What you're not hearing about the coming oil shock

So far the White House has resisted bipartisan pressure to ban Russian oil imports. If it does, and the EU doesn't follow, then NATO shows disunity. If the EU follows, it throws itself into recession and the oil market into deeper chaos. Already, the mere threat caused Brent crude to trade at almost $140. The US is less vulnerable to oil shocks than in the 70's or the 80's it takes only 6% of the oil to produce a unit of GDP than it did then. Though gasoline is close to all-time highs in nominal terms, it is far from the 2008 levels in real terms -- oil would have to rise above $200. Higher prices crowd out other consumer expenditures, but gasoline is only 2.3% of GDP, compared to 4.3% in 2008. Thanks to fracking, oil production has risen to the point where imports to produce gasoline are only 0.8% of GDP. The 1.5% difference is internalized, which means that higher gasoline prices harm domestic consumers but help domestic producers.