Everything seems to hinge on oil

Ground Floor/Sheila O'Flanagan: The clock in the guest room, which has been an hour fast for the past six months, is finally on time again!

Changing the time on the guest room clock has been one of those tasks I kept meaning to do (like having a chat with the fund manager about the still abysmal portfolio performance) but never got around to.

And now it does not matter maybe I'll say the same about the portfolio some day though I'm not sure how many time changes we'll have to go through before that happens.

But at least people who stay over will no longer feel as though they're living in a time warp when they get up to find everyone else operating an hour behind them.

It always seems to me that as soon as the clocks go forward I use the central heating a lot less in the evenings. I'm not sure if it's because I actually am warmer or whether I simply believe that I am, but I do know that the radiators begin to rumble less and less from now on.

Which - the way oil prices are going - may well be a good thing.

Actually, if you want to indulge in a bit of roller-coaster trading in the markets, oil is the place to be these days.

Although, bearing in mind the adage about the trend being your friend, the trend is still very firmly upwards despite occasional pull backs in pricing.

According to the International Energy Agency's most recent monthly report, this time of year is a transition period for the oil industry as we come to the end of the winter heating season (you see, it's not just me!). Global demand drops significantly between the first and second quarters of the year but then what's known as the "summer driving season" in the US kicks in, which leads to a pick-up in oil requirements again. In fact, North America accounts for about half the estimated growth in third-quarter global demand. It's all those gas-guzzling SUVs obviously.

So what traders have to decide is whether or not a downward blip in prices is likely to last longer than a few weeks and whether the subsequent US demand will drive prices even higher than those reached on St Patrick's Day when we saw light crude hit $38.18, its highest level since the lead into the first Gulf War back in 1990.

There is certainly some evidence that prices won't come down for any appreciable length of time. Stocks (and leaving aside the Shell reserves debacle for now) are very tight and producers seem to be trying to keep them that way.

OPEC is maintaining its plans to cut output by 4 per cent in April; tensions in both Nigeria and Venezuela don't help and, of course, the whole geopolitical aftermath of the Madrid bombings engenders nervousness about the potential of oil supply disruption anywhere in the globe.

Meantime, demand, even in this transitional period, remains extremely strong. Increased trading and shipping activity globally as well as continued demand for jet fuel in Europe (caused by lots of people wanting short-haul flights from low-cost airlines) have meant that corporate needs are plentiful.

As for China - well, demand there is absolutely soaring and the forecasts for their requirements are being continually revised upwards.

China has now outstripped Japan to become the world's second-largest oil consumer. Additionally, the growth in the Chinese economy is having a knock-on effect on neighbouring countries so that Asia has become a much greater consumer of oil and oil products.

It's all nerve-wracking, although there is an element of comfort for consumers given that oil is priced in dollars and that the dollar continues to exhibit lemming-like qualities thus offsetting some of the increases in non-dollar denominated countries.

But that same falling dollar is probably part of the reason why OPEC has implemented its production cuts which, on the face of it, are pretty bizarre given that OPEC itself has a preferred price for oil which nestles at $22-$28.

But if a dollar isn't what it used to be, it seems that higher prices are needed.

I'm old enough to remember the domestic and economic traumas generated by the 1970s oil price hike shocks. (My parents used to turn off the heating an hour earlier and go berserk if we left a light on when we walked out of a room. I'm still a pathological turner-off of lights which presumably is a good thing but also shows how deep the scars of childhood can run!)

The current rises are not so harrowing given that our economies are less dependent on oil now. But at some point a sustained price level of close to $40 will pinch.

Always providing it stays that low. The latest book about energy - Oil Factor - paints a not very encouraging picture of prices at $100 a barrel before the decade is out. Hello global recession.

Even at current levels there are concerns that increased spending on gasoline in the States will have a knock-on effect on retail sales.

Wal-Mart recently commented that higher fuel prices were an effective tax on its customers and has highlighted the cost of gasoline as being one of the major barriers to increased sales for the firm.

At the moment, US consumers are able to use the money that they've received from George W's tax cuts to keep on with their merry bouts of spending.

But, at some point, higher prices at the pumps will cancel out the tax refund effect and that's what's worrying Wal-Mart and the other retailers.

Once again, companies are looking at cutting costs to offset higher oil prices.

And guess where those cuts are happening?

Jobs, of course.

Regardless of today's jobless figures from the States, there's still a possibility that the jobless recovery will stay that way - not a heart-warming thought.