Recessionary threat from surging oil prices will be ignored at our grave peril

London Briefing/Chris Johns: Beware the pundit who argues "it's different this time", particularly if everyone is echoing exactly the same views.

I have lost count of the number of analysts and commentators who have argued in recent days that higher oil prices need not cause a recession, as they have done in the past. I may even have made the same arguments myself.

But we ignore history at our peril. There have been two occasions in the last 25 years when oil prices reached levels higher than today and, each time, 12 months later, the UK economy entered into a slump.

But, apparently, it's different this time because oil prices in real (inflation-adjusted) terms are still much lower than they were during previous oil price crises and Western economies are far less energy-intensive than they used to be.

We have managed to ship our heavy industry to China which, it seems, will bear the brunt of higher energy costs. So the argument seems to be that because China now makes all our manufactured goods and UK business is, relatively speaking, energy-lite (service companies don't burn much oil), we shouldn't worry about higher oil prices.

All of this may be true, but it ignores the impact that higher energy costs could have on business and consumer confidence. The wider context in which oil prices are rising is hardly going to inspire many people to believe that the world is becoming a safer and more stable place.

The two economies that have been driving global recovery - China and the US - may well experience slower growth in the months ahead, albeit for slightly different reasons. If so, all those economies that have been riding the coat-tails of global recovery might well be in for a disappointment.

Here in the UK, business has more than just the oil price to fret about. If commentators are sure that higher energy costs are little to worry about they seem equally certain that the factors driving oil prices higher are also going to push Tony Blair from office. Lots of political obituaries for the prime minister have been written in recent weeks and they all agree that his days in office are numbered.

If the consensus among political forecasters is as accurate as the conventional views of financial analysts, Mr Blair seems assured of another full term in Downing Street.

But it has to be acknowledged that the consensus is sometimes right. Will a change of prime minister bring about big policy changes? If Gordon Brown succeeds in his ambitions and is crowned as the next prime minister, then there probably won't be too many changes for us to worry about - he is, after all, running the domestic show already.

But the deputy prime minister, John Prescott, has already warned about the dangers of a simple coronation of Mr Brown and we might be treated to a full-blown leadership contest, which might throw up a surprise. In which case we could see not only an unexpected face at 10 Downing Street, but a new Chancellor as well. This, presumably, would bring about lots of changes, not just for UK business.

Political change in recent years has actually been a relatively painless experience for the economy. Blair came to office determined to leave much of the Thatcherite edifice intact. Tory public spending plans were adhered to and the wider structural reforms introduced over the previous 18 years were, for a while at least, left alone.

Since then, Gordon Brown has done his best to nibble away at the gains made during those difficult years but, thankfully, his ability to do severe damage has been heavily circumscribed, not least by his decision to grant the Bank of England full independence. Should he become prime minister, many people will fear that his socialist instincts will be given full rein.

Will Tony Blair still be prime minister when the referendum on the European Constitution is held? If he is, I suspect that he will view his political longevity it as a major personal triumph, one that may tempt him to ask a second question on the same day: the one about the euro.

In the meantime, storm clouds are gathering for the economy, notwithstanding the analysis of the experts. If people are getting hysterical about petrol in the US costing over $2 a US gallon, they should ponder the fact that we are about to pay over $6 for the same gallon. We are back to price levels that sparked the fuel protests a few years ago. Call me old fashioned, but I think we have a problem.