New York CNN Business  — 

The oil headlines are universally bad.

Oil prices have spiked to their highest levels since 2008, driven first by a global reopening of Covid-scarred economies, then exacerbated by Russia’s invasion of Ukraine. Global oil prices are up 26% since Vladimir Putin pushed his tanks and trucks into Ukraine and gas prices in the US have surged more than 60 cents in a week, to record highs.

Superlatives abound in the energy patch. But here are three reasons not to freak out – yet – about rising oil prices.

No. 1: Take a deep breath. US gas prices are at record highs, but adjusted for inflation they are not there yet. The economists at RBC Capital Markets note the $4.11 record price in 2008 adjusted for inflation is the equivalent of $5.25 a gallon today and they say US household savings are robust which could allow for many households to ride out these higher prices.

No. 2: The US relies less on Russian oil and natural gas than Europe and has more diverse supplies. Capital Economics says Europe faces its third recession in two years because of its huge reliance on Russia. Russia supplies more than a third of the EU’s natural gas and more than a quarter of its oil, according to Eurostat.

But Russia accounted for 8% of total US energy imports last year and in December, the US imported just 90,000 barrels per day from Russia, making it America’s ninth biggest supplier.

“The US is relatively safe without Russian imports but Europe certainly is much more hostage to the Russians for oil,” says Patrick De Haan, head of petroleum analysis at Gas Buddy.

Of course, oil is a global market. Sanctioning Russian supplies would no doubt hurt everyone. So would Russian threats to cut off supplies to Europe. It’s why the US is already pivoting away from Russian supplies and scouring the globe for other options.

The Biden Administration is considering easing sanctions on Venezuela in order to increase global supplies. It’s a move meant to reduce global dependence on Russia and isolate Putin from one of his key allies in South America. (It is not without risk, punishing one strongman by emboldening another.)

At the same time, pressure grows on the oil cartel OPEC and its allies to open the spigots and pump more oil to ease any shortfall in supplies. (So far, without result.)

No. 3: This is not the 1970s. The US consumes energy more efficiently today. And the US is now the world’s largest oil producer.

In a note to clients, Michael Pearce of Capital Economics writes, “Higher oil prices are not a huge risk to consumers,” in large part due to high household savings. “We think oil prices would need to rise much further from here to seriously threaten the consumer recovery,” noting “any hit to consumption should be mostly offset by greater investment in shale production.”

You’d think surging oil prices would entice more drilling, but so far, production is still below pre-pandemic levels. It may take incentives, says Gregory Zuckerman, author of “The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters.”

“I’m much more in favor of encouraging the U.S. frackers to produce more,” Zuckerman said. “I think there might be a deal that we can cut with them to improve the environmental production, and crack down on some methane emissions in exchange for a floor on prices.”

“A lot of them are nervous about spending a lot on production because what happens in a year or two when prices come back down,” he added. Instead of easing sanctions on Venezuela or even Iran, “I would rather get much more production from the US.”

Until then, buckle up.

“We might well see energy prices double because Putin realizes he’s got western Europe over a barrel,” says Democratic Sen. Chris Coons of Delaware. “This is his single greatest conventional weapon, nonmilitary weapon, he can use to push back the west and to divide us. It is the weapon he used after he invaded Crimea in 2014 to dissuade our European partners from joining us in tougher sanctions.”

The US has directly sanctioned Russia’s fossil fuel exports, and Europe has unveiled a plan to wean itself from Russian supplies. The message is clear that isolating Russia means cutting off the energy proceeds that fund the regime. Bottom line: Punishing Putin will carry costs for everyone else.

Energy companies have an important role here as well. Just two years after a crash in prices that had producers paying buyers to take worthless oil off their hands, they’re likely scoring massive profits as oil prices surge. It’s potentially bad optics when consumers and small business face higher costs. Now is the perfect time to invest those profits into the energy transition away from things like Russian oil, and toward renewables.