How oil shocks have become less shocking

THE OMENSOPEC are bad for the world economy. When oil prices surge, growth typically moves in the opposite direction. Sometimes the price shock begins with a political earthquake, like the Suez crisis of 1956. Sometimes oil producers deliberately create the shock, as with the embargo of 1973. And sometimes the culprit is soaring demand, such as when oil prices hit record highs in 2008. The common denominator in all these cases is that America and most other rich countries soon enough faced recessions.So it would hardly be surprising if the current surge in oil prices—a doubling in three months, fuelled by Russia’s invasion of Ukraine—foreshadows a sharp downturn in growth. Pictet, an asset manager, counts six episodes since 1970 in which real oil prices rose by more than 50% from their previous trend; each preceded a recession. As of late February oil prices had already surpassed this 50% threshold, and have only climbed higher since then.