The mood is one of no surrender at the Geneva motor show, even with crude oil topping $103 a barrel. This is an industry with the front half of its chassis perched on the edge of a precipice, but amid the raucous music, the shimmying models and the spotlit glare of Geneva's Palexpo, you might think that petrol was 50p a litre.

Take a stroll down the red carpet, cast an envious glance at the cut-glass styling of the Ferrari and Lamborghini models and lower your gaze in shame as you pass the military chic of the gas-guzzling Hummers. With sales shrivelling and losses mounting in America, the world's biggest market, manufacturers are looking east for salvation — to China, Russia and India. Renault has bought a stake in Russia's Avtovaz, the maker of the Lada.

However, for cars to sell in those Eastern markets, they must be cheap — and budget cars earn little profit. Meanwhile, Western governments want lower carbon emissions that bump up the technology bill and the manufacturers continue to resist. They could spend billions making zero-carbon cars, but for what return?

Continue your stroll and have a giggle at Nissan's Pivo concept car, an electric tea cosy that pirouettes on independently motorised wheels. Then ponder all the retro-styling of the saloon cars, their huge radiator grills shouting through clenched teeth. Is it the pain of constipation or is it fuel starvation?

Ask yourself which century we inhabit. What technology is being lauded? Consider the vast array of steel-and-plastic crates on wheels — after more than a century, this motor show is still celebrating the triumph of the internal combustion engine. Henry Ford, who first marketed the motor car to the man in the street a century ago, would feel entirely at home at this motor show. He might even be bored.

The promoters of this year's event hail a show that is “greener than ever”, but there is scant evidence. Each big brand is showing off a hybrid petrol-electric vehicle, but these are mainly for test-marketing and public relations. In Europe, where more fuel-efficient diesel vehicles have the lion's share of the consumer market, petrol hybrids offer small advantage in terms of reducing carbon emissions. Peugeot-Citroën is in the lead in diesel engines, showing off its Cactuc concept car, but the company will not sell its first diesel hybrid until 2011.

If you care to save the planet today, you should take a walk because there is little on offer that will really shrink your carbon footprint unless you trade down to a small car, and small cars don't make much money. This is not the fault of technology. Hydrogen fuel cells can work efficiently in cars, but they are still very expensive, adding £1,000 of cost to a vehicle that might earn a manufacturer £100 in profit. Politicians are not willing to risk their careers on a policy that would deprive a family on an average income from the luxury of a motor car, and so they have abdicated responsibility to the market — and markets are driven by price signals.

Car manufacturers will produce greener cars when we ask for them, but we will not demand these products until we get price signals that tell us to change our behaviour — in other words, we will not pay for the new technology until the cost of running petrol engines becomes ludicrously expensive.

History provides proof: older readers will remember American cars of the 1950s and 1960s, such as the Ford Thunderbird and the Chevrolet Corvette - slabs of steel dragged across concrete with the aid of an eight-cylinder petrol engine. No one cared about cost until the 1970s, when the Arab oil embargo and the Iranian revolution created the notion of energy insecurity.

Between 1949 and 1979, the fuel efficiency of the average American car barely changed, according to US Department of Energy statistics. Initially, it fell from 15 miles per gallon just after the Second World War to 13mpg in the early 1970s and then rose slightly to an average of 14.6mpg in 1979.

Oil nationalism, shortages and global recession provided the impetus for the motor industry to change gear. After 1979, fuel efficiency increased rapidly, reaching 20mpg in less than ten years as the world gasped at the soaring cost of petrol. We forgot about the Thunderbird and fell in love with the Datsun Sunny and the Honda Civic.

However, fuel efficiency is boring. Opec lost its grip and the oil price collapsed in the late 1980s as the cartel squabbled over market share. The North Sea and Alaska gave Americans and Europeans new energy affluence. The oil price reached its nadir in 1998 of $10 per barrel, the fuel efficiency of motor cars stagnated and Americans bought sports utility vehicles. In the 15 years to 2005 the fuel efficiency of the average American motor increased from 21.1mpg to 22.9mpg.

It is 11 years since UN Framework Convention on Climate Change was agreed in Kyoto, but the basic family car has not changed much. Manufacturers are struggling with technology efficiency, grappling with diminishing returns per car as the cost of emission-reduction technology rises. What has changed over 11 years is the cost of oil, which has risen tenfold. The price signal is now being heard loud and clear.

carl.mortished@thetimes.co.uk

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