STOCK MARKET WATCH -- Friday, 9 March 2012

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43. Oil Price Distant From 1980s Agony When U.S. Income Adjusted

http://www.bloomberg.com/news/2012-03-09/oil-price-distant-from-1980s-agony-when-u-s-income-adjusted.html

Oil at $110 a barrel is taking only half as big a bite out of Americans’ pocketbooks as it did in 1981, the last time Iranian shipments were disrupted.

The cost of a barrel of crude in the U.S., adjusted for total disposable income, was $107.92 in January of this year, compared with a peak of $213.44 in the same month in 1981, according to data compiled by Bloomberg (.OILINCM) and the Energy and Commerce Departments. Oil consumption was 4.8 percent of income in 2010, compared with 9.7 percent in 1981, the data showed.

For all the concern over the fallout from sanctions against Iran and the prospect of gasoline topping $4 a gallon in a U.S. election year, the distress caused by rising oil prices is being mitigated by improved household purchasing power, a strengthening economy and America’s growing energy independence.

“The threshold to withstand the run-up in energy prices is higher than most people think,” said Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities Inc. in New York, in a phone interview March 6. “We can tolerate fuel at $4. Job growth is stronger and incomes are looking very decent. The economy is on firmer footing.”


*** i guess we'll see if this holds true...or if we will be in for a 'surprise'.