Only a couple of years ago if you had predicted that oil would hit $60 per barrel most economists would have forecast a global recession and a major surge in inflation. Yet, as oil prices surged to almost $70 last autumn, the world economy continued to expand at a fair clip. Inflation expectations, at the same time, seem well contained.

Most attempts to explain what has so far been a benign outcome have pointed to increased demand from oil-consuming countries, like China, or to the increasing