Shokri Ghanem, chairman of Libya’s National Oil Corporation, put his spoke in.  The world is oversupplied with oil he said, and in any case, Libya is so put out by US action in Iran that it is considering reducing its supply of oil.

So the day has come when Libya plans economic sanctions against the US.

Meanwhile, OPEC president Chakib Khelil, speaking on French television, said he thought the price of oil could hit $150 or even $170 a barrel.

And yet, more evidence emerged to suggest oil will fall back, eventually.

In the UK, bus and train company Stagecoach talked about a Renaissance on the railways.  The last year has seen a 3.6 per cent jump in the number of passengers using its buses, but more to the point, it enjoyed a 13.6 per cent rise in like-for-like sales on its rail franchisees.

Maybe Jimmy Savile was right: This is the age of the train.

Then, Morgan Stanley suggested the high price of oil could put an end to global imbalances.

The argument goes like this. The Chinese and Indian growth story has been based on exports, which in turn have relied upon Western borrowing.

But, as the price of oil goes up, the cost of transporting goods rises too.  “In the short run, this is clearly a negative shock to Asia, and for Asian assets, including currencies,’‘ said Morgan Stanley’s Stephen Jen.  “In the long run, however, this shock could accelerate the move away from exports.’‘

But surely Mr Jen’s argument has another implication. Just as the high cost of petrol has been forcing us onto the buses and trains, it is also likely to lead to less flow of goods across the seas.

These are just two examples of why demand for oil is set to fall. 

There are plenty of other reasons too.  The fall in GM shares to a 33-year low yesterday, shows how much customers want fuel efficiency now.

Ironically, though, if energy producers believe oil is a bubble and will crash in price, they are less likely to spend money on ramping supply and on finding alternatives. This will in turn keep price high. If they believe the high price of oil is here to stay, they will invest in alternatives and oil will then fall in price.

For that reason, oil in excess of $130 must appear to become entrenched, before it can fall.

Cycles are like that. Booms go too far when people foolishly believe it can carry on for ever.  Crashes occur when people equally foolishly think there is no hope.

Yet, ironically, it is the foolishness of markets that creates innovation.

© Investment & Business News 2013