With just days to go before the Beijing Olympics, the Chinese government had all but given up working out how to clear the yellow smog choking the city, the legacy of the world's biggest, fastest and most expensive industrial revolution in history.

In London's Mayfair and St James's, and in the smarter offices of Connecticut, hedge-fund managers looked in disbelief at their half-year figures, a tsunami of red ink detailing the clatter of wealthy backers exiting in the face of collapsing investment values.

In New York, Dick Fuld, the boss of Lehman Brothers, knew full well, as did his counterparts all along Wall Street, that the game was up and it was a case of which investment banking titan would fall first.

It was early July, the day the oil price peaked at the scarcely credible $147.30 a barrel, double all previous years' oil highs.

History will tell us that, however unbelievable this “super-spike” had become, it was inevitable.

And just as inevitable was the crash that followed, taking the oil price all the way back down to below $40 in just six months.

The super-spike, it is now clear, was fuelled by an extraordinary combination of circumstances.

On the one hand was the out-of-control demand for oil and other commodities from China and the rest of the emerging world.

On the other was a financial system that inflated the oil-price bubble through reckless speculation with the reckless backing of the investment banking industry.

As the world now sifts through the remains from this oil-fuelled economic fireball, the question of where the price of crude goes now, without the perversion of crazy demand or crazy speculation, will play a key role in determining how deep and long this global recession will be.

According to a Reuters poll of 32 industry analysts, the benchmark price of US crude will average about $56 this year.

The Economist Intelligence Unit (EIU) is the most bearish polled, calling an average of $36 a barrel. Barclays Capital is the most bullish with an average of $76.For 2010, the EIU thinks the price will average $50; Barclays thinks it will average $106.

Jane Kinninmont of the EIU says its forecasts remain “despite efforts by Opec [the Saudi-led producers' cartel] to keep prices much higher”.

She adds: “Oil demand in the OECD [developed] countries is forecast to contract by 2% as severely depressed economic growth offsets the otherwise positive impact of low oil prices. In the rest of the world, demand for oil is expected to grow only modestly as the economic downturn spreads to emerging markets.

“There is a risk that oil prices could temporarily spike to a far higher level once demand starts to recover, but the current combination of relatively low oil prices and severe credit constraints already seem to be deterring much-needed new investment in oil refineries and may also deter new investment in oilfields.”

The EIU does not expect average prices to exceed $55 by 2013. Barclays analyst Paul Horsnell, however, contends: “Consensus is way, way, way wrong in terms of supply, demand and price.
“The supply indications are worse [than widely believed] and the mounting evidence of sharp falls in Opec output make us suspect that the global market is likely to tighten appreciably next quarter.”

The opinion of oil bulls such as Barclays is that as the global economy recovers, it will again be spooked by the theory of peak oil, that demand will rampantly outstrip supply and that, by Barclays' forecasts, a barrel of oil will average as much as $137 by 2015.

One man who saw last year's super-spike coming is Goldman Sachs analyst Arjun Murti. As long ago as March 2005, he was the first credible Wall Street analyst to call a surge of oil through $100 a barrel.

His argument was that the climate of fear over oil shortages at a time of overheating economies would create a 1970s-style super-spike that would only collapse when energy consumption was choked off — as it was to be in the second half of 2008 by the global recession.

According to Reuters, Goldman's forecast of an average 2008 price was the closest of any analysts' desk to the actual outcome of $95 — which appears to make Murti's views as relevant as anyone's.

His current take is that the dislocation in the oil market and the global economy will see oil fall as low as $30 a barrel next month, recovering to an average of $37 through to the summer before rising later in the year to average $45 for 2009 as a whole. Except, not so long ago Murti had appeared to have forgotten his 2005 thesis and was calling an average oil price for 2009 of $200 a barrel — not so much a super-spike as a super-plateau.

This wild diversity of informed opinion appears to confirm the worst fears: that actually no one knows where the oil price is going.

What we do know, only too painfully through the wreckage of the current recession, is that the global economy will always correct investment bubbles and unsustainable expansion. We also know that a sustained oil price of between $40 and $50 a barrel — a forecast greeted with horror in the past — seems possible and far less terrible.

About $50 per barrel is a historically high price — it equates to petrol prices above 80p a litre and household power and gas bills above £1000 a year. It means we are already in the epoch of expensive energy.