Huhne in 'The Observer': "We cannot afford to go on relying on such a volatile source of energy when we can have clean, green and secure energy from low-carbon sources"

It is reassuring to see in today’s Observer, on the front page no less, that the UK government is treating the unrest in the Middle East as a reason to get serious about sustainable sources of energy. It is, and they should, but the devil will be in the detail of the plans outlined this coming week. It may be that the protests throughout the arab world will achieve what the most hardened environmentalist protester may struggle with: whipping up political will and public support for renewable energy.

With the very real impact of the recession on things governments and the population generally have prioritised for 30 years – growth, employment and now inflation – it is understandable that environmentalism has been pushed onto the backburner. Annoying, yes, unhelpful, definitely, badly timed from an ecological perspective, absolutely. But understandable, nevertheless. What rising oil prices bring with them is a sense of reality to them that, despite the overwhelming evidence and genuine world-wide impacts, discussion of climate change cannot seem to manage.

As primarily a Financial Times reader, I am always struck by that paper’s unwillingness to talk about climate change, preferring to frame such issues as clean technologies in ways that quietly sidestep mentioning it. This is probably not a bad thing – ill-informed but vocal critics highjack almost any discussion of climate change, especially on online article comment boards. The Financial Times is, however, always happy to write about oil prices. During the uprising in Egypt the tabloids reported on the experiences of British tourists (presumably because Johnny Foreigner is not real a real person who experiences real things, and even if they do, who cares?), The Independent and The Guardian got excited about the winds of change sweeping the world (as only the liberal left can) and The Financial Times reported “Oil Surges as Egypt Protests Grow”. Because we wouldn’t want to get too excited by this politics nonsense when oil prices are rising, now would we? The Telegraph appeared not to notice Egypt for most of the period.

Oil: As we approach the 100th anniversary of the break-up of Standard Oil on the 15th May this year (buy your balloons now before they sell out) it's making the world go around as much as ever

The truth is that it is neither obvious nor straightforward that oil prices damage the well being of the man on the street. You have to understand that oil prices drive inflation, and particularly food inflation, which makes life more expensive. You also have to know that electricity and gas prices tend to rise in line with oil prices, even though neither comes from oil. On the face of it this is like saying “of course the price of tables will rise – the price of plant pots has risen”: on the surface at least it’s a little weird. These facts have, however, filtered down into the decision-making end of the public as received wisdom, and enough that the whole political spectrum is rattled. In economic good times, seriously rising oil prices are only inflationary. In bad times we’re talking about the dreaded stagflation, where the two horsemen of economic apocalypse, inflation and unemployment, ride out together.

(I would also like add, in passing, that this resolution seems to me further evidence of the value of having Lib Dems in the current government. Accusations of impotence and of “selling out” run rife in newspaper comment pages – and in most episodes of The News Quiz on a Friday night – but this may be one of many occasions when a Lib Dem minister or a Lib Dem presence has huge impact on the detail of policies that fly beneath the radar of many such critics. Nor is it an isolated case – I count two or three news stories a week highlighting compromise decisions or finely balanced Conservative-Lib Dem influences.)

With the future of the Middle East as uncertain as ever, future oil shocks may hit the world economy hard. The political unrest of Egypt and Libya may have pushed prices up, but they only produce 0.74 and 0.6 million barrels of oil per day. Iran produces 3.66 million, and Saudi Arabia more than 9 million barrels (source: FT). Even if these shocks don’t materialise, there is a simpler truth here – that the world supply of oil is finite, so in the long-term the price is only going to go one way: up.