One thing to consider when looking at oil is that the market is an oligopoly, in which the market is dominated by few sellers. The problem is that each of the sellers generally knows what the other sellers are doing and can adjust to keep up with the crowd. This is where the potential for cartels comes into play. Although a cartel is illegal in the US, on the global level it is what it is. Via OPEC, there is a tremendous amount of pressure to limit the supply of crude into the markets, because 1). it preserves the overall reserves of oil, and 2). it tends to keep the prices propped up.

The risk the cartel runs is that one or more of the members break with the group to increase production when they need the cash. Right now, the discipline within OPEC is very strong and there is very little chance of increased production (President Bush asked the Saudis last week to increase production, and they decided not to help him out).

So...a lot of the problem with oil is that the oligopolistic market structure does not act/react entirely the same as it if were a free market.

The same analogy can be applied to the mobile market in the US....few sellers who know exactly what the other sellers are doing (aided of course by being allowed to lock down phones and SIM cards).