Oil, oil, toil and trouble . . .

A couple of years ago, it seemed as if I couldn't escape from oil prices. Oil would hit a new high, and I would buckle down to another piece explaining why this was happening. The culprits were always the same: Chinese demand, apparent American insensitivity to gasoline prices, and a worrying inability on OPEC's part to open the taps. But there was always the new price record to talk about. How high could it go?

It seems odd, then, that the current price situation is so little remarked. Oil prices just topped $80 a barrel before sinking backwards, which is a record in nominal terms. This is still not up to the real record, which occurred during the Iran crises, when oil prices briefly touched about $100 a barrel in today's dollars. But we journalists have been repeating that mantra since oil was at $50, and it's getting thinner as we grow towards that mythical target.

For environmentalists, and those of us who would like to see a carbon tax, this is good news: oil markets are doing our work for us. On the other hand, it's not clear how long this will last. To be sure, Saudi Arabia's biggest oil field may be beginning to falter, other key producers such as Nigeria, Iraq, and Iran are having security problems. In Venezuela, Hugo Chavez, who is sitting atop a gigantic reserve of crude so heavy and sulphurous that until recently it wasn't even classed as oil, is doing his best to make sure that that crude never comes out of the ground by diverting investment funds to social spending. And the areas we exploited last time, such as the North Sea, are pretty fully developed now.

But of course, the current state of oil prices generally looks permanent until it's not; witness my former employer's famous forecast of $5 a barrel oil. Demand could collapse, either through recession or because people push for greater efficiency. Saudi Arabia cannot be happy to hear of Americans switching to more fuel-efficient cars. And exploration could ramp up. Venezuela is not the only country with "non-traditional" oil reserves; my understanding is that oil shale and tar sands are cost-effective to exploit at well under current prices. The main thing holding oil companies back is the fear that current prices may not last.