Why are oil prices so high? Well, if you believe Congress, one of the main problems is that OPEC members aren’t drilling enough. Thus, on May 20, the House of Representatives passed a bill that could allow the Department of Justice to sue OPEC for conspiring to raise oil prices. But just eight days before the House bill passed (by a vote of 324 to 84), the U.S. Energy Information Administration (EIA) released data indicating that world oil demand may be outstripping supply. (These data can be seen below.)

The EIA reported that from 2003 to 2006, supply and demand were nearly equivalent. But in 2007, demand outstripped supply by about 760,000 barrels per day. Given the increased demand in countries such as China—where consumption of refined oil products jumped by 16.5 percent during the first quarter of 2008—the gap between supply and demand may have widened even more in recent months.

Of course, there are other factors at work in the oil markets. The falling value of the U.S. dollar is a key element in the rising price of oil. Financial speculators are likely driving prices higher. And there’s little doubt that ongoing fears about possible oil shortages and political unrest are contributing to market turbulence.

That said, the easiest explanation for higher prices may be as simple as this: there are too many buyers in a market that has insufficient spare production capacity. Perhaps in the next energy bill, Congress should pass legislation that repeals the law of supply and demand.

Robert Bryce is managing editor of Energy Tribune magazine. His latest book is “Gusher of Lies: The Dangerous Delusions of ‘Energy Independence.’”

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