The slowdown effect, of course, will make life easier for Chairman Greenspan. "If oil prices help slow the economy down to within the 3.5 percent speed limit on growth desired by Fed economists, Greenspan may not need to raise interest rates again after March," says Baumohl. "Already the stock market senses that the cumulative effect of previous rate hikes combined with the rising oil price are going to slow growth later this year." The big question, particularly for presidential candidates, will be how abrupt the slowdown will be. If the growth rate eases gently down from the current 6 percent to around 3.5 percent, the political impact may be negligible. But a sharp drop may hurt Vice President Gore's campaign, which is centered on claiming credit for the good times of the '90s particularly if it's attributed in part to the actions of oil-producing countries. The U.S., after all, sent troops to protect Kuwait and Saudi Arabia from Saddam Hussein in 1991, and their collusion with the likes of Iran and Libya to raise the oil price won't play well with Main Street America. Says Baumohl, "The Bush camp may even take the opportunity to chastise Gore for failing to be more aggressive with America's oil-producing allies."
Oil prices, rather than interest rate hikes, may do Alan Greenspan's dirty work on the economy, and that could be bad news for Al Gore. The price of crude oil jumped to $34.13 a barrel Wednesday, an almost 10 percent increase in the space of a week that has Wall Street jittery and President Clinton warning producer nations against continuing to choke the supply. The price has more than trebled over the past year, after oil-producing nations inside and outside the OPEC cartel agreed to cut back production in order to drive prices back up. "Even though we're not nearly as dependent on oil today as we were 30 years ago, it still accounts for 40 percent of our energy use, and last year when prices were depressed it accounted for some 14 percent of our GDP," says TIME senior business writer Bernard Baumohl. "So the trebling of the oil price could very well act as a brake on economic growth, by slowing down consumption. When the price at the pump climbs to $1.80 or $2 a gallon, that eats into the amount of money households have to spend on other things."