Is the world on the brink of another ruinous oil shock? The International Energy Agency (IEA), which speaks for the big industrialised consumers in the West, is nervous. The organisation's chief economist, Fatih Birol, has issued a warning that prices are entering a "dangerous zone" and could leave economic recovery in many countries stillborn.
The Organisation of the Petroleum Exporting Countries – satisfied, we suspect, by the prospect of more bucks for its barrels – is more sanguine. Last month Opec decided against increasing supplies, with Saudi Arabia, the club's most influential member, suggesting that there was no need for members to meet again until the summer. Given the recent trajectory of prices, however, Mr Birol's analysis is more compelling.
After sliding during the financial crisis, oil shot up to its highest level in more than two years earlier this week. This does not bode well for import bills and living standards across the still beleaguered West. At around $90 per barrel, it might well derail the world's journey out of the slump.
But the suggestion that the passage will be easier if Opec simply loosens its grip on the tap overlooks the fact that, even if they fall back for now, prices will eventually head higher. The IEA's latest World Energy Outlook, for instance, sees prices beyond $100 per barrel in five years. The same report warns that, further on, prices could jump beyond $200 per barrel as global supplies near their peak in 2035.
And these predictions assume a global reform of fossil-fuel subsidies and "the cautious implementation of national pledges to cut greenhouse gas emissions" by 2020. The current pace of reform, let alone a short- term increase of Opec supplies, in other words, will not have any affect on the long term trend of higher oil prices.
An even tougher stance from governments, one which saw the near universal scrapping of oil subsidies, would also do little. In that scenario, prices are still expected to reach $175 per barrel in 2035. Though better, such levels would still entail financial pain for many countries and countless households across the world.
Which brings us to the heart of the issue, namely rising demand from emerging economies, chiefly China and India. Stretching their legs after a prolonged slumber, the giants of Asia are thirsty for the black stuff, so much so that the IEA sees Chinese demand swelling from just over 8 million barrels per day in 2009 to more than 15 million by 2035. In contrast, the world's crude oil output reached its peak four years ago.
Prices, then, will rise one way or the other. And putting pressure on Opec, which has a vested interest in a buoyant oil price, offers no long-term solution.
The answer is to look away from mucky – and sometimes fatally dangerous – wells in the ground and for companies and governments to invest, instead, in wind, solar and other renewable sources of energy.
Higher oil prices do indeed pose an economic threat, but they also offer an opportunity for the world to redouble its efforts to end – not just reform – fossil-fuel subsidies and look for cleaner sources of power. Along the way, this route offers cash-strapped governments a way of generating jobs and stimulating their economies. Britain could be at the forefront of this new energy sector.
This also helps address the threat of global warming, which is at risk of being forgotten while wealthy oil producers and desperate consumers debate the finer points of supply and demand. The world needs to kick its addiction to oil. If we do not, the climate itself will enter the danger zone.