That much is true…as long as economic conditions remain fairly stable.

But what will happen if the price of oil resume a northward trajectory to, say…200 USD? 250 USD? or even higher to stabilize around 230?

The economy couldn’t or wouldn’t convert to other forms of energy?

Call me skeptic, but I think all the incentives would be there. Policies would HAVE to change to foster the conversion. Whether some wouldn’t like it would become absolutely irrelevant in such a context.

- The planet remains in a state of energy stress. Asian countries are adding an estimated 50,000 new cars per day to their roads. Adding this growth plus that from other oil based consumables, will provide a huge demand side effect. With supply limited and growing very slowly, this will lead to a steep rise in prices.

- If China’s oil demand growth rate continues at its current pace of 6% to 7% per year, China will use 20 million barrels a day by 2020 – about the same as what the U.S. uses today. And by 2030, China would be up to 40 million barrels per day – twice what America uses now.

- Tensions between Iran and the U.S. and other Middle east countries don’t look like abating in the longer term despite recent diplomatic efforts and a lull in tensions.

- We’ll drive more, fly more and waste more. As prices fall, the alliance of environmentalists and consumers, brought together by pain at the pump, is already coming apart. When has is below $4, people will think of it as a relief and unfortunately most will go back to their old habits.

- Renewable energy is still a long way from being a viable alternative to oil in terms of widespread usage. The world economy cannot and will not quickly convert from an oil-based consumer to a blend of other energy options such as natural gas, solar, wind and so on