Today’s high oil prices, when adjusted for inflation, are still nowhere near the 1970s crisis peak of $90. The Economist predicts eventual relief, though it may take a few years:
Like an athlete who has recently discovered steroids, the oil market just keeps setting new records. Over the past 18 months, the world has seen oil prices clear $40, then $50, then $60 a barrel. On Wednesday August 10th, American crude touched $65 for the first time, thanks to fears of terror attacks in Saudi Arabia, an impasse over Iran�s nuclear programme, and problems in American refineries.
Most analysts predict that oil prices will remain high into 2006. But a recent report from Cambridge Energy Research Associates predicted that as much as 16m new bpd could come onstream by 2010, which would probably mean a precipitous drop in prices.
And even without new supply, as prices creep towards $70 a barrel, they will get close to setting real records, as well as nominal ones. At those levels, consumers, and their governments, can be expected to react. The market may eventually be able to accomplish what environmentalists seemingly cannot, by forcing energy-gluttons out of their sport-utility vehicles and on their way to a more fuel-efficient future.