AT FIRST it was a curiosity. When oil prices rose above $30 a barrel before the invasion of Iraq two years ago, we knew they were following a familiar pattern. Sure enough, once the statues of Saddam Hussein began tumbling, so did the oil price, dropping below $25 a barrel.

But that did not last either. Rather than settling at a non-crisis level, and indeed within the Organisation of Petroleum Exporting Countries’ target range of $22 to $28, the oil price began a fresh climb and hit $40 a barrel a year ago.

That, you might have thought, was that. But it wasn’t. North Sea Brent hit the giddy heights of $50 a barrel last autumn, subsided a bit over the winter, but has been above $55, before dipping late last week. But prices could rise again.

In an eye-catching report, Goldman Sachs suggests that oil prices could “super-spike” to more than $100 a barrel, with US crudes reaching $105 or more. This, it should be said, contains many ifs and buts, and is not intended to be the firm’s main forecast. But even its base case has Brent crude averaging $50-$55 a barrel this year and next, before coming down in 2007.

These are big numbers and raise key questions. Why haven’t prices at this level caused more obvious economic distress? Oil has been associated with some of the great economic disasters of the past, so why not now? Will there be a big impact on growth, or inflation, or both? Oil plays a central role in the economy: petrol is perhaps the most visible price. People who could not tell you the cost of a loaf of bread would have a fair stab at the price per litre of unleaded. Unless you drive with your eyes closed, never sensible, petrol prices are hard to avoid.

The same is true in America. Petrol is already above $3 a gallon.The threatened rise to $4 is a “nightmare scenario” the White House has been studying, not least because it looks as though it might come true.

Alan Greenspan joined the fray a few days ago, referring to the lack of global refining capacity as “worrisome” but predicting that the “price frenzy” would subside. The Federal Reserve Board chairman also offered the fascinating statistic that 11% of the world’s energy consumption was by vehicles on US roads.

Although Britain is also more car- dependent than ever, and the government admits it will miss its target for cutting carbon-dioxide emissions to 20% below 1990 levels by 2010, oil has less of an economic impact here than it had in the past.

The “oil intensity” of gross domestic product in Britain has declined by more than 60% since 1970. This does not mean that oil demand has dropped by that much. The economy is much bigger, and so is our demand for oil.

It does mean that the ratio of oil consumption to GDP has dropped. So, whereas in the past a 1% rise in GDP was associated with roughly a 1% rise in oil demand, now it means a 0.4% rise. Oil intensity has also dropped, though by slightly less, in other industrial countries.

The reasons are familiar. Industry in general, and heavy industry in particular, has been in retreat, replaced by a less energy-intensive service sector. Energy efficiency has improved; in the past quarter of a century average new-car fuel consumption has fallen by 25%.

It does not mean, emphatically, that high oil prices are an economic non-event. But it does mean we should think about them differently. Higher oil prices push up inflation, and the extent to which this becomes a problem depends on so-called second-round effects; the extent to which they are reflected in higher wages, for example.

Rises in oil prices also reduce growth, particularly in a world where most firms (except the oil companies) find it hard to pass on cost increases. This reduces profits, investment and employment.

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