Crude attacks on a man who gets oil price right

It's been a one-way bet for some time and not all of the experts have been on the correct page. Murti has been calling this right for longer than most, a brave stance in a sector where, until recently, talking about "peak oil" or suggesting Western economic policies aren't sustainable got you lumped in with the types who insist the moon landing was faked.

His employers, Goldman Sachs no less, might have wished his views weren't publicised but it's hard to fire someone for being repeatedly right.

Murti's most recent estimate is that oil could hit $200 a barrel in the next two years, but that's his most pessimistic outlook. A bit lower than today's $133 is his best guess for next year.

When it comes to oil, the word guess seems a fair description of any prediction.

If you hear someone arguing with certainty what will happen in the oil market, assume that person is bluffing. Oddly, given its importance, the gaps in our knowledge are huge. We don't know how much there is left, we don't know how much of it is drillable and we don't know how much the big oil countries have on hand (Saudi Arabia offers figures, but they aren't verified).

Murti may be the only oil man who thinks the world running out is a good thing on the basis it will lead to investment in renewable resources and less damage to the environment.

The oil industry has a long history of attacking those who dare to upset the status quo. In 1956 when Shell geologist M King Hubbert said American oil production would peak in the early 1970s, the experts laughed in derision. He was right, which is why America now imports two thirds of its oil.

Colin Campbell, who used to work for Texaco and BP, said a few years ago that Saudi reserves are much smaller than claimed and that there will be a "chronic long-term shortage" starting in 2010. He's been more or less ostracised ever since.

At this point Murti seems too influential to suffer the same fate, but his rising profile did prompt an unusual response from rivals at Barclays Capital. The revelation that he owns two hybrid cars had BarCap's oil team muttering about hypocrisy and joking that Murti's fame will lead to him being pursued by the paparazzi and Angelina Jolie - they might be jealous but they are funny.

To suggest, as some have, that Murti is only predicting high prices to attract attention or that these predictions cause the high prices seems absurd. Prices won't stay high unless most investors believe the story has merit.

Similarly, commentators noting that wheat and barley have recently seen their bubble-inflated prices sink and suggesting it could happen to oil are missing something obvious: we can't grow more oil. The oil team at Credit Suisse wrote in a note last week that it thinks the right price for oil is between $90 and $150. With a spread that wide, they might as well come clean and admit they've no idea.

Folk in the City make predictions so I don't have to, but I will venture this: demand for sensible explanations of where the oil price is going will continue to outstrip supply.

Why airlines are giving cattle class a downgrade

A brief lull in otherwise constant office excitement, and the question was teased: how much does it cost to fuel a plane for a round trip from London to New York?

The top guess around these parts was 15 grand.

According to brokers Daniel Stewart, it's actually £44,000, up from £29,000 just a few months ago.

This explains why airlines are going bust and why £200 tickets for a long weekend in Manhattan are history.

Fuel costs are typically a quarter of the total costs of any flight - and most of the other expenses are going up too.

A typical 747 flies 400 when full, so they'd have to pay an average of £110 each just to cover the petrol.

Airlines need lucrative first-class passengers more than ever, and some of them are beginning to wonder if they can justify the expense, and if it's really as bad in economy class as the butler claims.

In order to make sure the top folk don't find it bearable in the back, airlines will be trying to make the experience even worse than it already is.

Plane executives are at this very moment brainstorming on innovative ways to make economy class less pleasant.

How to hold those bankers' big bonuses in check, Alistair

News that bankers have taken £13 billion in bonuses so far this year will prompt the usual flurry of toothless complaints - unions can "demand" an inquiry and the rest of us can seethe.

It's only a few weeks since Bank of England Governor Mervyn King conceded that banks are run in the interests of bankers and not investors when he said: "Banks have designed compensation packages which provide incentives that are not, in the long run, in the interests of the banks themselves."

Angela Knight of the British Bankers Association told him to mind his own business, but if reckless pay that endangers the financial security of the public isn't Mervyn's business, then what is?

Bankers get paid for closing deals - for volume. The quality of the deals, the profits made, are barely relevant.

What's to be done? Anti-regulation fanatics like to argue that while the current system is broken, government interference can only make it worse.

Complaining about the status quo but insisting there's no point changing it seems lame - as if the speaker's main interest was in getting his own piece of the action.

It would be preferable if new laws weren't needed to sort this mess out, but the banks have had years to put their houses in order and clearly won't unless they are made to.

So how about this: banks should have to hold a big portion of bonus pay in escrow until the risks taken are deemed worthy of reward.

If the banker advises that this new whizzy financial instrument or that merger will start to pay off in 2020, then that's when the bonus arrives - supposing he's proven right. If the deal he stitched together unravels before then - bad luck, no bonus, and the money held in escrow goes to paying off the debts.

This is not an attack on the risk and reward system the City says it can't live without (bankers just doing the right thing is not possible), it is an attempt to align the two.

If Chancellor Alistair Darling, say, proposed this idea, banks would do what they always do when under attack - act like they are a powerless, unfairly maligned bunch of single mothers and threaten to take their ball away. Let them.

Labour has lost the City anyway, so Darling has little to lose.

The escrow idea isn't perfect. It has holes. But we could do a lot worse. We usually do.