Inflation, maybe stagflation, rising-to-expensive oil and gas prices, supply chain disruptions, gridlock over government debt, new currency regimes, threats from foreign competitors, Sox face Yankees in a one-game playoff—remind you of anything? It’s the 1970s, all over again.

After all, we’ve learned about reasons not to use oil and about new technologies that can replace it, we still live in fear of its spiking price, and it still drives inflation. And we still get offers from its politically unsavory suppliers—most recently, OPEC and Russia—to step up and save us from shortages.

This has a lot to do with the fact that our dependence on oil is still very real. For all the solar panels on our roofs and the windmills stretching across our prairies, total conversion is going to take a while and be messy and bumpy as it comes. And this may be one of those episodes.

It turns out that oil demand is still robust, as is painfully obvious as developed economies ramp up following pandemic shutdowns. Most of our transportation still runs on fossil fuel, certainly the large-scale ships and planes, and that means that most of our supply channels are still dependent on it, and to get them moving smoothly again, demand for oil increases.

In most of the northern hemisphere, oil or gas still heats our homes. So, coming into winter, demand is rising. And in most places, the transition to an oil-less future, on the consumer level, is complicated by the many personal and political decisions that will move that along. Meanwhile, we demand oil.

In other parts of the world, oil demand is being accelerated by a shortage of natural gas, especially in Europe, and a spiking of natural gas prices, which makes oil an attractive substitute again.

The oil industry had seemed to be in the dotage of its life cycle, with its main product becoming too damaging to use. Oil producers were beginning to remodel themselves as “energy” companies and diversifying into other fuels, such as renewables, to generate alternative revenue streams. Even before the pandemic, they had been scaling back oil production due to the excesses of the shale boom; at one point, inventories were so robust that the price actually went negative: it was more costly to store oil than to use it. During the pandemic--and coupled with the current and continued uncertainty of slowdowns or even shutdowns—production was dampened even further, and now supplies are unusually low.

But the infrastructure—the rigs and pipelines and refineries—is still there. As demand renews and prices rise, it can all be put back into production. And a financial infrastructure, a pipeline of capital, also remains to prime those pumps.

Anticipating oil obsolescence, retail investors had pulled back from publicly traded oil producers as politically incorrect, but they should be poor investments too: as producers of fossil fuels, they are the remnants of a dying industry with little or no prospects for growth. In turn, retail funds have been shedding those stocks in order to market themselves as “socially responsible” investments.

But as public firms have divested, private equity firms have been snapping up those oil company assets. Since private equity firms can be opaque in their dealings and holdings, they are not exposed to the cost of public opinion and can afford to reap the profits from remaining demand.

As markets come back into balance, as post-pandemic economies come back into balance, demand for oil will again recede. The long-term trend seems overwhelming: we simply can’t continue to burn oil much longer, and eventually it will become obviously financially unsound to do so. That will shut off capital, finally, from investors as well as consumers.

But we will probably lurch toward that future, and along the way, there will be more price spikes. As the overall trend dominates and oil becomes less well supplied and global inventories drop, any demand fluctuations will be riskier and more costly--and more profitable--providing some incentive for some producer to stay in the game until the last drop is gone. Likewise, while most investors will get out, some will stay in, hoping to scoop up the returns to be had on the way down.

The oil industry is not facing extinction because it is not profitable, but only because it is not sustainable, for nonmarket reasons. Until the market forces that drive it weaken enough, it will still drive our market volatility and our inflation, if not our cars.