An argument for being less concerned about the oil price shock in the last year has been that real prices never moved above the inflation-adjusted level of 1980. Well that argument has changed. Though it has taken longer to reach the height of this price spike, the economy is facing the worst price increase since oil price numbers since before WWII.
The US economy is less sensitive to oil price shocks than 30 years ago, but the magnitude of this increase is stark and unlikely to decline quickly. Unlike other price shocks, this may be more demand driven and has increased even with a slowing US economy. We are currently in a global demand shock and it is unclear whether supply increases will be able to significantly drop prices in near-term. Of course, the combination of geopolitical risk and supply impairment is exacerbating the situation, but the only way that there can be a clear price decline is a cut in demand. Demand will decline if there is a change in spending habits, but many of the largest new global users are countries that have subsidized price. Consumers have not been able to feel the full effect of the price increase and have thus not adjusted their spending habits.
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