Short Supply, Not Middle East Tensions, Push up Oil Prices by David P. Goldman | Martin Kramer on the Middle East |

"Right now the key thing that is driving higher gas prices is actually the world's oil markets and uncertainty about what's going on in Iran and the Middle East, and that's adding a $20 or $30 premium to oil prices," President Obama said March 23. But the problem is not risk, but supply. When demand increases, we observe in Chart 3, prices trend to rise faster than demand, because supply is relative inelastic (it can't quickly expand to meet additional consumption). The only way to reduce gas prices is to drill for more oil.