$135 and rising … has cheap oil gone for ever?

Consumers feel the pinch as analysts predict crude may reach $150 a barrel

Fresh from his mauling in the byelection, Gordon Brown met two leaders yesterday. One was the Dalai Lama; the other, Hamad bin Jasim bin Jabir al-Thani, prime minister of oil and gas rich Qatar, may have more influence on the prime minister’s chances of political survival.

Brown’s spokesman said his boss was “incredibly focused” on oil – little surprise at the end of a week that saw the price of crude rocket to a record $135 a barrel and revived memories of the energy shortages and economic hardship of the 1970s. The memories came flooding back: a seemingly unstoppable rise in the cost of crude; fears that the west would suffer the debilitating combination of rising prices and weak growth known as stagflation; daily comments from the oil cartel Opec on what it might or might not do to help the developed world out of its fix; demands by British and US leaders that the producers should do more.


Although oil ended yesterday at $132 a barrel, forecasts that crude could soon be changing hands for $150 or even $200 also conjured up images of what life might be like once the cheap oil that has been crucial to the development of modern industrial societies, and is used for everything from food packaging to tourism, runs out.

For the past 10 years or more, the leaders of the G8 countries have concentrated on the problems of the developing world when they gather for their annual summer summit. This year Brown wants oil to be at the top of the agenda and, with every other member apart from oil rich Russia feeling the pinch, he is unlikely to face much opposition. Oil prices are more than six times higher than they were in early 2002, and it took only a fourfold increase in 1973 and 1974 to bring the west’s long postwar boom to a shuddering halt. This is the fourth time that oil prices have soared in the past 35 years; on the previous three occasions dearer energy has meant recession.

Guardian