The return of oil price anxiety is a timely reminder to get fracking

‘Iraq turmoil sends crude oil prices to nine-month high’ is the sort of headline that used to send shivers down economists’ spines, especially if it appeared on the same page as ‘Europe faces gas shortage as Russia cuts Ukraine supply’. How worried should we be at the current turn of events in the energy world?
Since Iraq’s new insurgency kicked off, the price of a barrel of Brent Crude has blipped from $105 to $115 — nothing to panic about — but the more pessimistic analysts are talking of a further $30 rise if Iraqi oil flows of 3.6 million barrels a day (representing about 4 per cent of global demand) are seriously disrupted. That really will constitute a ‘spike’, and will have us all blowing the dust off studies written in the 1990s by Professor Andrew Oswald of Warwick University, who plotted half a century of oil prices against US employment and other data and found that spikes were invariably followed, after a short time-lag, by recessions.