TEXT C Could the bad old days of
economic decline be about to return Since OPEC agreed to supply-cuts in March,
the price of crude oil has jumped to almost ＄26 a barrel, up from less than ＄10
last December. This near-tripling of oil prices calls up scary memories of the
1973 oil shocks resulted in double-digit inflation and global economic decline.
So where are the headlines warning of gloom and doom this time
The oil was given another push up this week when Iraq suspended oil
exports. Strengthening economic growth, at the same time as winter grips the
northern hemisphere, could push the price higher still in the short
term. Yet there are good reasons to expect the economic
consequences now to be less severe than in the 1970s. In most countries the cost
of crude oil now accounts for a smaller share of the price of petrol than it did
in the 1970s. In Europe, taxes account for up to four-fifths of the retails
price, so even quite big changes in the price of crude have a more muted effect
on pump prices than in the past. Rich economics are also less
dependent on oil than they were, and so less sensitive to swings in the oil
price. Energy conservation, a shift to other fuels and a decline in the
importance of heavy, energy-intensive industries have reduces oil consumption.
Software, consultancy and mobile telephones use far less oil than steel or car
production. For each dollar of GDP (in constant prices) rich economics now use
nearly 50% less oil than in 1978. The OECD estimates in its latest Economic
Outlook that, if oil prices averaged ＄ 22 a barrel for a full year, compared
with ＄13 in 1998, this would increase the oil import bill in rich economies by
only 0. 25-0. 5% of GDP. That is less than one-quarter of the income loss in
1974 or 1980. On the other hand, oil-importing emerging economies—to which heavy
industry has shifted—have become more energy-intensive, 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 commodity-price inflation and global excess
demand. A sizable portion of the world is only just emerging from economic
decline. The Economist’s commodity price index is broadly unchanging from a year
ago. In 1973 commodity prices jumped by 70%, and in 1979 by almost 30%. From the text we can see that the writer seems ______.