The oil prices are set by the OPEC countries (AFAIK). The war in Lybia, an important oil source, causes a lack of supply (AFAIK), but the OPEC countries may just drive up the price in order to earn more money.
No, OPEC does NOT control the price of oil. OPEC plays a major role in setting the environment and have their own minimum selling prices--which are typically not known. The idea is that if there's no more oil, prices will rise and OPEC will sell again. That's why OPEC does its best to control the supply flowing towards the West. If OPEC wants to sell for $80/barrel and commodity traders want to trade for $60/barrel, then the oil traded will be at $60 and, as its consumed, it becomes scarce. Since oil is a necessity to business operations, commodity traders will Bid increasingly higher until the Ask price is satisfied. The reason OPEC works is that it uses nationalized oil companies. If a non-OPEC supplier (perhaps one in Canada or the Gulf) wants to sell at $60, oil will enter the system and OPEC will temporarily lose sales.
As I said, the laws of supply and demand are the words of theory in a commodities market. OPEC and oil companies DO have a strong position but it's still bidding. Speculators purchase the oil (and they do literally own a barrel of oil) and hold onto it, reselling it when they find it opportune. If you hold onto oil long enough or make your intent clear and allow for logistics to catch up, you'll literally end up with that oil. Nothing illegal about that (though you'll probably pay delivery fees).
Now the interesting thing about oil is that, like many other commodities, there are multiple variations each suited for specific uses. Sweet crude is rarely turned into gasoline because gasoline can be refined from far dirtier crude. That means there's not just a single price-per-barrel but multiple for each variation of both unrefined and refined oil.
The ultimate price man is your gas station; what will Sunoco or Shell or BP or Hess (or anyone else really) sell the gasoline at? They take their own slice and a portion goes towards state taxes (typically into the HWA) and tariffs.
My current view on the new downturn is that the market direly needs to correct itself. Uncertainty is rampant and speculation is causing high volatility. Pending news, I think the best thing you can do on Monday is to Short an oil index and Buy a gold or silver index. Come Wednesday, Cover the oil index and Sell the gold/silver index.
The theoretical chances of a AAA-rated bond being downgraded to AA is typically 6.80%¹. The chances of it being downgraded to D (meaning Default) is negligible; less than a 0.005% chance. Honestly, the USA doesn't have a AAA outlook and really shouldn't have a AAA rating. That's why Moody's/S&P/Fitch want to downgrade the outlook and the current creditworthiness. It won't raise interest rates on outstanding debit and it won't make future borrowing more expensive. The fact is that the any new bonds, bills, or notes issued will be for whatever interest rate is set. What will happen, assuming the new debt has the same interest rate as the recent debt, is that corporations with AAA credit ratings will be more likely to issue bonds with a lower coupon.
1: Fabozzi, Frank J., and Mark Jonathan Paul. Anson. "2: Risks Associated with Investing in Bonds." Fixed Income Analysis. 2nd ed. Hoboken, NJ: Wiley, 2007. 30-31. Print.
