There is no single reason for the increase in oil and gas prices. There are, however, some primary reasons. Most of the things you hear pundits say are politically motivated, so don't read an article and think "Oh, so that's the reason." Most of the writers write to support their political position.
I make a living investing so I try hard to keep politics out of my thinking. Here are the reasons I think oil has increased so much:
- First and formeost, the USD has lost half its value over the past seven years. Since oil is priced in dollars it is obvious that the price of oil has doubled as a direct result. It's common sense - since a dollar buys half as much, you need twice as many dollars to buy the same amount of oil, so the price goes up x 2.
- All the other reasons come in second to the devaluation of the dollar: speculation, uncertain oil supples (Nigeria, Venezuala, etc.), war in the middle east, increased demand from China and India, the shortage of refining capabilites, the shortage of drilling platforms, etc. No one knows the exact mix, but each contributes.
Gas was $1.50/gallon in 2001 and the 50% devaluation of the dollar since then has increased gas prices to $3.00/gallon ($1.50 X 2). The other $1.00 per gallon increase is caused by some unknown mix of the items listed in point #2.