On a daily basis, the average person is reminded of rising energy prices in the form of higher prices at the gasoline pumps and the ripple effect that has increased the price of virtually every consumer good. An area of particular concern for the advanced democratic world is rising oil prices, which has complicated the military involvement of the United States in Iraq as well. This paper focuses on high energy prices and Iraq, with a special focus on the economic development of Iraq's foreign policy toward the oil-importing world. Through the citation of relevant literature, the reader will have a better understanding of the topic upon the conclusion of the research.

             Why Are Oil Prices Rising?.

             In order to understand Iraqis position in the world economy as well as the democratic worlds domestic policies in light of rising energy costs, the question of the causes of rising oil prices needs to be addressed. Upon closer examination, the reasons for rising oil prices are complex and interrelated in some instances. The most recent increases, which began approximately two years ago, were first spurred by the terrorist attacks of September 11, 2001 as well as other acts of terror worldwide. When the United States occupied Iraq, ostensibly as part of the war on terrorism and to find and destroy alleged weapons of mass destruction that were thought to be hidden there, the world oil market was thrown into a because of the very real possibility that Iraqis oil supply would be curtailed or that the supply would be hoarded by the United States. Either scenario would have the net effect of reducing the available supply of oil worldwide, leading to rising prices in a classic case of microeconomics in action- less supply and increasing demand from developing nations like China (Beck, 2004). Prices are also kept inflated due to deliberate actions by the oil cartels that control the global supply of oil, whereby the amount of oil that is released onto the market is restricted by the cartels so that a higher price can be commanded.