THE LIST of possible reasons is endless but for businesses and households alike, the consequence is the same - the sharp rise in oil and petrol prices is starting to hurt.
As the price of crude on world markets struck a new all-time high by bursting through $54 a barrel in New York, the Western world's energy watchdog warned that rising oil bills were slowing the world economy.
The International Energy Agency cut its forecast for growth in consumption next year by almost a fifth as record prices restrain economic growth.
The Paris-based agency cut its forecast for world oil demand growth in 2005 by 320,000 barrels a day to 1.45 million, forecasting global consumption at 83.85 million.
The projection, in the IEA's monthly oil market report, marks a sharp fall from this year's growth of 2.71 million barrels, the biggest increase in petroleum demand in 24 years.
"The cut reflects expectations of slower economic growth and the impact of high oil prices on demand and the economy," said the agency, which advises 26 industrialised nations.
The warning echoes similar caution from the International Monetary Fund, which said high oil prices would slice 0.3 percentage points off world growth next year.
Yesterday it was Venezuela's turn to appear in the dock, as traders blamed its unexpected decision to increase royalty taxes paid by foreign companies on some major oil ventures for the surge in prices. President Hugo Chavez cancelled a tax holiday for four foreign-financed extra heavy oil ventures that had allowed international companies to pay very low tax rates on oil output for years to cover high start-up costs.
US crude set a record $54.45 a barrel, marking a sixth successive day of all-time peaks. In London, Brent crude hit $51.50 a barrel, a rise of 1.7 per cent.
This was only the latest step on a path that has seen prices rise by 66 per cent so far this year, with analysts pencilling prices breaking above $60 a barrel before the year it out.
The core reason is basic economics - the interplay between demand and supply. Put simply, a growing economy has caused demand to surge. The IMF expected this year to show world economic growth of 5.0 per cent, the strongest for some three decades.
More importantly, the fastest growing single country will be China with annual GDP growth of 9.0 per cent. Furthermore, this boom is driven by an industrial revolution that is sucking up the world's spare supplies of a whole range of commodities including oil and a range of petroleum products.
At the same time, a series of natural and man-made crises have restricted supplies of crude. Hurricane Ivan inflicted widespread damage to facilities in the Gulf of Mexico last month that has taken some 475,000 barrels a day (bpd) out of production. Meanwhile in Norway, a rig workers' strike widened yesterday, forcing the world's third-largest exporter to shut in 55,000 bpd. …