The big question on everyone’s lips is whether $100 per barrel is a price peak for oil or a new trading range. It will affect everyone’s plans, from farmers worrying about the cost of diesel, to airline bosses fretting over the price of jet fuel.

The oil price has tripled since the start of 2004, ending two decades of cheap energy. The major oil companies are busy investing hundreds of billions of dollars, but they are struggling to produce more oil. It is harder to locate and in the places where it is easily found, such as Iraq, it is difficult to do business. Instead, the multinationals are digging up oil sands in Canada, a dirty and expensive business that has emerged as the West’s best chance of avoiding total dependence on Opec and Russia for our fuel needs over the coming decade. Opec is enjoying a resurgence and can be expected to react with production cuts were the price to fall sharply.

At $100 per barrel, the cost of oil is close to its previous peak in 1980, adjusted for inflation, when Americans abandoned their gas-guzzling Pontiacs and Buicks in favour of smaller, fuel-efficient Hondas and Toyotas.

Since then, we have had the 10-miles-per-gallon Hummer, a vehicle favoured by Governor Schwarzenegger of California before his conversion to greenery - but human behaviour is (normally) rational and it is reasonable to assume that rising prices will eventually kill off demand. Indeed, evidence is emerging that Americans are beginning to feel a fuel cosh on top of a credit squeeze.

When the bank is threatening to take away your home, you might think twice about filling the car with expensive petrol. That hesitation is showing up in petrol consumption figures from the US Department of Energy, which revealed an unexpected rise in stocks last week, confirming a year-long trend of slowing growth in demand.

If the global economy is tipping downwards, we can expect the oil price to fall. It is true that we burn oil more efficiently than in 1980, but not everyone is hearing the same price signal; the cost of dear energy is hidden in many countries. China’s galloping growth has been the biggest factor propelling oil upwards over the past four years, and India is in hot pursuit.

The Gulf states, too, are becoming big oil consumers as well as producers, but the true cost of oil is hidden in most emerging markets. China and India both regulate the price of fuel, protecting consumers from the full effect of the global market for oil with subsidies and price caps.

Instead of subsidies, we in Britain are taxed for energy use and the market signal is loud and clear. Gas prices, which suffer a linkage to crude oil, are about to lurch upwards and they in turn, will inflate the cost of electricity. In a free market, a canny power generator will seek out the cheapest fuel available and yesterday, E.ON revealed plans to build a coal-fired power station, the first such plant for 30 years.

Coal is cheaper. It is also the dirtiest and most carbon-rich fuel on the market. But whatever politicians say about climate change, the likelihood is that we will stoke the furnaces with more coal to lighten our electricity bills. If that increases the risk that our planet cooks, it’s another price we will pay for $100 oil.

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