[DanUCSB]

You have to remember that it is not just the oil supply itself, but also refinery capacity. There are ways to increase overall crude supply (I believe Saudi Arabia just agreed to increase their production by 2m barrels/day), but there are hinderances to that: where I live, for instance, there's tremendous public outcry over any new drilling off the coast because of environmental concerns, as well as the perpetual issues over drilling in the Arctic National Wildlife Refuge. Of course, I never understood these arguments: I guess the environment in California and Alaska, where drilling would be tightly regulated by the EPA, is more valuable than the environment in other countries, where there are much looser laws in effect. NIMBYism at its best.

The other half is the refining. Obviously, you can't just pump light sweet crude into your gas tank. AL is correct when he said that no new refineries have been built in the US since 1976. Why? Because with all the hassle and expense of the environmental laws we have, it's just not worth it to the gasoline suppliers. What do they care? Gasoline is relatively inelastic; that is, we'll use roughly the same amount whether the price goes up or down. Are the suppliers crying because we're paying them too much money for gas? Ha.