The one thing we should not expect, though, is for China to rein back its car production - with all the implications for future oil demand.Those who stand and serve are made - unlike those who makeManufacturing in the UK has had a good summer - but services seem to have had a better one. On Friday we got figures for manufacturing output showing it had risen for four consecutive months. It is, so far, a disorganised response but the world will get better - at the tax and regulatory issues as well as the technology. Making bio-diesel or ethanol requires converting food crops - selectively bred over centuries for that purpose - into fuel crops. Suppose instead we breed crops especially for fuel, but use bio-engineering to improve the yield much more swiftly? I am not a scientist but I understand that an oil equivalent of $50-80 a barrel becomes a real possibility.The big point here is that the experience of the past year has given a huge boost not only to the hunt for mineral oil but also to the search for substitutes.
Surveys from the CBI and purchasing managers suggest that September will be good, too.Looking ahead, there are concerns that foreign demand may fall back when global growth slows (though note the impact of cheaper oil, discussed above). We can convert coal into gas and in turn into liquid fuel, but this is messy. That will fall, but it will take time.Some of the best hopes come from bio-engineering. And all these, properly costed, seem to come in at the equivalent of $100 a barrel or more.
We can convert sugar into ethanol but that is a wasteful process. The problem is that there is no general agreement on which technologies will be the winners We can grow bio-diesel but that uses huge amounts of land. The internal combustion rules for a while yet and oil remains the most convenient fuel.That leads on to the final point: what have we learnt in the past year about the practicability of oil substitutes?There is no doubt that a period of oil above $50 a barrel has created huge interest in a range of possibilities. China is already the world's third-largest car market behind the Japan and the US, and is expected to have passed both by 2013.
