-First, Matthew Simmons does NOT see recent high oil prices as the cause of the recent economic catastrophe. In this I think he is absolutely correct. He is so correct to point out that much of the industrialized world has long paid a gasoline price that would reflect $300 barrel oil, and lived nicely advanced and prosperous lives (Europe comes to mind, as does developed Asia)

The price paid for gasoline in the USA, Europe or UK is not relevant - whether considered in absolute or relative terms, it makes no difference. What does make a difference is the time period over which each economy arrives at its price.

The typical UK and European price is considerably higher than the price in the USA but it was arrived at over many years, people gradually adjusted their budgets to accommodate the price of gas. The timescale involved also allowed the car fleet to change to reflect the value of gasoline to each economy - hence the preponderance of small efficient vehicles in Europe.

The elasticity of peoples budgets was broken by the pace of the oil price increases when they rose close to $150 a barrel. This was more the case in the USA than in Europe because a $1 per gallon increase in the USA meant a 100% increase, but the same increment to the end user in the Europe had less impact because prices were already high.

The ability for either the USA economy or European economy to adjust to a sudden increase in price is a function of available discretionary expenditure - if people's budgets are already at breaking point, then a sudden and significant increase in price of any commodity might have been the straw that broke the back, and once broken it went into free-fall.

When the cost to fill your gas tank more than doubles in a short period of time (the USA), then it is quite possible that this could happen at a pace that is faster than most peoples ability to stop drinking a large latte every day, stop the gym membership, cancel the newspaper and other subscriptions, and so on and so forth. A lot of people probably thought they could use their credit cards as temporary buffers, maybe were late on a utility bill, then got hit by a jump in the credit card interest rate, etc. Then compound the impact by adding in the end of low introductory interest rates for sub-prime mortgage holders (probably for largely the same set of people) and you have the ingredients for the perfect storm.

Once again, I do not think the absolute or relative prices in the USA or UK etc. are relevant - it was the fast paced rate of increase combined with a low initial price in the USA.

I believe that if the USA already had prices that matched those in Europe and had a similar vehicle fleet instead of stupid SUV land yachts and monster trucks and also less urban sprawl, then the price run up caused by limited supplies would have had a smaller impact - maybe to the point that the subsequent economic crisis would have been manageable.

Instead we have Armageddon.