BP chief executive Tony Hayward says that that theory is "a myth." He chalks it up to good ol' supply/demand economics.
Remember the mid-1990s?
The rise in oil prices has been remarkable. In 1997 the average price of a
barrel of Brent crude was $12.72. In 2007 it was $72.39. And earlier this month
it touched $137.
Can supply/demand really explain this price explosion? The story linked above says so.
The tight balance between supply and demand creates an environment in which even
minor news stories about disruption to oil fields can cause sudden leaps in
More and more people in China and India are consuming oil like Americans have for a long time. LOTS and LOTS of folks live in those countries. Hence, it creates huge demand and it appears the supply/demand gap is very narrow right now.
So, oil up your bicycle chain...but, even that costs more than it used to.