EARLIER this decade, when oil was trading at around $60 a barrel, most Big Oil strategists were still expecting the price to fall back to somewhere between $30 and $40 before too long. Not any more.

With a barrel price of crude again topping $100, some forecasters are now looking to further price hikes, perhaps to as high as $150, in the foreseeable future. I've even heard some industry insiders speculate about $500-a-barrel oil further out.

On current trends, global energy demand is expected to double by the middle of this century. But, assuming that growth in demand cannot be curbed by other means, satisfying it is no longer simply a question of turning the taps on a few more notches.

Crude oil is, after all, a finite resource. Experts argue about whether peak production is now behind us and how quickly the world will slither down the other side of that curve.

Oil substitutes, like biofuels, are being developed, but the growth in production of these brings other consequences, contributing, for instance, to soaring global grain prices.

Even within the mainstream oil industry, existing supply infrastructure simply isn't keeping up with demand, especially from rapidly industrialising nations like China and India. Witness China's worldwide search for new reserves.

And, with the threat from accelerating climate change now seen in many eyes as a greater global threat than terrorism, dealing with the challenge of pumping even more carbon into the atmosphere also carries significant, additional costs.

Carbon capture and storage - still in its infancy, apart from a few early-mover projects in Norway, Canada, Australia and Japan - is far from cost-neutral. So the era of cheap oil, like the era of cheap food, may well be gone for good.

Some people who should know better still seem to think we can get back to the good old days of cheap oil. When the price goes up, they argue, all that is needed is for the big suppliers to open the taps.

US President George W Bush claimed exactly that on Tuesday when he urged Opec, the producer cartel which accounts for just over a third of existing global oil output, to boost production to help keep the US economy out of recession. Bush warned Opec it was making a "mistake to have its biggest customer's economy slow down as a result of high energy prices."

But yesterday, when they met in Vienna, Opec ministers gave the Bush plea short shrift. The cartel decided to keep its production at current levels.

Opec president Chakib Khelil of Algeria - who pointed out that when they had last boosted production last September, the oil price rally continued unabated - was among those arguing that, if anything, Opec should be considering a production cut.

The cartel argues that the price surge in recent months owes much more to the weakness of the American dollar and the activities of commodity speculators than any fundamental imbalance between supply and demand.

The likes of Khelil argue that a seasonal dip in demand in the US and elsewhere in the northern hemisphere is already inevitable as summer approaches. This year that fall-off in demand will be exacerbated as the American economy slows rapidly and courts outright recession. If the American slowdown spreads to Europe or other regions, that dip could prove dramatic.

So this is no time for them to be pushing more oil into the system, they insist. Beneath that official line, there is still some scope for individual Opec members, like Saudi Arabia, to pump a bit more than their output target permits. But that has even less chance of having a significant impact on the price of oil as Bush's favoured option, a collective public decision to raise production quotas.

So where does Opec's reluctance leave the oil price? Whether it eases or not this summer, it is probably down to how two competing forces interact. If demand falls sharply because of a sharp slowdown in the US and elsewhere, the price should fall. But if, in the wake of the global credit crunch and falling property values, speculators continue to target commodities, like oil, there could be countervailing pressures in the opposite direction.

The oil price may not fall far, if at all, in the short term. And further out, there is a bigger challenge for customers and governments alike. Despite the arrival of $100-a-barrel oil, demand has remained stubbornly robust. Advanced economies are certainly much more efficient in their use of energy than they were during the oil price shocks of the 1970s and early 1980s.

But even with the price now moving into record territory, in real terms, our love affair with hydrocarbons shows scant signs of abating. Governments confronting the consequences of climate change face some tough choices. The further direct price hikes needed to reduce demand sharply are probably so large they come with significant political risk.

So what do politicians do? Do they try, realistically, to price that carbon dependency in other ways? Or do they, belatedly, throw money at alternative technologies that wean us all off the habit?