As Jerome pointed out recently, the fact that oil at $135 still is not making too much of a dent in demand indicates that so far we've just been consuming as much as we needed without regard to the price, but that is now changing and Oil is, for the first time in maybe a century, scarce.

It's only been a couple of weeks and people are still getting used to the idea. It's going to take months before informal demand reduction starts making a difference years before it sinks in that the party is over and some advanced planning would be a wise and sensible thing.

Migeru:

I agree, but we still define a recession in terms of economic growth rates over the short term, and the zeroth-order effect of an oil price spike is to eat away at GDP proportionally to the increased cost of imports.

It's the multipliers that will make it hurt, not the nominal price increase. We've been here before and I don't see it playing out any differently this time. Inflation will rise, interest rates will rise 'to combat inflation' (and good luck with that), and with so many people on borderline incomes already, including debt and food inflation, there's going to be extreme unhappiness.

The particular problem for the UK is that we have a national culture of whining, and very few people have experience of radical self-reliance or of 'make do and mend.'

It's the political implications that bother me the most. It's going to be easy to point the finger at immigrants and brown people (and Brown people) rather than doing anything constructive.

With a culture of blame to draw on, there's going to be a lot of blame going around.