Upon further review, the price of oil went up last year as a result of high demand overseas.  Unfortunately, the only explanation for this year's jump is greed — and not by the oil companies, most likely.

The actual price of a barrel of New York light sweet crude oil — down to the penny — is controlled by trading on the New York Mercantile Exchange (NYMEX).  There are people there buying at higher prices on speculation that prices will rise.  They're doing this because of the perceived weakness of the dollar, but apparently don't realize that their pumping of money into oil is actually accelerating the weakness of the dollar.

See, one of the key factors in the value of a nation's currency is the level of inflation.  As oil prices artificially rise (more on that in a minute), so do the prices of nearly all other goods — after all, it costs more to make them and to ship them if oil is more expensive.  These prices are artificially high — the increase is not a result of supply versus demand.  So the rate of inflation increases.  As the dollar can buy less and less because of inflation, its worldwide value drops, making the whole thing entirely cyclical.

These speculators on Wall Street are simply in this to make a buck, and they are the only ones who stand to gain from oil prices going up (aside from Exxon-Mobil, BP-Texaco, Royal Dutch Shell, etc.).  And not just from speculation, either: remember, this is New York City.  There's a pretty good chance most of these guys actually live in NYC, so they never have to drive to work (or to a restaurant, or — GASP! — a gas station.  They don't care about the pain we feel at the pump, because they never feel it themselves.  And don't kid yourselves: most of these dollars going into oil are coming from hedge funds, and rarely is a hedge fund manager not a multi-millionaire.

Oh, about the supply/demand wackiness: a report out earlier this week (I wish I could still find the link) showed that gas consumption has been on a steady decline since about August of last year.  We have used approximately 8 billion fewer gallons of gasoline so far in 2008 compared to the same period in 2007.  And, yet, your price at the pump rises every day. 

Cutting demand will certainly cut gas prices.  But, unfortunately, the dent it will make will be small, and may even be covered by the jerks on Wall Street who don't drive anyway.