High oil prices certainly didn't help the economy at the end of the bubble, and they may even have been the straw the broke the camels back. But they are not the cause of the current economic disaster.

This disaster is almost entirely finance related, not manufacturing related. The collapse of the finance markets cut of the credit that people where expecting, leading to a massive decline in buying. And that lead to the shrinking of manufacturing, not rising oil prices and inflation.

If we where in an oil shock there would be a serious problem controlling inflation, because manufacturers would have to be raising prices to get ahead of production costs and trying to stay ahead of inflation. But inflation has been negligible for some time.

Essentially, as long as the finance bubble was expanding faster then the oil prices where going up, the rise in oil prices had only a limited direct effect on the economy.

I'll agree though that they could cripple any recover, particularly if oil prices go back into the triple digits.

Jay