Gas could be in the $1.40 to $1.50 per litre range this summer.

Crude oil's price broke US$135 per barrel in overnight trading before settling down today.

How can we cope?

If you're in the auto industry, follow the consumers and build vehicles that use less fuel -- a decision that Ford announced today:

Ford Motor Co. is cutting North American production of pickups and SUVs as car buyers eyeing record gas prices turn toward more fuel-efficient models. The auto maker says it no longer expects to return to profitability by 2009 and didn't rule out layoffs and plant closures.

Dearborn-based Ford also on Thursday cut back its projections for total U.S. light vehicle sales in 2008 to between 14.7 million and 15.1 million vehicles. That's down from 17 million vehicles as recently as 2005. Light vehicle sales exclude heavy trucks.

“We all would like the basic business environment to not have deteriorated, but clearly the most important thing we can do for the long-term success of the Ford Motor Company is deal with this reality,” Ford President and Chief Executive Alan Mulally said in a conference call.

An interesting factoid in the story: In 2004, SUV and pickup sales accounted for 70 per cent of Ford's production. In April, they accounted for 30 per cent, according to Ford analyst George Pipa.

Nissan wants to introduce an all-electric car to market by 2010, with wide availability by 2012.

Meanwhile, in Japan, people aren't panicking about pricey oil, according to this May 21 G&M piece by Marcus Gee:

At a time when other major economies are slurping oil at a record pace, Japan has actually reduced its imports to around 4.12 million barrels a day in 2007 from five million in 1973.

Increased energy efficiency is saving Japan about $140-billion a year, calculates Robert Feldman, the managing director of Morgan Stanley in Japan. Japan's consumption of oil per unit of GDP has fallen to one-third of its 1973 level.

Japan certainly looks good against other major economies. The U.S., the world's biggest net importer of oil, brings in about 13 million barrels a day, up from about six million in 1973. China, the third largest importer, just behind Japan, has seen imports grow to 7.8 million barrels a day as of last year, up from 4.2 million in 1997, a rise of 86 per cent.

How has Japan done it? Necessity, as ever, has been the mother of invention. Unlike China, which has plentiful supplies of coal, and the United States, which has lots of coal and enough oil to supply a good part of its own needs, Japan relies almost completely on foreign sources for its oil, coal and natural gas. Some of the answers have come from developing nuclear energy and new technologies, while old-fashioned conservation has also played a role. ...

Despite all this progress, Japan still has a long way to go on the energy front. Host of the meeting that produced the Kyoto accords, Japan has seen its emissions rise by close to 7 per cent from 1990 levels.

The government has tried to dig its way out of economic trouble by building kilometres of new roads and highways, using up tons of oil for asphalt and construction machinery while encouraging car use. Shutdowns and maintenance problems in the nuclear industry have made the government's plans to raise the share of Japan's electricity coming from nuclear to 40 per cent look unrealistic.

As Morgan Stanley's Mr. Feldman notes, Japan still imports 82 per cent of its primary energy, a reduction of only five percentage points from the time of the oil shock more than three decades ago.

Still, Japan's effort to control its energy use is impressive. It will suffer like every other oil-importing economy from the dramatic runup in oil prices, but without a national effort on energy it would have been a lot worse.