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Rising oil prices in recent years have merely put a drag on what otherwise would have been even more robust growth. One senior economist suggests oil price rises have not been noticed because they are the equivalent of a bruise on a galloping racehorse.
In fact, oil is still cheaper in real terms that it was after the first oil crisis. Since the 1970s there has been steady progress towards greater fuel efficiency, a shift to other energy resources especially gas and a decline in traditional manufacturing in the principal trading countries.
A combination of the Shah's fall and the Iran-Iraq war resulted in crude oil prices more than doubling from around $14 in 1978 to $35 a barrel in 1981. However, after the 1990 Gulf war crude oil prices entered a steady decline and in 1994 inflation adjusted prices reached their lowest level since 1973.
Marginal capacity
Even so, there are real causes for concern. Over the last 18 months spare capacity to produce oil has been barely enough to cover any significant interruption of supply. Some economists predict that the world is getting closer to a tipping point where recession, even slump could follow the barrel price approaching $100.
The room for manoeuvre has lessened. Global consumption, led by Asia now as much as the US, is running at 80 million- 85 million b/d, up 7 per cent from 2000 and 17 per cent since 1995.
But Iraq's oil production is down 900,000 b/d compared to before the US-led invasion. Venezuela's production has never fully recovered after a strike four years ago and is down330,000 b/d . Offshore supplies in the Gulf of Mexico are still disrupted as a result of damage caused by last year's hurricanes.
Pressures mount
Nigeria is producing about 450,000 less barrels a day because of tensions in the Niger Delta. The West's attempts to rein in Iran's nuclear ambitions are also causing pressures. There is at least a $15 per barrel premium on oil prices related to such political tension Qatar's oil minister Abdullah bin Hamd al-Attiya suggests.
Others are more sanguine pointing out that energy isn't as big a part of major economies as it was 25 years ago illustrated by countries' ability to absorb higher oil prices and their companies' ability to still record substantial profits.
On an inflation adjusted basis, oil prices would have to rise above $90 to exceed the all-time highs set a quarter of a century ago when supplies became tight in the aftermath of the Islamic revolution in Iran and the war between Iraq and Iran.
