Jerome,

many thanks for this olympian perspective on our ongoing energy woes.
The graph, for a start, is a sweetly informative item, since, far from showing a peak price being reached,
thus far it appears to show generally steeper rises after each significant reversal.

Thus the rate of oil price increase/year may itself be accelerating somewhat ?

With regard to the policy priority that should be given to demand reduction,
I would agree that this should be paramount,
specifically in those industrial societies where power & energy use is patently profligate.

However, the fact is (as seen since the sixties) that achieving demand reduction
is disliked by industrial planners & financiers even more than initiating sustainable energy supply.
In addition to which, there are very large populations now aspiring just to get an energy supply,
meaning that the worldwide R,D&D of both village & city-scale sus. energy supply
(without which fossil fuel competition will be all the more desperate)
is the entirely necessary complement to the sufficient demand-reduction that you urge.

You write:
"We have to reduce our demand. Let's do it in an organized way rather than a panicked, haphazard, inconsistent way. And that's where government can help, by providing longer term pespective, informing citizens, pushing infrastructure in the relevant direction, and bringing up standards that apply to all equally and guide individual behavior in the right (Energy Smart) direction.

Price mechanisms work, but they are brutal, hurt the poor the most, and cause unnecessary disruption to economic activity, and pain to many. And they are fickle, as the current volatility (which, as I explained above, is likely to remain) causes rapidly changing signals which prevent decisions from being taken."

All of which I'd applaud as a very succinct layout of the case for proactive national & regional governance,
and against a reliance merely on the application of inequitable, inefficient and unpopular price mechanisms.
Yet I think there is further to go on this,
in that success at the global diplomatic level of governments' agreement on burden sharing -
is plainly a prior condition for successful governance within national borders.
Otherwise, how long would national industries wait for their foreign competitors to invest in the vital changes ?

A further question arises over the potential allocation of national energy usage rights,
since the global climate policy framework of "Contraction & Convergence" [aka: C&C]
which offers a close proxy for energy usage rights in the form of national greenhouse-gas emissions entitlement,
is now under increasingly cogent discussion in the run up to the UN's Copenhagen Conference next year,
having won EU, African & Indian endorsement, among others.

In case this framework may be new to you, here is a banner-scale description, being :
CONTRACTION
of global emissions to respect the Earth's capacity,
& CONVERGENCE
of all nations' emission rights to per capita parity.

(A properly detailed account of the principle & its dynamics, plus analysis, endorsements, etc,
can be found at www.gci.org.uk)

Your critique of price mechanisms is, I'd respectfully suggest, addressing badly flawed models,
than which we can and must do much better.
I say "must", to reflect the urgency of our position -
since an equitable and efficient price mechanism could optimize the viable rate of change
both for oil [fossil-energy] addicts and for impoverished masses in need of basic energy supplies
surely it behoves us to try to advance the adoption of such a mechanism ASAP ?

Sadly there is as yet little open discussion on the web of this need.

The C&C framework was developed around 1990 to facilitate the necessary shift
from emissions (energy-usage) rights reflecting sheer national wealth
with those rights Converging (over a period of years to be negotiated)
to reflect national population size, i.e. per capita parity (at an agreed date).

An annual Contraction in the global emissions budget has also to be agreed by the national signatories to the UNFCCC,
in light of the climate science provided by the IPCC and its researchers,
to achieve an atmospheric CO2 (equivalent) concentration that will avoid further decay in climatic stability.

In light of negotiations to date, those national entitlements would, undoubtedly, be tradeable at least in part,
meaning that industrialized nations would increasingly need to buy entitlement from poorer more populous nations,
with the payments being verifiably ring-fenced to investment in UN accredited mitigation & adaption projects.

Notably, it would seem not beyond the wit of humanity to codify in the forthcoming treaty
poor nation's right to receive sufficient energy supply (at a preferential rate) to meet basic subsistence needs
as part payment-in-kind for emission-entitlements sold.

In this manner the international contagion of social & economic destabilization may at least be limited,
if not actually avoided altogether.
________________________________________________________________________

The above is just a first attempt at utilizing the global C&C framework
in the forthcoming "Treaty of the Atmospheric Commons"
to ameliorate effectively the excess energy demand and supply scarcity -
so I'd appreciate your thoughts on this option.

Regards

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