So the Oil Age will not end because we run out of oil, but when the price of oil goes so high that it becomes cheaper and simpler to move to alternative fuels. At $110 a barrel, that moment comes very close indeed. And in the tar sands of Canada, oil can now be produced for less than $50 a barrel and the sludge-like heavy oils of the Orinoco basin can probably be developed for similar sums.

Increasingly squeezed out of the Middle East, the private corporations are finding oil in deeper and deeper seas and in ever less hospitable climates, and with oil at $110 a barrel these new prospects look ever more viable.

The U.S. government is now pumping billions of dollars onto clean coal research, the British are building a new generation of nuclear power plants and the Europeans are subsidizing wind and solar power. Hitherto the great spur has been the fear of global warming; at $110 a barrel, these investments become elementary economics.

So the first familiar question is whether the OPEC countries understand that they are undermining their own future market? The second is whether they understand, as the shah of Iran pointed out in 1974, that "there is a danger of killing off the goose that lays the golden eggs." What he meant was that the market for oil would depend on the good health and vigor of the wider global economy. A recession brought on by a soaring oil price would be self-defeating, since the recession would cut the demand for oil.

The familiar dilemma is whether to freeze output and cash in now on the high prices, regardless of future slumps in the oil price or gluts in supply, or whether to pump more oil and let the price ease back to a more sustainable level of $60-80 a barrel. So far, OPEC has declined to increase the supply. This could be a big strategic mistake. Assume that the stabilization of Iraq continues and its output could soar from 2 million to 4 million barrels a day. Assume that a new U.S. president starts to talk with Tehran and reaches a reasonable agreement and Iran could soon be producing an extra 2 million to 4 million barrels a day. Things can change fast in the oil business, and not just the prices.