ON October 8, 1973 the Organisation of Petroleum Exporting Countries (Opec) invited the oil giants to Vienna and demanded a doubling of the price of crude oil.
The companies, which had always ruled the roost, dismissed Opec’s demands and the talks broke down. But the mainly Arab oil producers weren’t finished. A few days later they announced a unilateral price increase. Two days before Christmas 1973, they came back for more. By the end of the year oil was $11.65 a barrel, more than four times higher than the price had been in October.

The world was shocked. Politicians, businessmen and economists quickly worked out that the immediate effect of the end of cheap oil would be to plunge the global economy into recession.

America summoned other big oil-consuming nations to an emergency conference in Washington in February 1974, the main outcome of which was the creation of the International Energy Agency (IEA). The main purpose of the IEA, part of the Organisation for Economic Co-operation and Development, was to ensure members carried enough oil stocks to avoid being held to ransom by Opec.

A few days ago we saw the virtue of that decision as the IEA’s members agreed to release some of their stocks to tide America over in the wake of the Hurricane Katrina disruption and calm the markets. It worked, although only to the extent of bringing crude prices down into the mid-$60s. The US Department of Energy still expects prices to top $70 a barrel over the winter and average $63.50 next year.

The 1973-74 episode gave us the term “oil shock”. A few years later the Shah of Iran’s fall and the Iraq-Iran war gave us a second, arguably more serious, shock. Both times prices rose sharply. Both times there was a global recession.

The world recessions of the early 1990s and 2001-2 also came after periods of high oil prices. In the case of the early 1990s the first Gulf war, which began with Saddam Hussein’s invasion of Kuwait in the summer of 1990 and lasted until the allied victory the following year, was plainly a factor. It would be hard to argue in either case, however, that high oil prices were the driving factor, not least because price spikes were much smaller than in the earlier episodes.

During the oil shocks of the 1970s, finance ministers would gather at the OECD in Paris and survey the wreckage. Last week the OECD, the advanced countries’ club, gave us its current view on the impact of high oil prices today. And pretty relaxed it was.

According to Jean-Philippe Cotis, its chief economist, the rise in oil prices since the OECD’s last full forecast in May has not materially affected the world economic outlook. Growth among the leading industrial countries then was expected to be 2.4% this year. Its latest forecast, admittedly not allowing for the full effects of Hurricane Katrina, is 2.5%.

Japan and the eurozone have been doing better than expected, America about the same. Britain stands out as weaker. In May, the OECD expected 2.4% growth, now just 1.9%, which is why it thinks the Bank of England should be thinking about cutting interest rates again.

Cotis admitted that growth could be temporarily weaker in the second half of the year because of the hurricane, suggesting the full year may fall slightly below the OECD’s 3.6%.

Its rule of thumb suggests oil-price rises have little economic impact. Each $15-a-barrel rise in the oil price knocks 0.2% off industrialised countries’ growth in the first year, 0.3% in the second. The inflation effect is slightly greater: 0.7% in the first year and 0.4% in the second, but not huge.

Prices have risen about $25 this year, more in absolute terms than during previous spikes, but in their impact on the world economy this shock looks like a pinprick.
The dog of high oil prices isn’t barking.

Why is this? This year’s rise has been dramatic, but oil prices have been in a seven-year climb. From a 1998 price of $11 a barrel — lower in cash terms than at the end of 1973 — prices have been on an upward trend. We have had a chance, in other words, to get used to it.