Denise Chisholm

So I think it's pro cyclical in the sense that it's tied to the U.S.

economy overall.

I mean, energy prices are interesting in that I understand why the knee jerk reaction is to look at real energy prices over time.

And we've seen them spike in, you know, obviously 1980 and even the high in 2008 from a real inflation adjusted perspective was nominally high.

higher, was actually higher than the peak in 1980.

So you draw those peaks and you say that there's real, very strong correlation to very uncomfortable economic situations.

But it is quite different, right?

History can show you what the similarities are and also the differences, which is to say that oil intensity has actually declined substantially in the overall economy.

So that effect on the same price might actually have a much less impact than you think on the overall economy.

And in some ways to think about it in very practical terms, instead of just oil prices, to think about the stress that it could impact on corporate profits, specifically when we're talking about equity prices.

If you renormalize those oil prices in relation to corporate profits, you'd see that that spike in 1980 effectively was $1,000 in terms of the price per barrel that it would take to equate the same stress, which is not to say that higher energy prices don't take a bite

off the U.S.

consumer.

They do.

You see declines in real income growth and especially over the short run, demand is relatively inelastic.

But what you do see is I think that the comparisons to the 70s and 80s of stagflation, this is a very different economy and it might be much more absorbable than you think, which might mean, back to technology, that more of that is priced in than you may think.