It would be foolhardy to engage in conjecture about the future trend in prices. But equally it would be foolhardy to ignore the possibility that the troughs and peaks of future oil price cycles will be at significantly higher levels than what we have seen in the past.

The footfalls of global warming and high oil prices can be heard by everyone in Bali. They know that the conference should agree not simply to the contours of the post-Kyoto protocol but also the package of measures that can push the global economy onto a lower carbon and oil intensity pathway of growth. The positive (and this was also brought out by IGPCC) is that the technical ingredients of such measures are available. There is of course need for further research and testing especially regards carbon capture and sequestration (CCS) but the fundamentals are known and it is only a question of time, incentives and investment before technologies like CCS become an integral instrument in the containment of GHG.

The problem is that the effectiveness of such a framework depends on the willingness of governments and business to work in partnership. Hitherto, the debate has pitted governments against each other. The setting of Co2 emission targets has become the bone of contention between the developed western world (read US) and the rest (read India and China). This is a matter that will not be quickly resolved. The concern is that the noise and clutter of multilateralism is pushing governments and business into a Catch 22 situation. Businesses are not prepared to partner governments unless they are assured a clear, strong and stable policy framework that defines a long term value for carbon emission reductions and provides incentives for investment in the development of relevant technologies. And governments are reluctant to prescribe such policies because of concern it will arouse opposition from a diversity of vested interests. This is a problem that must be resolved because it is through public-private partnerships that the three most energy/oil intensive sectors of an economy (viz industry and power, transport and residential and commerce) can be most quickly shifted towards a low carbon/oil intensity future.

... contd.