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Oil prices at record levels in euro terms are threatening to rock the euro zone's economy more than might be expected, with those countries least capable of riding out a shock being the worst hit.
Standard estimates of the impact of oil prices on the euro zone economy are that a 10-percent price hike dents annual growth by some 0.2 percent in the ensuing three years, with disagreement over whether the hit is greater at the start or at the end.
However, these projections do not take into account the euro/dollar exchange rate and may underestimate the impact at a time of widespread austerity. Nor do they reflect potential differences across euro zone countries.
In dollar terms, oil prices are still some 13 percent short of the $147.50 US per barrel Brent peak hit in July 2008. However, in euro terms, oil prices surpassed all-time highs last month.
So far this year, the price of oil in euros has risen as much as 17 percent. The International Monetary Fund already projects euro zone GDP to shrink by 0.5 percent over 2012.
Italian bank UniCredit estimates that a 10-percent rise in the euro-denominated price of oil depresses euro zone growth by 0.3 percentage points over a single year -- not 0.2 percent over three years.
Marco Valli, one of Unicredit's economists, says the impact on the euro zone could be even greater because of the high level of prices.
"Moving from 50 to 55 euros and from 150 to 165 euros. These are both 10 percent, but they are quite different," he said.
The International Energy Agency (IEA) said last week that the European Union, extending beyond the 17-nation euro zone, was the hardest-hit of industrialized regions and would pay $500 billion for oil this year, an increase of $30 billion from 2011.
HARDEST IMPACT IN PERIPHERY
High oil prices, meanwhile, hit different countries differently.
ING Economist Carsten Brzeski said that while high oil prices were big news in Germany they had not yet filtered through into consumer confidence there but that the worry was much bigger for consumers in peripheral countries.
"Consumers in the south are already squeezed as they lost wealth in real estate and stocks. A high oil price on top of this should again be one of the factors contributing to divergence rather than convergence in the euro zone," Brzeski said.
Thomson Reuters' Datastream shows a very close negative correlation between oil prices in euros and the annual growth rate in periphery euro zone countries -- those currently struggling with unwieldy public debt and scant, if any, growth -- over the past 20 years.
In simple terms, growth rates tend to decline several months after oil prices rise.
For Greece, Ireland, Portugal and Spain, the correlation coefficients range from -0.7 to -0.8 with a delay of four to eight quarters.
This is close to the absolute negative correlation value of minus 1, at which point statistically growth would always decline when oil prices rise.
For Italy and France, the link is weaker, marginally more than the euro zone as a whole, with a coefficient of -0.5. For Germany, there is barely any correlation at all.
In theory, the colder northern European countries should face a higher energy bill than the weaker debt-troubled nations in the south of the continent, where less fuel needs to be burned to heat homes and work spaces.
However, energy saving efforts, more pronounced in northern Europe, offer a counterbalance to price hikes, while southern Europeans have little to shield themselves from among the highest energy prices on the continent.
Spanish and Irish households paid the highest electricity prices in the European Union last year, after Malta and Cyprus, according to Eurostat data, while only the relatively rich Swedes and Danes pay more for their gas than do the Portuguese.
Greeks and Italians have to pay 16 and 17 percent more respectively for their gasoline, according to data from Europe's Energy Portal.
All this makes its way into overall inflation baskets.
Excluding newer eastern European euro zone members, Portugal has the heaviest weighting of energy within its basket of goods used to measure inflation, an indication that Portuguese spend more on energy than their euro zone peers.
Greece has the heaviest weighting for liquid fuels and motor fuels are significant components of inflation for both Portugal and Spain.
This does not guarantee that oil prices will lead to a severe downturn. But they are hitting at just about the worst time for an economy snuggling with recession, the burden of austere fiscal consolidation and tighter bank lending.