EU-DIGEST - special edition

This time it is different. True, this is an oil shock akin to those that struck the world economy in the 1970s, for the price of oil -- even allowing for inflation -- is now a lot higher than it was at the 1979 peak. Those shocks pushed the world economy into two recessions, in the mid- 1970s and the early 1980s, and helped drive inflation into double digits in most of the developed world. Unemployment soared as interest rates were raised to try to curb inflation. But then the oil price fell back again as new fields came into production and countries made a start on conserving oil.

So will the surge in the oil price have similar consequences this time? It is a tough judgment because we don't know how high oil will go, but it looks likely that this oil shock will have a less damaging impact than in the 1970s. However, since the price is unlikely to fall back as far, it will have a more lasting impact on our way of life.

For the complete report from Seattlepi click on this link