There is controversy regarding the potential effects of oil-price shocks. Some see these increases in the price of oil leading to a recession comparable to those that followed the 1973 and 1979 energy crises or a potentially worse situation such as a global oil crash. Most economists see this as unlikely, partly because all developed countries have high fuel taxes that decrease as oil prices increase and can be eliminated in the event of a dramatic price spike. Nevertheless, that loss of revenue would put a strain on government balance sheets. The American Strategic Petroleum Reserve could on its own supply current U.S. demand for about a month in the event of an emergency, unless it is also destroyed in the emergency. This could well be the case if a major storm were to hit the gulf, where the reserve is located. While total consumption has increased, the western economies are less reliant on oil than they were twenty-five years ago, due to substantial growths in productivity. In the United States, for instance, each $1000 dollars in GDP required 2.4 barrels of oil in 1973 when adjusted for inflation this number had fallen to 1.15 by 2001. But oil's historically high ratio of Energy Returned on Energy Invested continues a significant decline. Despite the rapid increase in the price of oil, neither the stock markets nor the growth of the global economy have been noticeably affected. Inflation has increased. In the United States, the Consumer Price Index rose by 0.6% compared to 0.2% for September 2005. This was driven by a 4.2% increase in energy costs. As a result during this period the Federal Reserve has consistently increased interest rates to curb inflation.

Economists say that the substitution effect will spur demand for alternate energy sources, such as coal or liquified natural gas. For example, China and India are currently heavily investing in natural gas facilities. Nigeria is working on burning natural gas to produce electricity instead of simply flaring the gas. Outside the US, more than 50% of oil is consumed for stationary, non-transportation purposes such as electricity production where it is relatively easy to substitute natural gas for oil.

The increased price of oil also makes previously impractical sources of oil attractive to businesses. The most prominent example of this are the massive reserves of the Canadian tar sands. They are a far less cost-efficient source of heavy oil than conventional crude, but at 60 dollars a barrel, the tar sands have recently become attractive to businesses. Recent months have seen billions of dollars invested in the tar (bitumen) sands.

The increased price of oil might also encourage greater fuel efficiency and energy conservation. Recent years have seen a move towards more fuel-thirsty sport utility vehicles and "trophy" full-sized pickups in the United States and Canada, but this wasteful trend may be slowed or halted by the high price of fuel. The September 2005 sales data for all the vehicles vendor indicated SUV sales dropped while small cars sales increased compared with 2004 sales. There is also an ever increasing market for hybrid vehicles and diesel vehicles since they are more fuel efficient; since the 1973 energy crisis, the front-wheel drive passenger car has replaced rear-wheel drive as the preferred layout for energy efficient cars. Besides the traditional four-cylinder driving the front wheels, the traditionally fuel-hungry V8 engine has evolved, with some emplying variable displacement, which can marginally increase efficiency (6-8%) over traditional V8 designs. Variable displacement has been standardized with modern technology (as opposed to the early 1980s - the Cadillac V8-6-4 was conceived but the technical expertise was not). There is an increasing demand of crossover sport utilities which are somewhat more fuel efficient - Especially for those based on passenger car platforms.

For the working class (those who earn a living wage with no benefits), those who have older vehicles averaging less than 20 MPG usually face several alternatives - commuting via public transportation, carpooling, bicycling or walking and/or relocation into the inner city if one resides in suburban/exurban areas.

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