IT'S THE FOURTH OF JULY

, you've packed the kids in the car, you're off to a barbecue, and your eyes...are on the gas gauge.

At least that's where mine have been. I can't say I've been any model of conservation, even with gasoline prices well above $3 a gallon, but I've sure been thinking about it, and cutting some discretionary trips I once would have embarked on without a second thought. I miss the freedom to go anywhere without giving much thought to gas prices.

Still, my increasingly costly trips to the gas station have had a silver lining, especially since I've made a point to patronize Valero Energy, whose outlets have sprouted all along Route 17 in New Jersey, once dominated by Exxon Mobil. Not only does Valero tend to undercut its competitors by a few cents a gallon, but (as regular readers know) I own Valero stock. Watching the dollars and cents spin by on the pump I at least have the satisfaction of knowing that some of those pennies will be returning to my pocket in the form of dividends or higher prices for Valero shares.

Such are the benefits of owning energy stocks when high oil prices are otherwise crimping consumer spending and putting a damper on the summer. But with oil prices topping the $70-a-barrel level and once again pushing toward record highs, is it time to think about cashing in?

To me, the answer is a qualified yes. Just as I bought oil stocks when crude dropped below $60 a barrel, I would ordinarily be taking profits now that it's above $70. These are nice round numbers that are easy to remember, and they represent the Common Sense strategy of buying lower and selling higher. But I've become more cautious recently and reluctant to sell any of my energy positions outright.

That's because I think oil prices have moved higher for the foreseeable future. Although they did dip below $60 a barrel last fall, providing a good buying opportunity, I expected them to fall much further and stay low for longer. I'm convinced that continued strong economic growth in emerging markets has led to a sustained rise in demand, with higher prices the result. Higher interest rates may put a brake on this growth, but not stop it.

So I've revised my oil-trading-range expectations to $60-$80 a barrel from $50-$70. I'd be an aggressive buyer at $60 or below, and a seller at $80 or above.

In the meantime, I wouldn't be surprised to see a modest pullback from the $70 level over the next few months. With this in mind I sold some out-of-the-money covered calls on my positions in the aforementioned Valero as well as Suncor Energy. My hope is that the calls will expire worthless, which means I'll keep the cash and the stocks, waiting to sell them until oil hits $80 a barrel. If the plan works I'll have more than defrayed the higher cost of gas. It's not enough to solve the energy crisis, but it's something.

Meanwhile, drive safely, and I hope you enjoy the summer holiday.