Before US can tax oil consumption, there needs to be significant development of infrastructure to supply public transportation. This would be several years in the making. A better solution is to demand developing nations to stop subsidizing oil, put restrictions on speculation, up interest rates.

Jean, Austin, Texas, USA

"The ultimate aim should be a shift from oil-based to electricity-based technologies in all industries and throughout the global economy."

How? Electricity is not a fuel, but merely a means of transmitting energy, and electricity generation typically has efficiencies of 25%, the rest being lost.

DrJames Thompson, London, uk

There is enough oil on this planet. The challenge is in the infrastructure and recovery. Although at a lag, these can be speeded up quickly. We do need to vastly improve on our oil recovery rates and with innovation we can meet this challenge.
The US is still an energy powerhouse with their reserve

S Kelly, Calgary,

Oil is just in a bubble. Every man and his dog were convinced dot com was a one way bet in 99, houses a one way bet in '07, now its commodities turn. Well, if you wan't to stop bubbles, get money supply down. How hard is it to understand? IF YOU PRINT MORE MONEY IT WILL BUY LESS STUFF. Duhh!

Mike, Tauranga, New Zealand

The only realistic way to slow down the oil prices is to switch from dollar-based trading to other currencies. Any stable currency will do, but dollar-based traiding is madness.

Alexander, Berlin, Germany

First thing they need to do as a goverment is to expose the price fixing being caused by organisations such as the Bilderberg group who cause these rises in oil.

What has happened that has caused the price of oil to go from $25-30 a barrel in 2000 to $135 a barrel in 2008. Over a 400% increase?

Andy T, North East, England,

Anatole is an economist of the school that says things like ‘high inflation needs higher interest rates’ but whose idea is that? Has it ever worked?
Peak oil or not – the real long term value of oil is not in burning it but in using it for all the chemicals and pharmaceuticals we need.

Shaun Hexter, London,

I don't agree with your issue to use nuclear energy. That industry hasn't been around long enough to develop a catastrophic failure rate over time. More importantly, the development of energy sources such as hydrogen fuel cells and switch grass will create business opportunities for people.

Steve, Chico, US

sorry anatole but you display a lack understanding of inflation, deflation, stagflation, fractional reserve banking, profit, money, credit and dept. this crisis has nowhere near played out yet and if you do a little research and dig deep you will realise that this is going to be the BIG one.

brian king, coventry, england

Fred Keeling for Prime Minister...simple and elegant idea

john, glasgow,

Given what we could buy with (i.e. half of $100) when Labour came to power in 1997 and what it can buy now, what is today's $120 barrel of oil worth in those terms? i.e. What, in today's terms, did a barrel of oil cost in 1997?

cadzow, Greater London, UK

Nuclear Energy is the answer for the UK .One problem David Cameron can not make his mind up to support it.Cameron you will have to come off the fence and dump Zak Goldsmith,you know it was only good PR for you 6 months ago now its history along with your other guro Steve Hilton.

Bill Rees, Truro, Cornwall

You can synthesize oil from coal at a cost of $50 a barrel, and there's lots of coal.

peter, birmingham,

Brilliant article but with a Westerner's bias. The West has financed its prosperity by corruption and conquest which people like the Venezuelans are challenging. Also removing subsidies would create a revolution in India which is in the process of hatching out of its economic egg. FAIRNESS PLEASE!

LAKSHMAN PARDHANANI, GOA, India

The answer is to eat more pork. Methane from the pigs can be captured and used as fuel.

michael clarke, kensington, london

To expect US consumption to fall to EU levels is a pipedream. Centres of population in Europe are rarely separated by more than 100-200km. In the US its more like 500-600km, often more. By definition this is going to require more oil consumption for a given level of economic activity.

Sean , LOndon,

Further, the climate in the US is generally more severe than in Europe with hotter summers and colder winters. Ergo, more energy consumption.

Sean , LOndon,

China spends 1% of GDP on oil subsidies - almost nothing really.

The Chinese goverment has piles of dollars it cannot sell without hitting the dollar (which would devalue its own reserves). So it hands them out as cheap petrol to keep the people happy.

Sounds like a winner to me - why stop now?

Lee, London,

The first step should be to stop the devaluation of US dollar. If the dollar keep devaluating, how can the oil price fall?

Xiaowei Huang, Beijing,

It used to be said, and it is even now possibly still true, that the USA used 60% of all world energy alone. If this is true then it is a most irresponsible position for the USA to find itself in. Come on America, sharpen up your act! The world's policeman should get on with some home maintenance!

Ian SISLEY, Arras, France

A very logical article and a great quote to end it with . So nucear energy is the only answer

Michael Harrison, Nungwi, Zanzibar, Tanzania

I hope you are right and I look forward to the reality, though I don't see why we sould expect developing countries to take the first step when we can easily take it ourselves.

Sam, Carlisle,

"Falling prices can be cured easily enough. All governments and central banks have to do is cut interest rates, cut taxes and boost public spending. "

Seriously? have you heard of Japan?

David Holden, Sheffield, England

Buy a smaller car, don't make public buildings so cold with air conditioning that you have to wear a coat but wear a jumper at home rather than heat it so that you only need a T shirt. If all of that were done a ot of energy would be saved and energy=oil. But are there less SUVs. etc. etc. ?

Roger Corfield, Arusha, Tanzania

This is not about oil price but about automated trading by companies calling themselves banks (thus permitting them to use all the savings of the Western world to automatically trade). Free trade is about a real trade between a real supplier and a real user of the product setting price at purchase.

Chris Coles, Medstead, Alton, United Kingdom

The Fed's policy of lowering interest rates has backfired. This liquidity has resulted in a commodity price bubble. Oil is particularly sensitive to this type of asset price inflation since it is invoiced in dollars. Like the man said: 'infaltion is always and everywhere a monetary phenomenon.'

Frank L, London, UK

Peak oil IS a reality. The new provinces coming on stream won't compensate for the current decline in mature fields elsewhere.

There will be riots, and not just in the third world, when people realise they can't afford to get to work or eat - assuming there is work.

The old economy is dead.

C Smith, Norwich, UK

"and statistical facts about the “peak-oil” limit to global production capacity are ambiguous."

There is nothing ambiguous about the fact 1978 was the last year we discovered more oil than we consumed. So for the last 30 years, each year we have been consuming more oil than we discovered.

Paul Price, Warrington, UK

Excellent article Anatole. In particular I agree that deflation is the lesser of two evils, if only because maintaining the value of the currency is an essential element for stability
The oil price will self correct as the US consumer demand moderates,as is is already beginning to do.

WAB, Londonistan, EUSSR

Gradually the reality of geology seeps through to the guardians of neoliberal orthodoxy who continue to assert that the free market works.

Policy suggestion no. 5 (when the other four have failed): create a sustainable low-growth economy without commercial airlines and business class lifestyles.

Daniel, London, Uk

Peak Oil has been used as a scare tactic to save 'Big Oil' and the jobs of those geologists you speak of. There is no 'crisis' that requires $130 oil and the China/India excuse is wearing thin as demand is actually slowing with world growth and u.s. consumers cutting usage!

Kv, London,

Inflation has been cured in many economies world-wide, albeit with some paid. Deflation in Japan has proved incredible hard to solve. Deflation is rarer, but NOT easier to fix. Once interest rates go to 0, then there's nowhere to go.

Nick, France,

The trading of derivatives related to oil in the face to face unregulated market, could easily stopped. Just declare that unregulated derivatives related to commodities were not legaly enforceable as debt. That is precisely what gambling was in this country all those years ago

David Nammory, Liverpool,

The oil price is a speculative bubble inflated by financial flows on the run. Even the Chinese cannot tolerate $120 oil as this impacts both their $-linked-currency production costs and the spending capacity of their Western customers, to ultimately reduce demand. $120 oil is unsupportable and what is unsupportable will fall. New supplies coming on stream from Brazil, Azerbaijan, Kazakhstan and the Sudan later in the year will speed the process.

John Scott, Gateshead, UK

Isn't this what the Stern Report was about, in part?

Attempting to control the cost of oil was the root cause of the US invasion of Iraq. What resulted? The $US went down, the $Oil rose to more than compensate.

That worked well, didn't it?

termite, Brisbane, Australia

There will be problems with people understanding the need to find substitutes for fossil fuels, for as long as there are people who think that "peak oil" is a mining company.

termite, Brisbane, Australia

To blame developing countries is ridiculous. US and Western European consumption is a large multiple of that in China. At the same time we want them to revalue their currency and stop their oil subsidies - isn't that tantamount to the same thing?

Peak Oil is a reality. Ask any geologist.

Alfred, Isle of Wight, UK

I think that Anatoles point is that no on knows how much oil there is left, demand will fall at 100 per barrel, let alone 130, and subsidies will fall, being un affordable, 5 billion people can not all have their own cars.

Matthew Bramall, Wadhurst, East Sussex

I have not read such utter rubbish in years. There is not enough room here to condemn completely but here are a few reasons:-
1. Deflation is more serious than inflation and after 15 years Japan still has it.
2. If subsidies end there will be mass riots.
3. Cheap peak oil is proven.

MGrelton, London, UK

The basic, and frightening, fact is that ENERGY costs are rising, leading to rising food costs also, partially because of resource depletion, but also because of climate change. This is an unprecedented situation - we have never faced this combination of factors before. It is beyond just economics.

jonathan, Sydney,

How about pricing oil/commodities in currencies other than the most overrated, volatile currency in the world, the fiat currency, the US dollar? True to form the US is devaluing it's currency again and again exporting the resulting inflation to the rest of the world.

Vivien, Toronto, Canada

Ohh! What a news!!!

Carlos Norberto Mugrabi, Roma, Italia

For individuals to justify energy savings in their own homes capital intensive projects with a long payback time are unattractive. Why not let citizens tap into their own pension funds for such projects and enjoy their retirement without fearing massive energy cost inflation.

fred keeling, almunecar, spain