Whenever there is a fossil-fuel price shock, there’s a great

temptation to think that the higher prices are here to stay, that this

is the ‘new normal’. It happened after the great OPEC shocks of the

1970s, and in the run-up to the oil price peak in 2014. All the usual

suspects who benefit from higher prices are at it again now: “prices

are going to stay high” and “we’re in for a decade of high prices”.

It's possible, but we should also consider that there could be a

reversal in gas prices. There’s plenty of fossil fuels in the world to

fry the planet many times over. And markets do usually tend to work.

The recent energy forecasts coming out of the Office for Budget

Responsibility do not model a low-price scenario. But what we have

actually seen this autumn has been remarkable resilience and

adaptation in Europe to the high prices, and to Russians turning off

the gas tap. The market has responded in both supply and demand terms,

and gas prices have come down considerably.

What does this mean going forward? What happens to the economy if the

anticipated continuing high gas prices do not materialise? What

happens to the price caps, the massive interventions, to inflation and

interest rates if and when gas prices fall further?