Over a barrel: how sky-high oil prices affect everything from what you pay to fill up your tank to American influence around the globe.

• Author: Mouawad, Jad
• Position: Cover story

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A cross the country, it's costing people a lot more to gas up their cars. Prices of goods and services from snack foods to postage are starting to creep up. And thousands of miles away from the United States, the leaders of oil-rich countries like Iran, Russia, and Venezuela seem to be smiling a lot these days.

A swaggering President Putin in Moscow, $3 for a gallon of gas, and a higher tab for lunch may not seem related, but in fact, they're all effects of the soaring price of oil, which last month briefly topped $100 a barrel.

In the past, dramatic increases in the price of oil were caused by sudden disruptions in supply (usually cutoffs in oil shipments from the Middle East). This time, however, prices have risen largely due to increasing demand for oil, primarily from the booming economies of China, India, and other developing nations.

And that's not likely to change: Demand for oil from China and India is expected to double in the next 20 years as their economies continue to grow--and their exploding middle classes are able to buy millions more cars (see Opinion, p. 21).

At the same time, Americans' appetite for bigger cars and houses has kept demand for oil climbing in the U.S.--21 million barrels a day last year, up from 17 million in the early 1990s. (In Europe, high gasoline taxes--in the Netherlands, drivers pay more than $8 a gallon--have kept smaller cars popular and restrained the demand for more oil.)

Also putting pressure on oil prices: Tension in the Middle East and other oil-producing regions, including concern over Iran's nuclear program, the war in Iraq, violence in Nigeria's oil-producing regions, and Venezuelan President Hugo Chavez's general unpredictablity.

As recently as a decade ago, oil cost less than $11 a barrel. For most of the 20th century, as it transformed the modern world, oil was abundant and easy to find. Cheap oil fueled America's love affair with the car and the growth of suburbia (see Times Past, p. 18). But as oil became harder to find domestically, the U.S. became dangerously dependent on imported oil, much of it from unreliable, even hostile, sources.

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Now, Americans are feeling the pinch. Gas is at or near $3 a gallon (some experts think it could be heading to $4 a gallon), and people in colder states are facing soaring heating bills this winter.

There are also many less obvious effects. Energy costs are built into the price of practically everything we buy...