The price of crude oil doubled in 1973 following the OPEC oil embargo to the US. It did have a serious impact on our economy, especially coming on the heals of the post-Vietnam slowdown in military production. The price doubled again in 1978 following the overthrow of the Shah of Iran. That had a very serious impact on the economy. We entered a period of double digit inflation and interest rates (home mortgage rates then were at 18-21%, credit card rates!) while the overall economy was stagnant. The economists coined the term stagflation to describe the condition. The US weathered a quadrupling of oil prices in a 5 year span without going into a depression although things were pretty bad for several years.

If the oil producing nations cause a severe economic slowdown in the US, it can't help but have a very bad economic impact on most of the rest of the world. Much of Asia is already feeling the effects of the current US slowdown and Japan has been in recession for over 10 years. Cripple the US and you cripple just about everyone else, too, which will drive down the demand for oil.

The major oil producing nations know that if they try the embargo again, it could end up hurting them more than it hurts us. The price of oil is so much higher in other countries because of high taxes, not higher prices for oil. The price of crude oil is essentially the same for everyone but some countries put very high taxes on gasoline. When I was stationed in Germany from 1978 to 1980, I could buy gas on base for about the same price as it cost in America, roughly $1 a gallon. The price off base "on the economy" was roughly $4 a gallon. Our gas on base wasn't subsidized, we were just exempt from the German taxes.

If they do succeed in driving up the price of oil that dramatically or of establishing an embargo, you can kiss Democrat control of the Senate goodbye. You'd better believe that denial of drilling in places like ANWR will be a campaign issue. The Republicans will be able to accurately point out that the Democrats voted to keep America dependent on countries that now have shut off much of our oil imports. Higher energy prices and economic impacts hit everyone in their pocketbooks.

If the price of oil were to sharply increase, it would also help make alternatives that currently aren't economically viable into serious contendors. That article I linked to in the Arab Times alluded to that - they know any attempt to cut imports will be directed towards cutting imports FROM THEM. With nothing else in their dictatorships worth selling other than oil, they know they can be hurt by this even more than they can hurt us.