THE OIL CRUNCH IS COMING, SAYS KRUGMAN

Paul Krugman:

The collision between rapidly growing world demand and a limited world supply is the reason why the oil market is so vulnerable to jitters. Maybe we'll get through this bad patch, and oil will fall back toward $30 a barrel. But if that happens, it will be only a temporary respite.

In a way it's ironic. Lately we've been hearing a lot about competition from Chinese manufacturing and Indian call centers. But a different kind of competition — the scramble for oil and other resources — poses a much bigger threat to our prosperity.

So what should we be doing? Here's a hint: We can neither drill nor conquer our way out of the problem. Whatever we do, oil prices are going up. What we have to do is adapt.