LONDON : For all the angst caused by this year's 65per cent oil price leap, concerns about a return to 1970s-style stagflation are overblown and the developed world, at least, can probably handle even costlier crude without too much stress.
As recently as 2010 more than 75 litres of oil were consumed per US$1,000 of global GDP - today it's 65 litres, Morgan Stanley analysts note.End-users such as motorists remain reliant on petrol but thanks to tech advances, the average U.S. car gets 25 miles per gallon versus 13 miles in 1975. "We do not believe that the current price of energy will have a significant negative impact on the economy," they wrote.
Graphic: Oil prices vs world stocks: https://fingfx.thomsonreuters.com/gfx/mkt/dwvkralzjpm/oilper cent20vsper cent20worldper cent20stocks.PNGOil's share of the global energy mix has shrunk to 29per cent from around 50per cent in the 1970s, as use of natural gas and renewable sources has grown.
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