Analysts say the price spike is spurred by recent attacks on oil industry targets and the deteriorating situation in Iraq, CBS News Correspondent Sharyn Alfonsi reports.
"When we hear of a storm pending, everybody runs to the supermarket and before you know it, the shelves are empty," said Fadel Gheit, a senior oil analyst for Oppenheimer. "So this panic buying is basically driven by fear."
The sum of all those fears is felt at the pump: Drivers are paying an average of $1.95 per gallon, and analysts say it could go to $2.10 and stay there. Oil supplies are tight, and they are now strained by the world's fastest growing economy.
"China's growth is astounding," Gheit said. "It's hard to understand everything that's going on in that economy, and the economy appears to be growing faster than everyone expects."
China is now the number two oil consumer in the world, with auto sales up 37 percent this year.
"We're talking about 1.3 billion people who have decided that they don't want to ride bicycles anymore, that they want to drive passenger cars just like us," Dr. Gal Luft, executive director of the Institute for Analysis of Global Security, told CBS News.
Even if China grows half as fast as current predictions, analysts say China will become major competition for the U.S. energy supplies in the future.
"History has shown us that superpowers don't get along together when they have to compete over scarce resources," Dr. Luft said.
"It is a nuclear power, so we really cannot just push them in a corner at will," adds Gheit.
It was Napolean who called China a "sleeping giant," predicting that when it awakens, the world will shake. Analysts say the oil market is already trembling with fear - and consumers are paying the price at the pump.