I'm not an economist (but I did stay at a Holiday Inn Express last night), and I agree with most of Wayne's reasoning.
However, the price is driven by a number of other factors, mainly potential. There is a perception, real or not, that there is a strong chance of a shortage of oil in the near future. This is based upon the situations in Iran (their president redefines the word 'tool') and Nigeria (can't we all just get along?). Canada isn't helping with our Newfie provincial PM Williams playing hardball to start the new Hebron offshore oil project (even though oil production would be years away, it would give another small but stable future oil source).
Speculators are driving the market and there is nothing we can do about it. Oil and gas companies are making huge money from this speculation right now. In the long run it will hurt them as people become more conscious of their gas use and opt for hybrids or smaller, more efficient cars or even maintain their existing cars better or G-d forbid-- drive less (I now take public transit to work, mainly for other reasons though). On the industry side of things, the prices force companies to look at different options. In the meantime, my oil stocks have been doing really really well
