Courtesy of Charles Hugh-Smith of OfTwoMinds blog,
Until oil no longer matters, our real earnings and our economy remain hostages to the cost of oil.
Note that hourly earnings rose smartly in the 1960s era of cheap oil, and suddenly plummeted to a lower plateau after the 1973 oil shock. The next jump in oil (the Iranian revolution) sent earnings to a new low. Recall that each leap in energy costs pushed the U.S. into a deep recession (1973-74 and 1981-82).
As oil costs declined over the next two decades (the exception being the first Iraq War, which triggered the 1991 recession and spiked purchasing-power earnings lower), real earnings rose.
The Internet boom and oil dropping to $15/barrel caused real earnings to spike in 1999. The bubble burst in 2000, causing a mild recession. Earnings subsequently spiked again during the housing/credit bubble, and then plummeted when oil rose to $140/barrel in 2008.