Today's Oil Price vs. 1979
Oil would have to average $100.52 for the entire month to be as high as the price we saw in December of 1979. But we are "only" paying about one half that amount. Another factor that makes the Oil price worse in 1979 is the fact that back in '79 interest rates were two to three times higher than they are now, peaking in the high teens. Combine lower mortgage rates with lower taxes and the modern household actually has $500 extra cash available each month... which will buy a lot of gasoline.
Apparently, we are approaching a similar bying-power cost point in oil prices, but we have a far better economy to absorb that pain, so even equivalent spending value will keep us in a slightly better position (unless the economy tanks).
I've always regretted that the US governement didn't have the political courage to invest in better energy technlogy back in the 1970's, but paying high retail prices for a couple of years might be the equivalent of a grass-roots tax that opens up motivations for markets on an issue where the US government failed.
[image] "Oil Price History and Analysis" WTRG Economics (Accessed 1/1/2007)
"Why Oil Prices haven't Crippled the US Economy Yet" Financial Trend Forcaster (Accessed 1/1/2007)