The whole debate over petrol prices is starting to get silly. I know oil prices are at record levels and the damage to the economy could be substantial but unfortunately governments really can't do that much about it.

Australia is caught up in a global phenomenon and it is simply unrealistic to expect the Federal Government to wave a magic wand and bring back the old days. We have to adjust our behaviour to limit the financial pain.

Sure they can cut the excise on petrol but this would put a huge dent in government revenues, meaning there would have to be a trade-off and a cut in expenditure elsewhere. Some countries with subsidised petrol prices have been forced to scrap these because they were sending governments broke.

Rather than artificially cushioning petrol price rises, maybe we should invest more in reducing our dependence on oil and developing renewable energy sources at a faster rate.

It's also worth bearing in mind that most markets have "tipping points" where prices rise to a certain level and then some factor will tip the balance of momentum and prices will fall and stabilise at a different level.

We've seen that in some of the grain markets in the past few months. For example, last year the price of rice tripled but fell by 30percent in recent months because governments built stockpiles and limited exports while consumers looked for alternative staple foods.

I have no idea what factors will bring about oil's tipping point. It could be reduced demand as industrialised economies slow, increased production from OPEC (Saudi Arabia is increasing production and Iraq is back to pre-war capacity), new discoveries which become viable at the higher price, a shift to renewable alternatives or a combination of these factors.

History tells us market pendulums overshoot on the high and low sides but invariably shift back to an acceptable medium over time.

Rather than a knee-jerk reaction to satisfy short-term public opinion, governments are often better off hanging tough and riding out the swings.

That's not to say we'll see the oil price back down to $US30 a barrel as it was five years ago because the fundamentals have changed thanks to the booming economies of China and India.

Even if these economies slow on the back of weaker demand from big customers in Europe and the US, they will still be solid because of their own rapidly expanding domestic market. Their burgeoning numbers of middle-class consumers have an enormous thirst for luxury items.

There are some pretty amazing figures around at the moment which give some idea of just how powerful China and India are becoming and the amount of money being invested to keep pace with their economic development.

Investment bank Morgan Stanley predicts emerging economies will spend $US22trillion (that's $1000billion) on infrastructure during the next 10 years and China will account for just under half that amount.

China already spends 12percent of its gross domestic product on infrastructure every year.

The country has spent more on infrastructure in the last five years than it did in the whole of the 20th century.

Goldman Sachs says electricity capacity will have to rise 140percent in China and 80percent in India over the next decade to cope with each country's projected economic growth.

During that time, air travel within China will jump by 350percent and within India by 200percent.

These are mind-boggling numbers that show these two massive economies have enough growth internally to offset any slowdown by overseas customers.

More roads, airports and railways are needed to support manufacturing, farming and exports. As a result, shipping rates - the cost of hiring the huge bulk carriers needed to export goods - are at record levels.

The world has exported its manufacturing to China and India (and its resultant pollution problems) and the momentum is, if anything, increasing.

While Europe and the US slow, Australia is in an ideal geographic position to be a major continuing resource supplier to these emerging economic giants.