Our friend Mr. Texas has done a pretty good job of enumerating some of the causal factors, though mostly dealing in the "supply/demand" aspects (though touching lightly on the fear factor). Given his background he knows how to look for factors other than what the majority of people in our society are influenced by. Most of you get your perspectives/info from some "major media" outlet. Sorry, unless you dig deeper, mix in some financial industry news, and then think about it more than in a passing fashion none of this will make sense. True, doing that isn't in line with most folks normal, day to day processing, so it's understandable why it doesn't prevail.
To expand on the "fear factor", that's what commodity trading is there for. To react to fear (react, not cause). Again, media influences have taught us to loathe otherwise reasonable institutions. McDonalds is evil because "it forces people to be fat" (slight exaggeration for effect). Oil companies are evil because they sometimes make profits. Speculators are evil because they "make prices go up". Of course when they "make prices go down" they're no longer evil so they are then known as "futures traders" or commodity traders/brokers. We're encouraged to avoid politics, so I'll just ask you to imagine on your own who these media types are flacking for.
To look at today's petroleum pricing only through the supply/demand eye is to miss the point, or more accurately, see through a pin hole. The world wide value of the dollar has even more impact on the price of crude since the world, so far, uses the US dollar as the pricing standard. If the value of the dollar goes down, say 20%, the price of any commodity will have to go up 20% in dollar denomination just to stay even in buying power for the producer, no supply/demand change. If world market demand (either now or expected in the near future) is dropped on top of that the prices go even higher.
If the term QE2 (not the old ocean liner) is meaningless to you then what's happening in the pricing of all commodities will seem a mystery. QE2 is Federal Reserve Bank shorthand for Quantitative Easing, second time around (in very recent history). Sort of an innocuous term that? What are they easing the quantity of? Money! In other words, they're printing more of it, devaluing the underlying real value of each bill already in circulation. That's why all commodities; gold, silver, aluminum, copper, and on and on, are going higher in price. The producers around the world understand that our central bank is purposely lowering the value of our currency, and they respond rationally to that lower value by changing prices. They can do that because all commodities exist in a world market and in some parts of the world demand is growing. Again, I need to be mindful of avoiding politics, but there are reasons why we're not recovering commensurately.
Economics is a complex "science", even highly trained economists don't/can't agree (though again, I suspect politics colors some of their thinking). But sometimes we forget to use history as a teacher. On another thread someone opined that if "the government" lowered the speed limit again it would reduce the demand, thus reducing the price. Must be a young fella who wasn't around in the '70s when that was actually tried and didn't have that result. I know, it's those "evil oil companies" that are to blame. Even those those evil guys somehow screwed up and "let" the prices drop when government controls were dropped in the early '80s....................oh, but that can't be, can it?
As for the notion that "Lybia only supplies 2% of the worlds crude....". The futures (meaningful word) traders aren't just looking at Lybia. The entire middle east is in turmoil, with Saudi Arabia smack dab in the middle of a number of revolting nations, an could be next.............they supply 10%.........that has just a bit more meaning.
Mr. Texas, you probably shouldn't be too hard on your prior employer for the LNG plant thing. I'm sure you recall that as soon as 10 years ago the market predictions for the US natural gas supply were pretty dim. Government reluctance to allow new drilling, and exploration, particularly on public lands, put an artificial cap on supply (yeah, and we're constantly told it's the oil companies that are evil). Hydraulic fracturing technologies have blossomed in the past few years that have led to near quantum leaps of renewed production in existing fields, as well as Gulf of Mexico stikes that have yielded incredibly high productivity. My guess is Exx/Mob started permitting that plant more than a decade ago when domestic supplies looked bleak. Sort of like the next nuclear plant scheduled to go online here in the US started planning/permitting in 1973! The E/M folks just got caught in the evolving technologie/government interference vortex. Might be one of the reasons that corporations like E/M need to make the kind of profits they sometimes can make in order to do for us what we want them to. Hmmmmmmm.