Fuel Prices - Supply and Demand

From what I’ve been hearing, the reason for the soaring fuel prices is supply and demand. Sounds simple enough. I’m sure everyone knows about supply and demand and how it causes prices on products to be extremely high. Just look back at certain video game systems being sold on ebay around the holidays.

I’d really like this to be explained to me more though. Because from my observations it looks like more people are carpooling, buying more cars that offer better fuel economy, riding bikes to work, riding motorcycles, and not traveling as far for vacations. So those factors seem to tell me that the “demand” part of this equation is actually less than it was in previous years.

This takes us to the “supply” part of the equation. What’s the big hold up on the supply end? We can’t blame it on Hurricane Katrina because that was over years ago. We’re currently occupying Iraq so what’s the big hold up?