The impact of $60 oil prices in 2006 is very different indeed from the impact of high oil prices in the 1970s or 1980s. Energy is becoming a less important part of the global economy. Oil expenditure is currently about two percent of US gross domestic product, one quarter of what it was in 1980.

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The price of oil deflated by the U.S. consumer price index would have to be above $110 a barrel to match the prices seen in the early 1980s. So say $55 a barrel today would be the equivalent in real terms to a price of less than $20 in the early 1980s.

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If the oil price moves up, companies will be cutting back on labor costs. Corporate behavior and individual behavior seem to be a lot different.

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