Could the bad old days of economic decline be about to return？ Since OPEC agreed to supply cutsin March， the price of crude oil has jumped to almost $26 a barrel， up from less than $10 last December.This neartripling of oil prices calls up scary memories of the 1973 oil shock， when prices quadrupled，and 19791980， when they also almost tripled. Both previous shocks resulted in doubledigit inflationand global economic decline. So where are the headlines warning of gloom and doom this time？
The oil price was given another push up this week when lraq suspended oil exports. Strengtheningeconomic growth， at the same time as winter grips the northern hemisphere， could push the price higherstill in the short term.
Yet there are good reasons to expect the economic consequences now to be less severe than in the1970s. In most countries the cost of crude oil now accounts for a smaller share of the price of petrolthan it did in the 1970s. In Europe， taxes account for up to fourfiflhs of the retail price， so even quitebig changes in the price of crude have a more muted effect on pump prices than in the past.
Rich economies are also less dependent on oil than they were， and so less sensitive to swingsin the oil price. Energy conservation， a shift to other fuels and a decline in the importance of heavy，energyinteusive industries have reduced oil consumption. Soitware， consultaney and mobile telephonesuse far less oil than steel or car production. For each dollar of GDP （in constant prices） rich economiesnow use nearly 50% less oil than in 1973. The OECD estimates in its latest Economic Outlook that， ifoil prices averaged $22 a barrel for a fill year， compared with $13 in 1998， this would increase the oilimport bill in rich economies by only 0.25%0.5% of GDP. That is less than onequarter of the incomeloss in 1974 or 1980. On the other hand， oilimporting emerging economies to which heavy industryhas shifled have become more energyintensive， and so could be more seriously squeezed.
One more reason not to lose sleep over the rise in oil prices is that， unlike the rises in the 1970s，it has not occurred against the background of general commodityprice inflation and global excessdemand. A sizable portion of the world is only just emerging from economic decline. The Economistscommodity price index is broadly unchanging from a year ago. In 1973 commodity prices jumped by70%， and in 1979 by almost 30%.
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