If the global financial crisis that broke out last year had one happy effect, it was to puncture the commodities bubble that was driving oil prices into orbit. When energy costs that were punishing economies like ours, and eating into everyone's pocketbooks, began falling, it provided welcome relief from the worsening recession.

However, in recent weeks, world oil prices have started heading back upwards. Some analysts have once again begun to muse about a future in which oil prices reach the lofty heights they had predicted last year, before the bubble burst. Will we see oil at $200 a barrel?

The answer is probably yes, but probably not yet. This twofold response points to a dilemma at the heart of the current global downturn. When the global financial crisis sent panic through the world's markets, prices on commodities fell as they did on most other asset classes. Anticipating a global depression, investors foresaw a collapse in demand, and resultant excess in supply. They stopped buying oil.

The aggressive response of the world's major countries to the crisis has, at least for now, restored confidence to the world's investors and consumers. With the world economy flush with cash from the spending boosts in countries like China, the United States and Britain, and with monetary loosening having thawed credit markets, there is a renewed conviction that the world economy is back on course.

However, when it comes to the world's oil supply, bottlenecks remain. Despite the talk about new energy technologies, a cheap and viable alternative to oil has yet to be found. Black gold will remain the principal energy source for the world economy for the foreseeable future.

Meanwhile, the continued growth of China, not to mention other developing countries, will drive energy demand considerably higher. There have been no major new discoveries of oilfields in recent years, and underinvestment in new development has constrained the emergence of new supplies.

This problem will probably persist, for a variety of reasons. One is that the state presence in some of the world's major oil companies - Venezuela, Iran, China - has increased at a time when the governments of some of these countries are shifting towards increased populism. Quite understandably, oil profits are more likely to be distributed to impoverished populations than to be reinvested.

Therein lies a recipe for long-term price rises. The world economy is caught in a bind. If it resumes growing healthily, oil prices will continue rising. Eventually, that could curtail the emergence from recession.

So, it's either the world economy grows slowly, or energy prices go back up. I believe that markets have lately overstated the positive news about the end of depression. It's true, there probably won't be another great depression. But a new boom is not the only alternative to a depression. A more likely scenario would be something like a great recession: not an outright collapse of the world economy, but a long period of slow growth, with periodic bouts of contraction in some countries.

Long, difficult journey

Therefore, I expect oil prices to come back down. That's the good news. The bad news is that they'll come down because we face a long, difficult journey back out of our slump.

And, when that happens, the conditions that underpin high energy prices will return. If anything, they will be aggravated by years of low prices, which will result in low investment in energy exploration and infrastructure.

The last time energy prices were low, in the 1990s, we missed the chance to invest the savings for a rainy day. We need to start preparing now for a world of $200-a-barrel oil.

John Rapley is president of the Caribbean Research Institute (CaPRI), an independent research think tank affiliated to the University of the West Indies, Mona. Feedback may be sent to columns@gleanerjm.com.