Margareta Pagano: Eco-warriors couldn't do it, but the black stuff might consign the car to history

The combustion engine won't be economic if people can't afford petrol

As if it were an invisible amendment to the constitution, Americans believe that cheap gasoline is as inalienable a right as the one to bear arms. It's not just the long distances they have to travel but the freedom they enjoy to drive along those great open highways. As Henry Ford said: "I had to invent the gasoline buggy to escape the boredom of the farm."

But the price rise at the US pumps is putting paid to those notions. The car maker that Henry Ford founded 105 years ago admitted last week that it was going to slash production levels by 15 per cent this year and was unlikely to return to profit next year.

Congressmen are calling for emergency oil supplies to be released, while police in Chi-cago have started patrolling by foot. Families are cancelling their vacations because of the cost of gasoline. In some states there are fears of a "sub-prime" crisis mounting up in car-related debt as many buyers were persuaded to take out what looked like cheap deals on the back of low interest rates.

Here in the UK we seem to be more immune, for now, to price rises, although the voters at Crewe will have factored petrol into their decision. Over the past few years it has gone up from 70p to £1.14p a litre. Households have still to face the real cost of this and other recent price rises because manufacturers have yet to pass on their own higher costs.

But the fuel crisis begs a bigger question. Are we watching the end of the car as we know it? Car makers are historically averse to changing production methods, but there must be a point at which it is no longer economic for them to produce internal combustion engines, because people will switch off – like the Chicago police. There is also a point at which you and I, the customers, will think twice about which vehicles we buy and where we will travel in them.

Despite the industry's conservatism, there is still huge potential for more tinkering with the combustion engine, if not morally then technologically. Car makers already have the technology to produce ordinary cars that can run for 200 miles a gallon but until now the price of oil has not justified mass production.

BMW is probably the leader of the pack, having made a car that can do 60 miles a gallon, using energy only when the pedal is engaged. It has also designed what will probably be the car of the future: a hydrogen-powered model – hydrogen being the most perfect cheap and clean fuel there is. The only problem is, you can't buy it anywhere; to date, the distribution costs are too huge.

But this could change too, quickly, if oil were to continue rising. Fuel cells, being developed by manufacturers such as Rolls-Royce (the aerospace company not the car maker), are the next big thing. Suddenly, need becomes the mother of invention and you will find the car industry accelerating its investment in alternative technologies in a really serious way.

Forget hybrids and LPG cars; these are gestures to the green agenda rather than the next generation of cars. The Toyota Prius's batteries, for example, are guaranteed only for 60,000 miles, at which point their owners may well dump them, as no one has yet come up with viable and longer-term batteries. As Stephen Bayley, design guru, car fanatic and writer, has pointed out, the really eco-economic cars are luxury ones such as the Ferrari – mostly hand-made so its manufacturing impact is low. Their owners don't drive them very much and no one has ever scrapped a Ferrari.

But Bayley has a bigger issue for us to ponder. He thinks the car, however magnificent and whatever the power, is doomed, certainly in the West. Travel has been a privilege and a delight for most of the past century. Now, with congestion on the roads and airports that come close to Dante's Inferno, travel is an ordeal. He predicts the end of commuting, more and more shopping and working online, and travelling far less. Meanwhile, Bayley's new book, Cars: Freedom, Style, Sex, Power, Motion, Colour and Everything, will be published this autumn.

Nuclear power just like Mamma makes – or what the Italians can teach us

It's been a nuclear week. In an astonishing volte-face, Italy's newly appointed government agreed to build nuclear plants, overturning a ban in force since the Chernobyl explosion more than 20 years ago. Soaring energy prices and the country's dependence on Russia and Algeria for its energy supplies, coupled with environmental considerations, have persuaded the sceptical population that nuclear could be a clean and safe option. Italians pay more than anyone else in Europe for their energy.

Enel, the country's biggest energy provider through coal-fired electricity, would be the most likely operator. It already runs plants in Bulgaria and other European countries and is at the cutting edge of developing fourth-generation nuclear reactors.

The rehabilitation of nuclear in Italy is echoing around the corridors of Europe as governments seek alternatives to fossil fuels. On Thursday, Jose Manuel Barroso, president of the European Commission, spoke out in favour of nuclear, adding that it might help in the fight against global warming.

This is why it's so bizarre that the British Government isn't backing a British solution to the ownership of British Energy, whose auction is being conducted in the most cack-handed way.

British Energy has results out this week but I'm told the directors are not going to say anything about the potential bidders. Only EDF, France's subsidised nuclear operator, has put in a formal bid; its French counterpart Suez pulled out last week. RWE and Ibedrola are said to be mulling offers.

Providing 20 per cent of our electricity, British Energy is crucial to the UK. It operates eight power stations, many of which will soon be past their sell-by date. More importantly, it owns the sites for any future development of the next generation. It needs partners to do this but they should be sought here in the UK, not overseas. Clearly the Government is desperate to get the £3bn or so for its 35 per cent stake, but it should be pushing for a British partner.

Check it out: Burberry is dancing round the handbags

All eyes will be on the Burberry check this week to see if the famous retailer has finally thrown off its "chav" image.

Although sales have been trickier over the past few weeks, Burberry is set to buck the gloom with full-year results on Wednesday showing pre-tax profit up to around £196m.

The American chief executive, Angela Ahrendts from Indiana, is likely to say that trading is holding up despite the economic downturn, helped by good growth in the Far East where the Japanese taste for the brand is still strong. Burberry now has 97 shops worldwide – 35 of which are in China – and 230 concessions.

The company went really big with handbags last year, selling its gold alligator Warrior bag for a whopping £13,000. Apparently handbags now account for a third of sales and Ahrendts is hoping to do the same this year with shoes.