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It's not a record you say. I must say you're really stretching it by comparing today's price with 1864.

It's high time you in the know just called this for what it is. Peak Oil. Or rather the downside of Peak Oil, and the permanent energy crisis that has scarecely begun.

But of course you won't do that. No doubt when oil does exceed $104 you'll be saying that that isn't really so expensive either. Well just so everyone knows, oil is going to keep on getting dearer - and when the price rises, they will be followed by even greater price rises.

Of course there will be small price dips... but the lows will be successively at a more expensive price than the last.

The world is in deep trouble, and it's time you starting admitting it. The problem is resource depletion.

When talking of pump prices why do you refrain from mentioning the massive tax burden carried by refined products? eg tax on producers,fuel tax
vat etc.
£1.00 at the pump
0.30p to producers retailers etc
0.70p to goverment.

Evan Davis analysis is way off beam, he should know that oil prices are controlled by OPEC which in turn is controlled by Saudi Arabia. OPEC's power comes from imposing production limits on its member states, which includes Iraq. Iraq has the second largest oil reserves in OPEC after Saudi Arabia. Most of it untapped at 112 billion barrels. The invasion of Iraq was not about grabbing these oil fields it was about making sure that they were left untapped. A potential flood of say 12 billion barrels of oil a day from Iraq would result in a dramatic price drop of oil. That would not suit the oil magnates of Texas and Saudi Arabia, who would see their obscene profits fall through the floor. The "Oil crisis" is a deliberate manufactured one to keep profits high. Iraq's oil output between 2003-2005 was less than pre-invasion. That decline has resulted in the five major US oil producers profits tripling in 2005 to an estimated $89 billion dollars!
No wonder the oil companies gave $40 million to George Bush's election campaign. That's why Iraq was invaded and Iran is threatened, one word, Oil.

The actual price at the pump is well over $300 bbl.. That's three times the oil price. We've done pretty well to withstand that.

Evan,

I assume that, to express oil prices in "today's money" you are deflating by a dollar consumer price index? I believe that one reason why the present oil price appears high in "real" terms, and yet is having surprisingly little effect on economic activity, is that consumer price indices have been fiddled down to reduce published inflation (so the number the oil price is divided by is too small). There is no right way to calculate inflation, and, under pressure from politicians and some central bankers (eg through the Boskin commission in the US), goverment statisticians have tended to adopt the methodological options that give the lowest reading. Besides making inflation appear lower, this also makes real economic growth look stronger and reduces index-linked government expenditure.

Above ground factors - geopolo
itics, speculation, accidents and weather events are what cause the volatility. What will cause a continuing steady rise in the underlying price is the growing gap between supply and demand. The world is using a far greater amount of oil than is being found. Production has been flat for over two years despite the increasing price. Those who cannot afford the price are being squeezed out of the market, and this will happen to more and more people unless a severe recession causes a dramatic fall in demand. What is worrying is that our goverment shows little awareness of the coming crisis.

Evan, you are not getting it!

The current and future increases in the oil price are caused by GEOLOGICAL constraints on production flows.Since we passed Peak Oil last year, no amount of new investment will ever again increase world production of oil above the magic number of 85 mbd. And that is the problem in a world where consumption is trying to increase by several percentage points each year.

You can of course see the market mechanism working: the poorest people on earth simply cannot afford some of the basics they were able to afford even a few years ago, be it fuel, food, medicines, plastics, etc.

As new groups of people around the world are priced out of the oil based economy, from time to time the oil price will no doubt reduce, but always at a higher level then the last reduction, shortly to be followed by yet another sharp increase in price.

Post Peak Oil is the new economics, where the rules have changed. Now higher price does NOT increase production because that is geologically no longer possible. Instead it simply destroys some demand for oil somewhere on the planet.

Here in the UK we are probably safe from demand destruction for another couple of years. After that here too people will start to die due to being priced out of the oil economy. The first victims will probably be the elderly who will no longer be able to afford to pay for their heating, for some of their food, for travel to the supermarket. As a result we will see an increase in excess deaths. Over the next few years this will spread amongst other sections of our population and by then the Government will be unable to help because of the crippling debt from the ever widening trade gap and galloping inflation.

Open your eyes and help people to prepare by telling them how it will be.

Here's a thought for you Evan. Although $100 + a barrel is considered to be a high price (and by historical standards it is), you don't often see a comparison between the price of oil and the value we get from it.

I'm aware of a statistic (source unknown I'm afraid) that 1 gallon of oil can do work which is the equivalent of 50 people working all day. Now there are lot of possible interpretations of that, but let's go with it for the moment.

At the UK minimum wage of 5.35 an hour, 50 people for a day (7 hours) will cost £1,872.50. For simplicity let's not worry about NI, or paying people over the minimum wage - but keep in mind that true labour costs would be higher.

A barrel of oil is about 42 gallons, so labour costs equivalent to a barrel of oil would be £78,645. At today's rate of exchange (1:2.08) that would be over $163,000.

However much one can argue with the details of the calculation, or whether oil can be compared directly to human power, that does put $100 a barrel into perspective! And perhaps helps explain why any shortage is so damaging economically.

I think the important numbers are not numerical milestones like $100 but the price levels at which oil will become more expensive than an alternative fuel.

The tipping point for converting cars to LPG could be getting quite close in the UK. I did a rough calculation on my car and it seemed to pay for itself in 3 years. That is still too long-term for an old car, but if petrol hits £1.50 (roughly, oil nearing $150) it might persuade me.

This item as ever is informative and circumspect but as Christopher Briggs note intimates to my mind the discussions and understandings we need to have must increasingly be about behaviors for when a a finite resource reduces to an untenable level and disappears. It would surely be more important to invest our finite revenue and capital resource in replacement behaviours that would smooth out a crisis (and reassure our future) rather than chase rising prices until shortage becomes famine. Yes one of these behaviors would be and is smaller more efficient engines but this may be better regarded as a holding strategy rather than a short term response to a market blip.

Not only does high cost affect the cost of petrol you put in your tank, what about fertilizer, pesticide and the diesel to put in the tractors to grow food.

Food prices are rising and set to rise more with the China/India effect so add on $100 oil and eating is going to become a lot more expensive.

I completely agree with the comments made my Christopher Biggs.

We are entering the era of ‘Peak Oil’, or are about to…

If you don’t know what that is, its worth doing a search to understand.

Everything in nature follows a bell curve, and the availability and rate at which we can extract oil is no different.

Peak Oil does not say that there isn’t enough oil, but rather that the rate at which it can be economically extracted is, or is about to be, less than the total demand.

And, as Evan Davis says, small differences between supply and demand can cause huge differences in price. Someone is going to have to go without !

I argue with my father about this whole issue, and his argument is that technology will always come to the rescue. He says there are already technologies that exist that can increase the supply of existing wells but that technology has a price – a significant price in some circumstances.

It seems evident therefore, that for this reason alone, there will continue to be an upward pressures on the price of oil, and of course, on all products and devices that rely on oil – travel, plastics, distribution, food production, energy, manufacturing, commodities mining and refining, my TV, my fridge, my packaged tomatoes, my central heating, my CDs etc.

The real problem though is the continual advancement of the Chinese & Indian economies. I believe that their rate of increase of the consumption of oil is about 3-4% p/a. Peak Oil suggests that we will start to see global declines in production of about 2% p/a.

Its pretty evident that oil extraction / production is pretty much at its peak, we all read on this very web site, that US reserves are always lower than seem to be expected.

Look at the latest earnings reports by all of the big oil giants, and you will see in all of them that production was less than expected.

As they contain this big secret, but need to convince shareholders that they are still able to offer good returns, what will they do ? They will start to buy each other.

Peak Oil is an inevitability. There is only a finite amount of the stuff in the ground.

I personally believe that the Credit Crunch, is in part a consequence of Peak Oil for, whilst future growth seems a realistic possibility, there is at least a good argument to continue lending against it.

Peak Oil dictates that future world production will inevitably reduce. Our economy will retract. I certainly wouldn’t lend against that prospect !

When oil starts to run out (or should I say, when demand exceeds supply capabilities), its going to be hell !

What it really means is that someone, or lots of people, are not going to get the oil that they want and need. They’re going to be cross !

As usual you (like your employer) treat your audience like 10 year olds.

Approve that.

I'm leaning towards what CB has said. The rise in the OP over the last few years can hardly be put down to volatility - I'd say it constitutes a very strong trend based on the balance of supply & demand. If not then I would have expected oil supply to have been ramped up by now to meet the increasing demand and bring the price back down.

Anyway we must be close to peak oil cos they've just released a film about it - 'The crude Awakening'. They'd hardly do that if it wasn't true now would they ;-)

It's interesting that part of the supposed reasoning of the Iraq invasion was to get oil back down to nearer $20 a barrel...

But its not clear as Christopher Briggs asserts (#1) that we really are at Peak Oil, let alone past it.

It'd be good to have some reasoned analyis of future energy supply and demand, Evan.

The Brazilians have just announced a huge find off their coast, Alberta has massive reserves of tar sands (albeit with huge environmental impacts), and other fields currently considered uneconomic may come into play if the price stays above $80 or so long term.

And don't forget that the USA has hundreds of billions of tons of coal available, much of which could be converted into oil if the price was right...

Also technological and social change will almost certainly affect future demand curves. For example, if we stopped using so much oil to make non-transport products like plastics and could improve the efficiency of electricity-consuming activities such as air conditioning units, this would stretch oil reserves much further.

So while we may have to get used to permanently high oil prices, this doesn't mean the world economy is heading for a great depression.

High oil prices will certainly hit Ford and GM hard, and force governments to look at the proportion of petrol and diesel prices taken as tax they can get away with politically, but I don't see a great crash as inevitable.

I still don't understand why the strength (or rather the weakness...) of the US Dollar must dictate fuel prices for us and every other non-dollar economy? Why can't British firms buy straight from a supplier, using a far stronger currency to bring out the cheaper priced fuel we in the UK deserve for our economic success with the Sterling.

Anyone care to shed some light on that for me? Would be much appreciated.

As a side note, I'm not much of a conspiricist but there really is something fishy going on. We're told daily the US economy is doing worse and worse with an almost feeble dollar; then we're told oil is ridiculously scarce to inflate its prices, then we're told Iran is a terrorist nation so the US should go to war with it...

I don't know, really.

In addition to the factors you mentioned in your excellent summary, there is also a squeeze on refining capacity, which acts as a choke point, even if there is enough crude oil production capacity. And the refining squeeze is exacerbated short- and long-term by ever-tightening quality specifications on petrol, diesel, heating oil etc. This is especially true in the US, where states tend to set the standards (thus giving the lie to the widespread view that the US does little or nothing about the environment).
Maybe also worth considering that there is plenty of oil left, but much it is under-exploited in Iraq, Iran and Russia. If, as so many (mistakenly) believe, the Iraq invasion was about oil, we went the wrong way about it. Iraq produces less oil now than it did in 2002, and seems unlikely to develop its oil industry in the foreseeable future.

"The lesson of history, is that when oil prices soar up to record levels, they usually then fall back down."

Wow, that sounds incredibly complacent. Oil is a finite resource. If production has already peaked (currently, July 2006 saw the peak of all liquids and May 2005 saw the peak of conventional oil), don't expect to see prices go down significantly in the future, unless there is massive demand destruction, which usually means recession. Maybe production can be increased but that would be more hope than certainty. The only thing that is certain is that prices will ultimately go a lot higher and oil will become increasingly scarce. Perhaps you could concentrate on figuring out how an economy can continue to grow indefinitely on a finite planet?

I worked out the pump price in Britain i s equivalent to about $330 per barrel, so there is a lot of wriggle room.

I also don't buy this 'record was in 1860s' idea. That's what BP's Review of World Statistics says, but how accurate are CPI figures from 1860? And to what extent was oil a major traded commodity then?

So to all sensible extent the peak was in December 1979, at (what I calculate) to be $102 in today's terms. It's of course lower than that if you use the Producer Price Index, and we've already passed it.

Evan seems to have fallen prey to an Economics fallacy; high prices create more supply. Although this is generally true for other products it is actually expecting money to CREATE oil. High prices will increase the incentive for producing oil but if the oil is not there it will be a futile search. After US production peaked in the early 70s drilling went up massively but oil production still fell.

As to the other sources mentioned (Brazil, Tar Sands etc.) these are a small drop in the ocean even with a 1% annual drop in supply.

It appears peak oil is now. Production (all liquids) has been flat for over two years. With high prices producers should be producing more oil to maximise profits. That is not happening, to me that says they can't increase production.

How many millions have the UK government spent 'retraining' the workers of Vauxhalls Luton plant, Bedford trucks, Peugeot, Ford, Rover, Jaguar workers, while buying products from their competitors? If the BRITISH government was to invest in R&D and buy BRITISH instead then we could by now actually have some alternative fueled cars, we could be insulated from these costs, we could be exporting a much needed environmentally friendly product to the world. Its not that difficult to see how OUR government has been instrumental in bringing the problem about.
And before the Conservatives claim to be better, I'll remind them who started buying foreign, I'll remind them who closed all the coal mines and moved all our electricity generation to gas.

As usual, I feel the need to comment; however, I'll be brief:

The one oil market driver Evan did not mention in the text is BIOFUEL.
For the world's governments to meet their renewable energy targets, investment is required in biofuel technologies.
At present this fuel is VERY costly to produce, and represents poor value. The public will be loathe to spend money on this unproven (and in my opinion dead-end) pursuit. What governments need is for private buy-in.
Raising the price of oil certainly increases the value and viability of biofuels.
Watch sugar and corn prices, and investment levels in biofuel technologies.

I'm not sure I accept the central premise that $100 is a lot of money for a barrel of oil. Maybe it's a lot more than it used to cost, but that's because oil used to be ridiculously cheap, and is now simply cheap.

Consider this: despite the fact that most of what we pay for petrol at the pumps is tax, rather than the cost of the oil itself, it's still far cheaper to make most journeys in the UK by car than by train. Until that changes, I'm not going to believe that oil is expensive.

In my view the Peak Oil argument is far from being conclusively made, as it depends on assumptions about the future based on the recent past and on conservative thinking about what will be technically recoverable in the future. There is a lot of difference between economically recoverable, proved and possible hydrocarbon resources.

Also, the "other sources" are actually a lot more than 1% of world annual consumption of 30 billion barrels of oil a year. While the newly-announced find off the Brazilian coast is small at probably less than a billion barrels, other resources are much more significant.

I don't claim to be an expert but a quick trawl of the Internet reveals that:

* Canada's tar sands are estimated to have at least 175 billion barrels, and probably more.

* Venezuela may have over 1,000 billion barrels of heavy oil, much of this not recoverable with current technologies and at current prices but nonetheless a resource for the future.

* US coal reserves are of the order of 5,000 billion barrels of oil equivalent, and part of this could be converted into fuel oils.

There are probably other resources not yet even on the radar.

So while it is possible or maybe even likely that we are at or close to Peak Oil, I'm not yet convinced that this is the case.

This not to disagree that real oil prices are likely to stay high, and may even go higher yet, so Evan's analyisis may be wrong. However, crude oil prices are in any case weakly linked to consumer prices through the tax policies of the western economies, and price increases could be buffered by changes in taxation policy away from oil and towards final goods consumption.

More detailed and sober analyis, and some hard-headed scenario planning, seem to be indicated.

Mining giant BHP Billiton is currently thinking of selling its oil operations to finance a bid for Rio Tinto. RT itself may well be a takeover target for others. It would suggest that the received wisdom is currently that oil is about at its oeak and will require some pretty steep investment to increase supply. More economical machines and alternative power sources are probably a more likely and quicker response than an ibncrease in supply of oil, but that means that the supply/demand price curves will be affected by substitution rather than a change in the two drivers.

I may be wrong, but this is my own opinion. I think the oil and the financial crisis are just a poltiical stunt between China and the US. China want to play economy war against the US. They just want to destroy the America economy bit by bit, and show to the American they have the power and muscle to do so, but the US won't back down easily and will play this game. However, the big loser is not both of the gorvernment, but it's the general public. I think this game will finish before Christmas because I don't think the US afford to play this game, and they don't want their own people suffered.

The Chinese sell all their shares and invest in Europe and make the dollar weaker and weaker, also they have the russian backing. So when the chinese and russian pull out, US is suffering, therefore, UK can't afford to lose them, they are the biggest investors in our country, that's why Gordon Brown needs to have a good relationship with them, otherwise it would be a disaster.

As the global economy relies on the US market, when they fall, the whole world will follow them and fall. We are now in the 21st century, things have changed; Russia, China, Iran and India play a big part in the world economy. It's not about the economic issues, it's about politic and international relation issues. They are not going to start nuclear war with us, but they are starting economy war. It's the most dangerous game ever.

Very bold of Evan to suggest he thinks that oil prices will fall back down again - would he place a bet on that I wonder...

Peak Oil seems to me to be a real phenomenon, however it need not be as catastrophic as some people think.

People are surprsingly adaptable when they have to be, and Peak Oil is more likely to mean a return to wooden items, working from home and no foreign holidays than a total collapse of civilisation.

I agree with Post number 6 by Paul.

We have hit Peak Oil.

Once the prices do get too much for us here in the UK, we may begin to see "The End of Suburbia" and the 3000 mile Ceasar Salad.

Historically energy/oil has been dirt cheap, and transportation costs didn't really come into the equation.

Now, the rules will change, and people will need to start producing and trading items on a local scale. It simply will be uneconomically viable to drive 70 miles to Bluewater® to buy a Marks and Sparks cardigan.

It amuses me to watch America panic about a commodity that is eventually going to run out. I'm talking about the invasion of Iraq, and inevitably, Iran.

I would like to add my voice to those who are arguing that Peak Oil may be happening right now. Sadly, it is not possible to be certain that we have reached Peak Oil until we look back at oil production with some hindsight; by which time there will be plenty more unsettling consequences for the media to digest.

It does seem extraordinary to me that the consequences of resource depletion on prospects for our economic growth, food security and the environment have not been picked up by the mainstream media. My best guess at why this is the case is that it is not an issue that easily fits the news media requirement of being something happening today that can be explained and illustrated in a 3 minute piece.

I am a fan of Evan Davis - it is so important that economists start to understand this, rather than the usual crowd of geologists and politically motivated environmentalists (of which I am one, albeit of the armchair variety).

Just a small question.

As Oil is only traded in dollars and the dollar is so weak at the moment, wouldn't changing the trading currency to euro's or pounds bring that cost down?

Not only that but wouldn't it have the added bonus of tanking the US economy to the point where they can't start any more silly wars beacuse they're more worried about rising costs of fuel and food than about the brown skinned man who walked across the street infront of them?

Evan Davis

Energy = Economic Activity

Most energy is from oil - if there is a supply gap then the econonmic activity must reduce unless another energy source is found.

Yes it is possible to use more coal/nuclear for electrical production but this does not help the container ships, aircraft and all those cars. Not to mention plastics and chemical production.

As oil is finite, production is flat and will start to fall in the next few years just when China and India are increasing their need for oil - what do you think is going to happen?

Somehow you seem to think that this is just like before - but you are totally wrong, when oil production falls this time it will be permanant - there is no country that will be able to make up the slack.

Perhaps it is time for the world too look at new forms of energy ie:- heavier research into nuclear fusion and eco friendly renewable energy sources(wind power etc)
While in the process people of the world should start reducing their energny demands by a few pecentage points ie:-walk to the shop for a paper instead or taking the car.
Final point that world leaders have been dodging for years,is too look at ways of ethically controlling world population growth/stablising/and reducing to a number that this poor planet Earth can sustain properly.(This to quote a saying should "put the fox in the chicken pen")
We can not ignore this problem, "stick our collective heads in the sand and hope it will go away.

The big question is this: 'is $100/b a high enough price to trigger a response?' In other words, does this change government policies, and does it change consumer choices?

Back in the 1973-74 oil crisis, governments became alarmed, less about oil prices as such (though that was bad enough) than about dependency and vulnerability. Some of their actions were painful - higher (believe it or not) petrol taxes, lower speed limits - but were seen as essential and therefore accepted by the public.

Simultaneously, auto makers invested in a new generation of lower-consumption vehicles. From 1980, these measures began to drive consumption downwards - until oil prices crashed in '85-86, and previous economy measures began to reverse - leading us to where we are now.

The statistics to think about here are these:
- Oil importing nations (which include the US, Europe, China, India, Japan) account for 73% of world oil consumption
- These same countries have only 24% of production capacity; and
- most sobering, they account for less than 7.5% of world oil reserves.

This amounts to a very worrying level of dependency, and increasingly transfers leverage into the hands of the exporters.

So, is $100/b a high enough price to prompt a response from governments or consumers? If it isn't, then prices will continue to trend up until they are high enough to trigger the tough but necessary responses from governments, industries and consumers.

"The lesson of history, is that when oil prices soar up to record levels, they usually then fall back down."...and exactly the same can be said for House Prices.

By the way Tim Young's comment has it the wrong way around. If the CPI has understated inflation (and that is the measure Evan is using - he could perhaps use the PPI, it would depend on what you wanted to measure) then the real price of oil in the past (say 1980) was much higher than $100bbl.

Rememeber we know the price of oil - it is nearly $100bbl, and we know what it was in 1980 (I can't remember, something like $20/bbl in nominal terms). It is the overall price level we have to estimate. If we are underestimating it now, then the $100/bbl oil (which we aren't underestimating) is better value.

Although I have to agree with many of the comments above about peak oil, I think there may be a couple of extra points that do not seem to enter the public debate on oil prices. The first is that although it is common to see mention of the 10 dollar per barrel price at the end of the nineties (some of which is attributable to speculators holding short positions rather than supply or demand), there is rarely mention of what happened to the industry as a result. Hundreds of thousands of lost jobs worldwide, scrapping of oil rigs due to lack of profitability, halting of exploration due to lack of profitability and basically the decimation of a full global industry. We now have a massive skills shortage evident by gaps in age groups working offshore (look around your office and ask yourself if there is a distinct gap with people of a 10 year or so age range simply missing from your workplace - I work offshore and I see 2 gaps like this), lack of rigs and massive demand due to the high oil price. That massive demand has resulted in spiralling costs (a rig for 120,000 USD/day in the mid 90s was 30,000 USD/day in the late 90s and maybe 400,000 USD/day now) which in turn have put a break on some projects until more units become available to dampen exploration cost inflation. Even if there were enough rigs to do the job, there are not enough people to man them compounded by a severe lack of skills. My point here is simple; there is more production potential at the moment and reserves could be increased but it may take a few years to see this come through as we are still in recovery. This is also somewhat compounded by the nationalisation in some countries. Although this may allow nations to retain the profits from their commodity assets, the lack of skills and knowledge result in reduced production (see venezuela as an obvious example).
I think the second point here is the demand side. In a world run by economists we have a simplistic view that we must continue to increase population to ensure 'growth' (ie profits). Having a child is probably the biggest carbon dioxide footprint a person can do and increases demand on the resources of the planet. At the same time, many developed countries actively encourage population growth through tax incentives etc whilst developing nations have no population policy at all (Indias encouraging emmigration is more head in sand burying than actual policy!). This way of thinking is absurd to say the least. The lining of pockets at the expense of the sustainability of the human race on the planet, or the living standards of future generations is possibly slightly short sighted. It seems a taboo subject with many people, who raise points of human rights etc when mentioning population management but advocating a policy of not encouraging growth does not mean introduction of draconian methods to reduce population. It only takes education, increased rights for women in developing nations, and a complete halt to tax incentives to breed like rabbits in developed nations, to have an effect. If this means a tightening of belts to sustain an ageing population, we may consider this worthwhile with regards to the resouces available to us, and the supply of oil would not be such a huge concern, allowing us more time to diversify our energy sources.

SEveral topics have come up on this discussion.
1. Peak oil - peak oil is a more long term issue, it cannot be used to explain such short term cycles. While it can be appreciated that production is at a limit at the moment investment and political issues play a much stronger role in the short term.
2. Politics - I would suggest Iraq's current condition is not contributing positively to oil prices nor do I think the US constantly challenging Iran about nuclear weapons. Remember Pakistan also has nuclear capabilities and no-ones blinked even with emergency rule coming in.
3. OPEC - it has been considered that OPEC are the main source of price elevation and when you look at it from their point of view. Production efficiency and capital investment can be put off if you can get more for your oil. Why expand your capacity by by 20% only to have the oil price drop by the same on the increased supply?? There is little economic incentive to fund huge investment to increase production by the qualities necessary for the project demand.
It ironic that the WTO penalise nations for subsidising nation interests yet no-one seems interested in approaching the largest none competitive market in the world which is also the largest market in the world. Perhaps this is what the US has been attempted to break with its activity in the Middle East (?).
4. Supply/demand - maybe oil prices will not increase oil production. It may however focus more people on a future without oil and encourage more investment in alternative technologies and legislation. Equally it will cause economic growth to slow particularly in countries with low tax on fuel. These are more exposed by percentage increase.
5. Population
Lets think - The US still uses around 25% of world oil production. It accounts for 4% (must be less by now) of the world population. Europe follows...at lesser percentages but the same. Population is a no argument. It seems to be used as some way of justifying developed countries overconsumption, (eg. new TVs every two years, new mobile every contract every year, buy to let, two cars, lastminute.com weekends away two/four fashion seasons a year).

Just out of interest - What type and scale of event would have been required to have proved Davis wrong?

Hmmm... most of these posts are anti-oil and gas. I bet you guys like to drive your cars and listen to your CDs though? Do any of you know the costs involved with exploring for, drilling for, leasing land for, producing, refining and transporting something like crude oil into gasoline to the pumps? Probably not... it isn´t magic and right under each petro station... it is a very involved process. Why not complain about the price of cola? Everyone seems fine with paying $2 per litre of coke... but whines and complains when they have to pay $1 per litre to fill their gas guzzling SUV. People need to educate themselves before complaining so much.

Oil is still cheap!

OK, it's expensive comared to previosu years but look at the alternatives. Electirc cars? Hydrogen cars? Alternative heating fuels?
Oil is robust and dynamic, it's used for fuels, plastics, even road surfaces, pesticides and fertilisers (yummy).
Comapre the cost and ease of heating your home with oil versus a solid fuel. Or driving versus the costs (mostly time) of cycling or walking.
High oil prices will enforce a change in behaviour for sure. People may be forced to move closer to work but it will benefit teh environment and therefore all of us in teh long term. Short term pain for long term gain I guess.

Also, to rain all over the conspiracy fireworks if OPEC really did engineer the high oil price, which they didn;t and possible couldn't then think of the long term costs to them. People invest in more fuel efficient durable goods, insulate their houses etc, in order to reduce the fule burden. If they keep pushing then everything will be electric.
Powerstations can be fuelled by coal (dirty) or Uranium (Greenpeace would say Satans fuel). This would provide the base load for the gird at a very un volitile price. OIl has a little further to go before this occurs.

Peak oil? WEll its more of a tabletop. ONce other competing technologies and fules become economical the marginal demand for oil will slide.

There's still plenty of oil the problem is getting at it. Russia is drunk with hydrocarbon power, Africa is Africa and the other stuff is very deep (Brazils new find is the deepst offshore find) or tricky to extract (the Alberta oil sands). One thing though, it took over 100 years to consume the first trillion barrels of oil (estamiated at 1/3 total global reserve) the next trillion will be gone in 25 years. Better buy a Prius!