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A combination of things

1) There are known fields that could be developed (i.e. ANWR) as well as areas both here and abroad that could be explored. New fields will take about 6 years to come online and for as yet undiscovered fields the time frame would be longer. All the while we are loosing production due to older fields declining. Unfortunately there are likely no Ghawar sized fields out there. Unconventional sources of oil do exist, in Alberta, the American West and elsewhere, and these reserves contain perhaps 1 trillion barrels of oil or more but questions remain as to how much of this could be recovered and how easily. More importantly could these unconventional sources be extracted sufficiently fast to feed the world's 84 million barrel a day oil habit.

2) Demand is probably not yet outstripping supply but it is nudging against it in large part due to growth in demand from China and India. In addition what excess capacity remains is largely Saudi heavy, sour crude difficult for refinery's to process.

3) I wouldn't use the term nefarious but market speculation is playing a role in part because of the underlying market fundamentals already mentioned. Supply is very tight. The least little thing seems to set the traders off. Hurricanes, terrorist threats, Iran, refinery problems, etc... But as to why this warrants $66 oil as opposed to $40 or $80 I don't know.

I'm not an expert in the petroleum field but I can't help but feel that a certain amount of gouging is going on. While understanding the supply & demand issue and the fact that there's a war going on, Big Oil must be engaing in a small amount of price gouging. Call me parinoid about that, but there must be others that feel tha same way. With prices as high as they are, it would be easy to tack on a little bit extra without raising eyebrows. I may get flamed for this but this is my opinion.