My erstwhile colleague Daniel O'Sullivan argued in his book Petromania that these arguments in support of $150 oil - as espoused by the likes of Goldman Sachs in particular - were specious; speculation rather than supply was the real culprit. I would go further still and argue that peak oil theory itself was the real problem - in a normal commodity cycle producers will respond to high prices by increasing supply; the suggestion of peak oil theory was, of course, that such supply was not there to be created. Yet that didn't stop people trying - and a headlong rush to prospect for new reserves to exploit the high price appears to have met with great success. As we point out in this week's cover feature, any extra consumption was quickly replaced, and in fact proved reserves are now significantly higher than they were 30 years ago.
The issue at the heart of the cover feature is not the oil price, though, or even peak oil, but whether we can ever fully use the bountiful reserves that exist. The concept is an environmental one - that carbon emissions are responsible for global warming, and that even small increases in average temperatures could wreak chaos in the years ahead. In other words, our use of hydrocarbons will be limited not by how much we have but how much the planet can absorb - not peak oil but peak carbon. Many do not accept the scientific basis of this argument, of course - but it is certainly a risk to be taken seriously.
If only the government thought so, too. David Cameron's rather muted demands to renegotiate the UK's position in the EU, and the possibility of an eventual Brexit, have dominated the headlines this week. But our confused energy policy arguably has the potential to do much greater damage to the UK economy in much shorter order. National Grid warned last week of power shortages, with industry being asked to rein in use - yet the government has slashed support of the renewables industry, and its Chinese nuclear deals do not pass the smell test, either environmentally or economically (disclosure: I live near one proposed site). The bursting of the market's carbon bubble could be the wake up call we need.
