Oil prices have been climbing for nearly two weeks straight, breaking new records almost daily. Friday's been no different with U.S. crude oil futures breaching $90 a barrel during the Asian morning session.
U.S. light, sweet crude for November delivery was at $90.02 per barrel during Globex electronic trading. Soon after striking $90, oil futures eased back to about $89.70 a barrel.
So with oil prices at $90 a barrel, why aren't consumers feeling the pain of these sky high oil prices?
Well, even at $90, the price of oil will still be $11 BELOW the inflation-adjusted high of $101.70 hit in April 1980, a year after the Iranian Revolution. And at the gas pump, the place that usually hits your wallet hard when energy prices soar, retail gasoline prices today are still slightly less than prices were in 1980 when calculated in 2007 dollars -- and pump prices are significantly less than they were this spring.
Mark Zandi, chief economist at Moody's Economy.com, crunched some numbers for us and here's what he found, comparing April 1980 figures (set in third-quarter 2007 dollars) to the actual third quarter of 2007.
Overall consumer spending on energy is far less today than it was 27 years ago, set in today's dollars, while household incomes and housing prices have appreciated greatly -- even adjusting for inflation.
Americans overall are wealthier, their biggest assets -- their homes -- are worth more and they're spending less on energy than they did two and a half decades ago when oil prices were at their all-time high. Even today, the data shows, the richer you are the less you spend on energy.
Retail gasoline prices at $2.80 a gallon on Thursday are also down 13% from May, when refinery problems caused the national average for regular unleaded spike to $3.23 a gallon, according to AAA.
Retail gasoline prices have slowly started to climb, up 4 cents since Tuesday, even as gasoline demand is at seasonal lows and refiners are making a cheaper winter grade gasoline.
Stephen Schork of the well-regarded energy newsletter The Schork Report says if oil prices are this high as gasoline demand ramps up for the winter holidays and Black Friday, retail gasoline prices will likely soar.
The worse may be yet to come. Zandi says if oil prices are still near $90 this spring, when the housing crisis is at is worst, consumers WILL definitely feel it. "The problem isn't now, it's then," he says.