Humans are not rational beings. This is evidenced by how much agony there is over having to pay $500 more per year on gasoline than initially expected, against the relatively muted criticism towards real estate agents charging $10,000 to $60,000 for their services, or income tax preparation consuming over 10 hours of time per household per year (is 10 hours worth so much less than $500)?
But yet another interesting thought arises. Expensive oil affects the price of many things, as it inherently raises the cost of moving an object from one place to another. Corporations that need to do a lot of this, such as Wal-Mart, Federal Express, or United Airlines, see their costs rise, and have to both raise their prices and trim their staffing levels.
This seems like bad news for the US economy, until one considers the following :
Other countries also have such industries, and are also hit by higher oil prices. Countries that many fear will overtake the United States, such as India and China, have economies even more dependent on oil than the US. Sectors like automobiles, steel, aluminum, airlines, and concrete are actually growth industries in India and China, where the majority of people are yet to become consumers. If half of the people who have cars today did not have cars five years ago, then the increase in gasoline costs is a much larger percentage of their income than it is for an American. $500 a year more for gasoline actually is a lot for those who make $10,000 a year and just bought their very first car. Chinese and Indian consumer spending is much more sensitive to $70 oil than US consumer spending is.
At the same time, US corporations such as Google, Yahoo, Goldman Sachs, Pixar, Citigroup, or Oracle are much less vulnerable to high oil prices. Yet, these knowledge-based businesses are the ones that have created most of the new wealth in the US during the last 25 years, and are the industries in which America's dominance over the rest of the world is the largest.
So in conclusion, high oil prices hurts some of our industries, but it hurts those industries in other countries to the same degree if not more, and the industries which are less affected by high oil prices are already the industries in which America is ridiculously far ahead of the rest of the world.
So high oil prices actually increase the gap between the US economy and those that would seek to catch up to it. If oil hits $100/barrel, US GDP growth may drop from 3.5% to 2%, but China's GDP growth may drop from 10% to 4%.
Food for thought...