Oil Shock

Most economists pull the 1970s oil crisis out as an example of how rising prices eventually crimp demand and send prices lower. But let me give you two reasons why it’s different this time: China and India.

Over the last three years, China has accounted for over a third of the global increase in oil demand. As GDP increases, so does a country’s oil use. And Chinese President Hu Jintao says China aims to quadruple its GDP, to $4 trillion, by 2020.