RENEE MONTAGNE, host:
When it comes to the price of oil, things don't look good for consumers. Oil hit another record yesterday - topping $82 a barrel. And Texas oil investor T. Boone Pickens says it's going to get worse. He predicts the price will hit a hundred dollars a barrel, although probably not this year. The global economy is growing despite the rising cost of energy.
NPR's Scott Horsley says some observers wonder how long that can last.
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SCOTT HORSLEY: Watching oil prices in recent years has been like watching a Hollywood suspense movie in which the hero climbs higher and higher up the darkened staircase: $50 a barrel, 60, 70, $80 a barrel - all the while waiting for the axe murderer you know is lurking in the attic.
Or maybe that creepy sound you heard is not an axe murderer at all, but just a harmless squirrel.
Mr. PHIL FLYNN (Alaron Trading Corporation): I think we have to reevaluate what $80 a barrel of oil means.
HORSLEY: Energy analyst Phil Flynn says despite all the dire warnings, oil prices don't seem to have phased the U.S. economy, even though they're $20 a barrel higher than they were a year ago and more than $50 higher than they were in 2003.
Mr. FLYNN: I mean, oil prices are like the weather. You know, we love to complain about them, but we don't do anything about it.
HORSLEY: Both consumers and companies are better able to withstand high oil prices than they used to be. Energy is a smaller part of the average household budget than it was a generation ago. And businesses, on average, are twice as energy efficient.
Economist Mark Zandi, of Moody's Economy.com, says what's more, rising oil and gasoline prices have not necessarily pulled up the price of other goods.
Dr. MARK ZANDI (Moody's Economy.com): Manufacturers are under a lot of competitive pressure from overseas. So it's very difficult for them to pass through their higher energy costs. And it's one of the reasons why the surge in energy prices has not affected broader inflation and thus been a significant problem for the economy.
HORSLEY: Take the Formosa Plastics Corporation as an example. The Livingston, New Jersey company makes plastic resins for things like water bottles, garment bags and vinyl fencing. Spokesman Steve Rice(ph) says crude oil is a major raw material for the company. While Formosa owns some of its own oil supplies, it has to buy the rest at today's higher prices.
Mr. STEVE RICE (Formosa Plastics Corporation): We obviously try to pass it along as much as we can. But sometimes we're able to do that, and sometimes we're not.
HORSLEY: Even the price of gasoline has not kept pace with the most recent run-up in crude oil prices. While the price of crude oil has climbed $10 a barrel in the last month, gasoline prices barely budged nationwide, suggesting refiners and retailers have largely absorbed the increase.
Eventually, higher oil prices may show up at the gas pump. Economist Zandi warns if pump prices top $3 a gallon again, as they did earlier this year, consumers may think twice about spending money elsewhere.
Dr. ZANDI: Consumers are very sensitive to the price they see for a gallon of gasoline when they drive down the road. And if they see that moving north of $3 a gallon, I think that might be a little bit too much for them to bear, particularly given that, you know, their house is worth less, their stock portfolio is not appreciating, and besides, they're a bit worried about their job.
HORSLEY: If that happens, it could be time to cue the scary music again.
Scott Horsley, NPR News.
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