Oil prices continue to fluctuate nervously with every report or rumour that the world economy is on the mend or heading for double dip recession. On Friday, they slipped again when it became clear that the US economy is still in trouble and Ben Bernanke, the Federal Reserve chairman, and his colleagues are arguing furiously about what, if anything, they can or should do to come to the rescue. Some want new stimulus measures, while others contend that keeping interest rates at rock bottom is playing with fire.
The last few weeks have seen a few troubling reports that, once again, point to the failures of markets - and to politicians as incapable of making long-term plans even in their own country's interest, let alone with a perspective of Earth in mind.
Oil offers a specific example of our dangerous world. The Paris-based International Energy Agency reported that China has now passed the US as the world's biggest consumer of energy. According to its data, China consumed 2,252 million tonnes of oil equivalent last year, about 4 per cent more than the 2,170 billion tonnes of the US. The measure of oil equivalent includes all forms of energy consumption, including oil, gas, coal, nuclear and hydropower.
Simultaneously, official reports said that China's oil import dependence last year exceeded 50 per cent for the first time. China produced 189 million tonnes of crude oil of its own, but imported an extra 199 million tonnes. Beijing's officials predict oil import dependence to grow to 65 per cent by 2015 and 70 per cent by 2020.
But for a really scary scenario, the Council for Foreign Relations, the leading US think tank, last week produced a graph that looked at historic patterns of oil consumption in terms of economic development and projected them forward to see the prospects for a booming China and the world.
The CFR's Maurice Greenberg Center for Geoeconomic Studies found that as a country's per capita income increases, its per capita oil consumption also increases. There is no surprise there, but the study also found that the growth in oil consumption is modest until a country reaches a per capita income level of US$15,000, but then it takes off rapidly, before levelling off at about US$30,000 per capita income.
The experiences of South Korea and Taiwan illustrate the pattern, and even the US showed a sharp rise in oil consumption per head between the US$20,000 and US$30,000 levels.
The CFR points out that South Korea, which consumes 3 per cent of global oil output, is too small to disrupt oil markets. But it warns, 'China is too big not to disrupt them'.
It then projects China's oil use forward and assumes that China's per capita oil consumption reaches South Korea's levels today. The implications are horrendous: 'China's share of global oil consumption would increase from today's 10 per cent to over 70 per cent,' says CFR.
If you try to turn the forecasts round and assume - surely optimistically - that China's share of global oil consumption stays at the same level as that of the US today, which is 22 per cent, the scenario is equally problematic. To cap China at 22 per cent, 'global oil output would have to increase by a massive 13 per cent per annum over 10 years, well beyond the 1 per cent growth averaged since 1975,' says CFR's report.
It adds: 'This rate of growth is inconceivable, even if vastly more expensive sources of supply, such as the Canadian oil sands, were developed at breakneck speed.'
Other studies have also forecast soaring Chinese oil demand. One projected by 2020 China's demand for oil, if unchecked, would be 55 million barrels a day, as compared with current total global production of about half that figure.
The CFR report ends with a cop-out. It notes that if China's recent pace of growth continues, it will surpass South Korea's current per capita GDP shortly after 2020, 'meaning that the world may be forced onto alternative energy sources much sooner than it realises'.
The CFR projections do however provide an early warning of how unsustainable current energy consumption is becoming.
JP Morgan Chase has lowered its predictions for the oil price in the third quarter to US$75 a barrel and predicts that prices will fall to the mid-60s before the oil exporters meet in October.
The US, depressingly as still the world's biggest economy, remains in thrall to 'Big Oil', and uses more oil per person than other countries. It would be political suicide for any candidate hopeful for office to suggest raising prices. Even the last oil crisis when prices shot up to US$140 a barrel quickly demonstrated that pricing sends a powerful signal and high gas prices at the American pumps cut consumption and sharply reduced sales of gas-guzzling SUVs.
In consequence, US pump prices are about US$2.85 a gallon, which translates to 73.4 US cents a litre, or about half of the price paid in Europe or 40 per cent of the Hong Kong price. Critics contend that without tax breaks and other financial assistance, the real price of oil in the US would have to rise to between US$8 and US$11 a gallon.
By the standards of the US, some commentators say that Beijing has pursued an enlightened policy, particularly in seeking more efficient use of energy and encouraging renewable sources of energy, such as solar and wind power, in which it is way ahead of the US.
But China can be said to be more enlightened only in a narrow sense and with a shortsighted vision that has seen it do business with rogue states in its attempts to diversify its sources of oil.
Moreover, Beijing is still pursuing an oil-based economy and is encouraging car ownership, and its domestic motor vehicle production rose to 13.79 million units last year, way ahead of Japan's 7.93 million and the US's 5.71 million. Beijing is still not sending the right message to economise via the petrol pumps, where fuel costs 94.6 US cents a litre.
If you look at the world as a whole, not a lot is being done in terms of political planning for a new world. At the time of the Copenhagen environment summit in 2008 it seemed that if the political hot air of fine promises could be turned into an alternative fuel, then the world might still be saved. But environmental issues have almost been taken off the table of global concerns.
The oil-producing countries themselves are encouraging oil consumption like there is no tomorrow with their low prices, ranging from 2.3 US cents a litre in Venezuela to 16 US cents in Saudi Arabia and a relatively expensive 40 US cents in Iran.
But as the CFR report suggests, the writing is on the wall unless the world both curbs oil use and discovers alternative fuels.