Oil shocks, almost always a function of devalued dollars, have historically triggered calamitous economic turmoil.
The other bad news for Arab states is that oil shocks aren't what they used to be.
"That's why we've been seeing the most rapid productivity rise since the oil shocks of 1974, " says Hausman.
But America and its friends are becoming much less vulnerable to oil shocks.
That leaves nuclear power, which charms Brazilian import-substitutors much as it did European ones after the oil shocks of the 1970s.
This promising start, however, was kyboshed by the two oil shocks of the 1970s, and even more by a knuckle-headed policy response.
There were two oil shocks as inflation surged into double digits, interest rates eventually reached 20% and unemployment remained a big problem.
Economists have consistently underestimated the impact on growth of previous oil shocks.
The development of futures market, which did not exist in 1973, allows consumers and firms to insure against the financial consequences of oil shocks through contracting.
In the early years of fiat money, inflation took off, especially in America, in part because of the two oil shocks of the 1970s.
Many argue that the latest jump in oil prices is far more modest than it was in the two oil shocks of the 1970s.
Uncertainties about the future course of pivotal Persian Gulf states like Iran and Saudi Arabia are exacerbating concerns about future oil shocks and their economic consequences.
The late 1960s saw investigations into government contracting, while the 1970s added energy shortages to the agenda in the wake of "oil shocks" as well as national security issues.
When joblessness rose after the 1970s oil shocks, Europe's governments, pressed by strong trade unions, kept labour markets rigid and tried to cut dole queues by encouraging early retirement.
As complex as some of these adjustments might seem, Cachon is confident that retailers will adapt more quickly than in previous inflationary periods, such as during the 1970s oil shocks.
In the early 1980s, Japan was able to repair the damage inflicted on its finances by the previous decade's two oil shocks without fundamental reform to its system of public finances.
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The saving surplus in East and South-East Asia is the legacy of a bust both more recent and more spectacular than the 1970s oil shocks: the Asian financial crisis in 1997-98.
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One reason is that OECD economies are less energy-intensive than three decades ago when the first oil shocks occurred, thanks to the shift out of manufacturing into services and information technology.
Oil shocks have frequently instigated such large scale dissonance.
Since the 1970s, through oil shocks, Middle East wars, terrorist attacks and disease outbreaks, the number of passenger-miles flown seems always to have snapped back to its long-term growth trend (see chart 1).
Mr. Emanuel noted, correctly, that the U.S. largely squandered the opportunity the oil shocks of the 1970s presented to make serious, long-term changes in its energy habits -- a failure that has returned to haunt the nation today.
In many cases, they do not have access to abundant sources of energy and have sought efficiency as a matter of energy independence--in the case of (No. 2) Denmark as an urgent national priority since the oil shocks of the 1970s.
When life-cycle costs are compared, natural gas is currently a more economical decision than flex-fuel powered vehicles, although both are more expensive than gasoline at current figures (keep in mind that these dynamics could change due to oil shocks or increased demand for traditional fuels both real risks).
Even in the face of a Great Depression, a World War, a Cold War, recessions, oil shocks, inflation and unemployment, Congress never sought to require the purchase of wheat or war bonds, force a higher savings rate or greater consumption of American goods, or require every American to purchase a more fuel efficient vehicle.
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The oil in the portfolio can also hedge against the other economic effects of oil price shocks.
GDP, less than half the terms of trade loss from each of the 1970s oil price shocks.
Worries are now growing that the pattern of previous oil price shocks may be repeated: inflation, interest rate hikes and, finally, years of painful recession.
Despite these actions, the Seychelles economy struggled to maintain its gains and in 2008 suffered from food and oil price shocks, a foreign exchange shortage, high inflation, large financing gaps, and the global recession.
Davis and John Haltiwanger have found that oil price shocks account for 20% to 25% of the cyclical variability in employment growth--twice as much as for monetary shocks--and they documented who feels the shocks the most.
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