The price of a barrel of oil was $10 in the spring of 1998, and hit $133 a barrel as of this writing, a record in both real, inflation-adjusted dollars no less than absolute dollars. The price rise, some argue, is reflective of the falling value of the US dollar as much as anything else. But that argument holds no water when it’s noted that the cost of a barrel in Canadian dollars has risen from $13 a barrel ten years ago to $133 today—hardly a noteworthy difference.

There is also speculation, especially among important oil producers like the Saudi minister of oil, that speculators are to blame for driving prices so high. But this argument is also conclusively dismissed by always-stellar Globe and Mail business columnist Eric Reguly. The annual oil market is nearly $4 trillion in traded value, he noted recently, and is far too large a monster for any band of speculators to push around.

Then there is the perennial strikes in Nigeria, “concerns” in Venezuela, pipeline explosions in Iraq, threats of war in Iran and so on. The US congress this week approved a bill to sue OPEC for price fixing.

Every reason to explain astronomically high oil prices has been tried by governments, banks, oil companies, analysts and pundits, except for the one simple and obvious reason: supply is shrinking.

Peak oil is nothing new. Oil production peaked right in the first year it was commercially mined. It has been at peak production virtually the whole century and half since. All commodities are almost always at peak production. What changes, sometimes slowly, sometimes dramatically, is price. If you offer $5 for a barrel of oil, as traders once did a few decades ago, you will experience first hand peaked oil, and get none. If you offer $300 for a barrel, on the other hand, you can have virtually all you could ever want and you won’t know peak oil for a long time.

Price affects demand far more than it affects supply, especially in the investment-intensive oil producing industry. Prices go up to lower demand to the point where it falls in line with supply again. If demand is below supply, prices will drop, which raises demand until, again, it meets supply. The price of oil is high and rising steeply for the simple reason that demand is higher than supply. Prices will continue to rise until demand comes down to the level of supply. (Supply may also rise, but only a little and only very slowly, since so much time and investment is required to find, drill, process, market and deliver new oil.) That is, prices will keep rising until enough consumers of oil and oil-based products stop buying it. Since oil is intensively and intimately involved in just about everything consumers and companies buy, it means that oil will rise in price until consumers stop buying virtually everything.

The reason governments, including our own, oil companies, banks, analysts and pundits search desperately for other more convoluted and increasingly nonsensical reasons for high and rising oil prices is because the implications of the cold hard fact of necessary reductions of virtually all human activity to stop prices rising ever higher are too frightening to bear and too all-encompassing to grasp.

Less oil usage is no longer a plea by environmentalists or a cry from the loony left. It is the unappealable and unavoidable decision of the market economic system. The iron-fisted hero of Ayn Rand (ex-US Federal Reserve chief Alan Greenspan’s hero), and oracle to every think tank, business council and political party the last three decades has uttered a new pronouncement and its word is final: the world and every nation, company and individual within it, rich or poor, right or left, powerful or powerless, will use less oil, period, full stop, no ifs ands or buts. The market is not saying we should try to use less oil or that it would be wise to use less oil or even that we should be preparing for that eventuality. The oracle’s statement is brief and unambiguous, as it always is: we will use less oil and prices will rise inexorably until we do.

The market doesn’t care what that means for corporate profitability, unemployment, housing starts, inflation, central bank lending rates, currency transactions, commodity prices, US presidential elections, war, famine, global warming or airline bankruptcies. Everything can go south for all the market cares. Because the oracle is not making a suggestion, it is not making a prediction, it is saying what will be, and if everything comes apart as demand for oil finally drops, so be it.

After investing so much for so long in the unerring wisdom of the pronouncements of the market, no government, oil company, bank, think tank, analyst or pundit can now declare that on this, the market’s biggest call in its long career as most high priest, is wrong. But that is exactly what they are all doing. It is speculators skewing the market’s message, it is strikes or saboteurs muddying the message, or it’s the OPEC cartel interfering with the market. Anything, this time, but the market speaking clearly. Yet on this topic, the market has never spoken more clearly.

There’s an understandable reluctance on the part of forecasters, be they ministers in government, analysts at investing firms, or pundits at mainstream newspapers, to engage in Chicken Little talk of the sky falling. But that’s only when it’s suspected of falling on the heads of their clients and benefactors. If a building housing the working poor is sold and closed and knocked down to make way for more high-end condos, none of the governments, analysts and pundits have a problem with finding the market true and wise to bring the sky down on the heads of the residents therein. When a community of small independent businesses is shuttered after a WalMart sprouts down the road, not one of them show a reluctance to hear the market speak clearly in its dreadful message harkening the end of a whole community. When towns lose their lumber mills bringing the sky falling down on the families, schools and homes, why, that’s the market being the market, they all say, and there’s no fighting it even if it’s the end of 100 years of history in a BC valley. But when that same market no less and no more callously brings the sky down on the Canadian Council of Chief Executive Officers, it must be mistaken, it must be fought, it must be denied: surely we mustn’t, they cluck, engage in doomsday talk now. And yet, after sitting idly by praising the wisdom of the market with its doomsday messages for our families, businesses, towns and jobs, now they expect us to care, to respond, to do something now that it’s them who are getting the doomsday message.

But I’m afraid they sold the unassailable wisdom of the market all too persuasively the last 30 years. Everyone by now knows and agrees: when the market speaks, listen or ignore as you wish, but you will obey. There is no fighting it, we all know that now. The market has said our industries will use less oil, and so they shall, even if it means, like one community after another, like one town after another in one valley after another, shutting down and going out of business. It is a wise, if harsh, oracle, we know, we know.