International crude oil prices hit US$99.29 overnight. So, we'll probably be through the US$100 / bbl threshold by the end of next week.
As for what it will mean, probably rather less than people think. What was so damaging about the early oil crises was that the price basically quadrupled overnight. Here's it's gradually crept its way up on the back of a supply crunch and security concerns. People and the market are already used to high oil prices and the idea that they will increase, so there isn't the economic shock there was thirty years ago. But an important psychological threshold will have been breached: oil will be more expensive in real terms than at any time in the past, without such an acute crisis. This I think should make it clear that the age of cheap oil will be over, and that we'd better start using it far more efficiently. Which can only be good for emisisons reductions.
The question is whether Treasury and the Ministry of Economic Development will accept this in their modelling, or whether they'll still persist in basing our long-term economic forecasting on the idea that this is as high as it gets, and prices will drop. Not while the US is still up to its neck I Iraq, I suspect...
