The fluctuating price of oil has always had a corresponding effect on the economy. The Guardian The 70s have returned to haunt us with a vengeance. First it was flares and disco, now the soaring price of oil is threatening a re-run of that decade's energy crisis. Then the spike in oil prices heralded the onset of a global recession.
Some economists think the seeds of the next one have already been sown.
Yet there are good reasons for believing the impact of dearer oil will not be anything like as damaging this time around. The first is that the real level of oil prices is not that high, after taking inflation into account. But they are not that far off their long term average. Moreover, the price is likely to fall. Until now prices have been propped up by two things, First there is rising world demand as the global economy recovers from the slowdown associated with the financial crisis which swept markets in 1997 and 1998.