Lord Oxburgh: 'High fuel prices are not a danger, they are the best news'

From a contribution by the former chairman of Shell to a round table discussion at the Royal Society of Arts, in London

Oil has been important for getting on for 125 years, maybe even longer. Today it's used for the propulsion of vehicles. It's used for the generation of electricity, and it is of course used for domestic heating. Until the Seventies, the price of oil had not increased in real terms - indeed you could argue that it had fallen slightly over the previous 100 years. Since then it has got steadily more expensive, with ups and downs, and then recently has increased significantly.

This very long period in which we have lived with cheap fuel has built into the assumptions on which our infrastructure is based. Our main problem over the next 30 to 40 years is how we re-engineer not only our ways of life but our infrastructure to get away from this dependency on fossil fuel.

Now I personally believe that the present high fuel prices, far from being a danger, are probably the best thing that has happened. I'm not just thinking of the shareholders of the oil companies, who are largely pension companies, but I'm thinking of the message this sends to everyone else that fuel, particularly fossil fuel, is not something that is cheap and that you can take for granted. It is also the best news for a whole range of alternative energy technologies, which at oil prices of $20 a barrel simply didn't make economic sense, however worthy they were. At $50, $60, $70 a barrel, these really come into their own.

There's a great deal more I could say, but if you look at this the worldwide picture, it is gloomy. It is gloomy because the worldwide demand for energy is remorselessly increasing. Frankly, except in terms of example and developing technology, what we do with the UK scarcely matters; it is really on what is going to happen in India and China that the future will depend.

Time is not on our side - changing our infrastructure is slow. We have got a turnover of perhaps 10, 15, 20, 30 years for some things. In the case of these developing countries, we have to start helping them now, as appropriate, to develop the right lower-carbon infrastructure, than one on which we grew rich.