[Business Week]: Standard & Poor's chief economist David Wyss offers a contrarian view: 'Expect prices to slowly come down -- and if they don't, fear not. Even at $75 a barrel, we wouldn't see a recession in the U.S.'
The long-term problem is that energy demand is likely to continuing rising. The International Energy Agency forecasts that worldwide demand for energy will rise 50% from current levels over the next 20 years. Asia will account for 85% of the increase, as energy demand is outpacing gross domestic product growth in China. It's unclear where the additional oil will come from.
So, why not worry? Because
The good news is that energy is a much smaller part of the U.S. economy than it was during the first and second OPEC crises....Although total energy use is up 40% since 1973, the ratio of energy use to real GDP is down 43%... In fact, higher oil prices could cause greater damage to the Asian economies than to the U.S. China is one of the few countries where energy consumption is rising faster than GDP, while most industrial countries are reducing their power needs relative to GDP.
China is the interesting monkeywrench in the global equation. On one hand, we can expect China to move aggressively on energy efficiency, both as export and domestic opportunity. On the other hand, the sheer scale and dynamics of the Chinese economy will pressure the global energy and resource economy for decades to come.
One beneficial consequence: increased pressure on everyone to reduce petroleum dependence.