In the late 1990s, East Asia's economic crisis helped drive oil prices to less than $11 a barrel. These days the world's price of crude is more than sixfold higher, and what's happening in Asia again goes a long way toward explaining why oil is higher.

Asia's emerging economies - China, India, Indonesia and other countries - are growing fast, and to feed that growth, they need increasing quantities of energy for manufacturing, transportation, power generation, road construction and other uses. China's energy consumption is expected to be 69 percent higher in 2010 than in 2002, according to the U.S. Energy Information Administration. That growth rate is five times higher than the estimate for the United States and more than 15 times higher than Europe.

China also plans to build 14 express highways, six railways and a dozen new seaport facilities before 2010. And in India, the government invests 3.5 percent of its GDP on power plants and other infrastructure.

With so much at stake, these highly populated nations are vigorously competing to get a larger share of the world's energy supply, which is one of the key factors in the dramatic price increase for oil.

If oil supplies were able to grow at a pace close to that added demand, the price impact would not be as strong. But those low prices in the late 1990s created little incentive for oil companies to explore for new deposits. In addition, it's getting harder to find oil that's cheap and easy to produce, and environmental regulations have limited access to new areas for exploration.

In 2002, when prices again fell following the September 11, 2001 terror attacks, the world's oil surplus production capacity was nearly six million barrels a day. This year, with demand rising and supply lagging, that surplus capacity is less than one million barrels a day, according to the EIA. Such tight surplus capacity became evident lastfall when prices shot up after hurricanes Katrina and Rita forced closure of Gulf of Mexico oil platforms.

Political factors are also driving energy prices. Over the years the OPEC has often cut back its production quotas to boost prices. But currently there is an abundance of political risk around the world: the ongoing war in Iraq, militant attacks on Nigeria's production facilities, Iran's nuclear ambitions and moves to nationalize oil fields in of supply disruptions. With so little excess production capacity in the world, supply worries generated by these major oil-producing countries tend to send prices upward.

Many energy industry watchers believe in the "peak oil theory," which holds that oil production topped out a few years ago and that we are now on an irreversible downward trend in supply. If the best possible years of production are behind us, the current global demand increases are destined to outstrip the world's supply capacity. It is a controversial theory. But any scenario that envisions a long-term and growing imbalance between supply and demand exerts pressure on prices.

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