The LA Times asks what such a world would look like. I think it’s a difficult question to answer — it will depend a lot on our policy response. Clearly, if we keep spending priorities and regulations in place that were formed when oil was cheap, but then oil becomes massively more expensive, then the results will be terrible. But not only would that be a bad idea, I’m fairly confident it won’t happen — it just wouldn’t make sense. The question in play is when will politicians stop offering McCain-style gimmicks and start recognizing that relatively expensive oil (I won’t make specific predictions about $200 / per barrel or anything else) is likely to be the long term trend so we should respond accordingly.