” including “cratered” consumer confidence and, of course, housing hell.

The Journal on C3 says an ex-Fed staffer slammed the central bank’s bailout of Bear Stearns, saying it is “the worst policy mistake in a generation.”

Speculators feast on food crisis

Bloomberg reports that speculators are gaining increasing influence over food supplies—and thus, prices. It says commodity funds holds half of all grain in U.S. silos now, up 29 percent in a year.

Investments in grain and livestock futures have more than doubled to about $65 billion from $25 billion in November, according to consultant AgResource Co. in Chicago.

Our Farmers Just Can’t Win Quote of the Day:

“It’s the best of times for somebody speculating on grain prices, but it’s not the best of times for farmers,” said Niemeyer, 59. “The demand for futures exceeds the demand for cash grains.”

Sounds like a bubble to us.

Chewing over the Wrigley deal

Mars and Warren Buffett’s Berkshire Hathaway agreed to buy Wrigley creating the world’s biggest gum and candy stash, and the WSJ says the deal is a positive sign for financial markets.

It also sends two positive signals to the market: First, bankers are willing to lend, albeit to good clients. Last month, J.P. Morgan Chief Executive James Dimon encouraged clients to seek financing. “Leveraged finance is still there; give us a call,” Mr. Dimon urged.

It wasn’t just talk. Mr. Dimon himself approved an approximately $11 billion loan package to longtime client Mars to help the candy maker capture Wrigley. And, the approval wasn’t accompanied by a lot of hand-wringing; this one took the approval of only about five people and just five days to arrange, according to a person familiar with the deal.

Hey, WSJ—if we’ve learned anything in the past year it’s that nonchalance in lending isn’t really something to be applauded.

Shameless, if true

The NYT on C3 reports that a Senate subcommittee will investigate whether mortgage companies are charging abusive fees to struggling homeowners in order to help shape legislation to protect borrowers.

Among their concerns are excessive fees imposed on homeowners and actions taken to seize the homes of borrowers who are not delinquent on loans. Most foreclosures are uncontested by homeowners, who typically rely on what the lender or its representative says is owed, including fees assessed during the process.

Airfare up, planes packed

The Journal says on B1 that airline rate increases stuck in March with fares up more than 10 percent from a year earlier. That’s because planes are flying fuller than any time in history, with capacity up just 6 percent in eight years. And the paper says the industry, hammered by oil prices (not to mention a safety scandal) is hoping that the flurry of merger activity “can eliminate seats and competitors and give airlines even greater pricing power.”

If you'd like to get email from CJR writers and editors, add your email address to our newsletter roll and we'll be in touch.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.