The oil shocks of the 1970s and 1980s happened for a simple reason: huge and sudden cuts in supply. After supply was restored, oil prices eased.

Today's energy crunch -- which has seen oil prices double since 2003 -- is different. Once again, supply shocks have played a role, including those triggered by hurricanes in the oil-rich Gulf of Mexico and the U.S. invasion of Iraq.

But the real cause is a profound shift in the global energy system that has been 25 years in the making: The world's thirst for oil has grown faster than the industry's ability to slake it. As recently as the late 1990s there were gluts. Now there is virtually no spare oil left.

Many big forces combined to create the crunch: the Organization of Petroleum Exporting Countries' obsession with avoiding market crashes, Big Oil's emphasis on profits over finding oil, China's new oil addiction, America's old one, and the new role of investors in energy markets. Behind it were decisions by individuals around the world, including a Saudi minister, a British oil baron and a Beijing yuppie.

The OPEC Czar

Ali Naimi spent his early boyhood in Saudi Arabia tending sheep. He grew up to become the most powerful man in the energy industry, thanks to his skill at herding a more difficult bunch, the nations of OPEC.

Mr. Naimi started out as an errand boy at the kingdom's giant oil company, where he attended a one-room schoolhouse for promising locals. Later, he was sent to Stanford for a master's degree in geology and quickly rose to lead the company.

By the time he became Saudi oil minister in 1995, the industry had plenty of extra pumping capacity, created by a frenzy of drilling in the early 1980s. Oil inventories swelled in 1998 when Asia's economy tanked.

As chief of the world's largest producer, Mr. Naimi was OPEC's de-facto leader, and he had a strategy. The cartel needed to start behaving like a central bank -- united, technocratic and driven by data, not internal politics. Because OPEC producers had a swath of idle oil fields, they needn't develop new ones. To prevent gluts, OPEC should limit crude flowing into customers' stockpiles.

In the late 1990s, Mr. Naimi began targeting the amount of oil held in commercial inventories in the U.S. Midwest, a key segment of the world's biggest market. If Midwest inventories fell below a certain level, Mr. Naimi believed, prices tended to rise and OPEC needed to open the spigot. If they rose above a ceiling, OPEC had to cut. "You have to watch that like a hawk," he told journalists in early 2004 when discussing U.S. inventory levels.

It was audacious: A foreign official was trying to micromanage a key business indicator in the world's most powerful country. OPEC went largely unchallenged in Washington. Oil firmed but stayed relatively cheap. Mr. Naimi wanted to keep prices from going so high that world growth -- and oil demand -- would slow, or consumers would turn to alternatives to oil.

Mr. Naimi's numbers-driven strategy turned out to have a big vulnerability: bad data. By the time it became clear demand was soaring instead of faltering, OPEC had whittled away the cushion of extra pumping capacity needed to tame overheated prices.

In February 2004, the cartel's oil ministers met at a hillside villa in Algiers. The world economy was doing well, so oil consumption was rising. Prices had jumped above $30 a barrel, a level that worried many people, being far above the average of around $20 through the 1990s. Yet supply-and-demand data from a host of sources -- including the U.S. Department of Energy -- suggested a glut was building. Catching traders off guard, the cartel announced a 9 percent cut in output, although it never went through with the cut.

The data were wrong, and a glut never materialized. On the contrary, demand soared. A barrel of Texas crude hit $40 in May 2004, $50 in October after Hurricane Ivan, $60 in June 2005, and touched $70.85 on Aug. 30 after Hurricane Katrina.

In hindsight, the February 2004 meeting marked the last gasp for the dynamic that had defined the oil world for nearly two decades: a tendency to gluts. The market's reaction to the meeting showed the new dynamic: ultra-tight supply.

Saudi Arabia boosted production and started investing in new fields. The moves, though, came "too late," Mr. Naimi says in an interview in his Riyadh office. "The price kept rising. The impact of demand was huge."

Soon after the Algiers meeting, Mr. Naimi led Saudi officials on a visit to China. They expected to find China hoarding crude, as it seemed to be importing more than needed. What they saw instead was one of the greatest leaps ever in energy use.

The Gas Guzzler

Growing up in Beijing, Jason Yu rode his bicycle to school each morning. Last year, the 38-year-old accountant put away his bike, borrowed $33,000 and bought a black Volkswagen Passat.

With cream-leather seats, a sunroof and a CD player, Mr. Yu's new car helps explain one of the main drivers of the oil crunch: China's voracious appetite for energy. Professionals such as Mr. Yu, who makes more than $20,000 a year, have stormed into the car market, helping turn China into the world's second-largest petroleum consumer after America.

When China decided to rev up its economy in the 1980s, state planners embraced car-making as an engine of growth. They invited in foreign manufacturers and encouraged banks to loosen lending requirements for buyers. They also subsidized gasoline use by limiting prices -- now at about $1 a gallon, compared with more than $2 in the U.S. and $6 in England. Meanwhile, city workers started earning enough to afford cars.

There are now more than 27 million vehicles on Chinese roads, up from just 10 million in 1995. The government projects the fleet will double by 2010. China accounted for about 40 percent of the world's oil-demand growth over the past four years, according to the U.S. Department of Energy. Part of that surge last year came from emergency use of oil to generate electricity amid blackouts, but the car craze will continue straining oil markets, as will demand from Chinese industry.

As China opened up in the late 1970s and 1980s, Mr. Yu got hooked on Western films. "Of course, we wanted what we saw in those movies," he said. Specifically, he wanted a car.

In 1997, he joined Charna Chemicals & Pharmaceuticals as a clerk, and his boss handed him keys to a company car. That only increased his desire for his own wheels. In 2002, Beijing revoked rules that limited the number of new models foreign auto makers could sell. Prices dropped, and in May 2004 Mr. Yu, by now an accountant, chose his Passat.

Twice a week, he pulls into one of the many car washes that have sprung up along Beijing's streets. He's active in an online community formed by Passat owners. On weekends, they play basketball against squads of Honda, Citroen and Buick owners and organize drives into the countryside.

Mr. Yu is aware of the ills caused by the automobile, such as Beijing's snarled streets and smog. But owning a car gives him freedom, he says: "You can't ask anyone to give that up."

The Oil Baron

In September 1996, John Browne, a cigar-puffing opera buff, gathered the board of British Petroleum at a Berlin hotel. In his second year as BP's chief executive, he had a bold request: permission to find a merger partner. For two days, he made his pitch. BP, once a state-owned also-ran, needed to bulk up via a big deal, then boost profits by slashing costs.

Lord Browne -- he would be made a life peer by the Queen of England -- got his way, and two years later BP merged with Amoco Corp. in a $52 billion deal. Months later, he agreed to buy Atlantic Richfield Co. A frenzy of consolidation followed the Amoco deal: Exxon merged with Mobil, Chevron merged with Texaco, and France's Total gobbled European rivals.

The deal-making brought 15 years of cost-cutting at Western oil companies to a climax, and shareholders cheered. But the consolidation and cost-cutting led to a sharp decline in spending on exploration for new oil. That left the industry unprepared to quickly develop fresh crude when demand bounced back this decade.

In earlier years, the oil industry regularly replaced the oil it pumped with new finds. In the past two years it failed to do so, according to a study by Wood Mackenzie. The Edinburgh, Scotland-based consultancy estimates industrywide spending on exploration would have to more than double, to $30 billion each year, to fully replace production. The industry's access to new fields and equipment is limited, and it shed so many engineers that it "is simply not structured to invest at anywhere close to this level," Wood Mackenzie wrote.

In a rough-edged business, Lord Browne stands out as a wine buff, photographer and art collector. But his focus on paring expenses has been relentless. In the third quarter of 2005, BP earned $6.46 billion on sales of $97.7 billion.

In an interview, Lord Browne argues that dollars spent seeking oil is a misleading measure, because technology allows oil companies to get more for their exploration dollars today. More importantly, he says, Big Oil is no longer in the swashbuckling business of finding oil at any cost.

"We are in the business of efficiency, because we have to maximize the amount of free cash flow" available for shareholders over the long haul, he says.

In Washington, politicians are blaming Big Oil for causing the crunch by focusing too much on short-term profit. Lord Browne says today's boom has triggered a surge in investment at BP and others, which should eventually expand supplies. He stands by his philosophy of focusing on long-term earnings.

"In the end, corporations have to be responsive to price signals," he says. "We are not public service."

The Prophet

Matthew Simmons, a veteran petroleum-industry banker, visited Saudi Arabia's vast oil fields in 2003. The kingdom has almost a quarter of the planet's reserves, which the world is counting on to meet ever-mounting demand. But Mr. Simmons came away disturbed. On a red-eye flight home, he tossed out a troubling thought to his companions on the visit: What if those fields weren't as healthy as the Saudis claimed?

Back in Houston, the 62-year-old Utah native followed up on his hunch, digging into scientific papers and writing a book on his conclusion: Saudi fields appeared pooped and might soon go into irreversible decline. He hit the lecture circuit with a provocative presentation, "Saudi Arabia's Oil: A Reality or a Mirage?"

Bull markets often have a guru who helps crystallize a belief that prices have nowhere to go but up. Mr. Simmons has played such a role in the oil boom. His scholarship has been criticized by Western oil-company executives and petroleum engineers. The Saudis say they can boost output another 50 percent, and some experts think they can go higher.

Since the oil industry's birth in the 19th century, people have been forecasting that crude output was about to peak and decline. Mr. Simmons made waves because he focused on specific Saudi fields. Mr. Simmons "stirred quite a debate among our clients" last year, says Raymond Carbone, chief executive of Paramount Options Inc., a New York-based energy brokerage firm. "By casting doubt about Saudi reserves, he contributed to bullish sentiment."

His influence illuminates a new factor in this oil crunch: big investors and speculators. The New York Mercantile Exchange introduced an oil-futures contract in 1983. Ever since, investors outside the industry have been able to buy and sell oil without taking delivery of a single barrel. Instead they buy and sell contracts for delivery of oil at a future date, which can be traded like other financial instruments.

Even conservative investors such as pension funds have targeted energy as an alternative to low-yielding bonds and pricey stocks. Goldman Sachs estimates investors have put close to $70 billion into instruments that track commodity-market indexes this year, up from under $10 billion in 2000. Jeffrey Currie, head of commodity research at Goldman in London, says nonindustry players now make up 15 percent of the financial markets tied to the world's crude-oil supplies. When oil markets are tight, the added demand from new investors can further boost prices.

Earlier this year, Mr. Simmons published his book, "Twilight in the Desert." So far it has sold 90,000 copies, but he says his influence still isn't reflected in oil prices. "If people listened to me," he says, "the price would be three times higher."

The Washington Warrior

In early 2001, Vice President Dick Cheney tapped Andrew Lundquist, a former labor-crew boss on Alaska's oil-rich North Slope, to head an energy task force. Then as now, the U.S. was the world's biggest oil consumer. Demand was growing, and the nation's once-prodigious oil and gas fields were declining. President Bush and Mr. Cheney, both former oil men, promised to do something about that imbalance.

As Mr. Lundquist's brief tenure shows, however, energy is a highly partisan, gridlock-prone issue. His team spent months consulting energy-industry experts and came up with a plan heavy on proposals to drill new acreage, including the Arctic National Wildlife Refuge in Alaska.

The plans raised an outcry. Environmentalists charged they were shut out of the process and unsuccessfully sued for access to task-force documents. Many Democrats were angry that the plan failed to include major steps to conserve energy. "They started off on the wrong foot," says Sen. Jeff Bingaman, a New Mexico Democrat.

Energy legislation lay in limbo for the remainder of Mr. Bush's first term, even as he raised the stakes by invading Iraq. Mr. Cheney and others predicted that Iraq could soon be pumping more oil than it had under Saddam Hussein. The conflict instead triggered one of the largest disruptions to a global oil supplier, ranking behind Iran's oil-field nationalization in the early 1950s and the Iranian revolution in 1979, according to Department of Energy figures. Iraq is still pumping less oil a day than it did before the invasion.

Mr. Lundquist, who stepped down from the Bush administration in 2002 to become a lobbyist for energy companies including BP, blames his opponents for the stalemate. He says he did consult environmentalists, and the focus on supply was partly because even some Democrats were hesitant to discourage Americans from driving gas-guzzlers. Alaskan drilling, he says, promised one million barrels a day, equal to 5 percent of U.S. use.

"It's frustrating," says Mr. Lundquist. "You've got to make tough calls with few good choices and (politicians) just don't want to make these calls."

Finally this year President Bush signed the Energy Policy Act of 2005. Alaska drilling didn't make it. Nor did Democratic measures to curb consumption. The result is legislation that does little to alter the supply-demand imbalance in the U.S. The debate continues: In budget negotiations this week, Congress is discussing again whether to open portions of the Arctic refuge to oil and natural-gas exploration.

The outcome of the energy law is only the most recent example of how American leaders, both Republican and Democrats, have failed to ease the country's oil dependence. The oil shock of the 1970s led Congress to set auto-efficiency standards. But low energy prices later sapped political will in both parties to keep up the conservation effort.

Mr. Lundquist notes that the law does include some policies his task force proposed, such as giving utilities more incentives to invest in coal-fired and nuclear-power plants. Perhaps in a decade, those measures will give the U.S. more energy alternatives. But he thinks America is still dodging the tough calls it needs to make on fueling its future.

Sen. Bingaman agrees: "The big challenges remain unaddressed."