Average price of oil so far in 2007 is just 1 percent higher than last year as economy adjusts

As oil prices climb toward the once unthinkable $100 a barrel level, fears that the U.S. economy could tip into recession are also rising.

To spur spending and borrowing, the Federal Reserve on Wednesday cut a key short-term interest rate for the second time in two months. This, even after the economy grew at a respectable 3.9 percent annual rate in the third quarter and fuel demand continues to rise. So what gives?

Anxiety-inducing headlines can cloud reality, analysts said, especially when it comes to a critical commodity such as oil, whose economic impacts are best measured over time. Through October, the average per-barrel cost of oil is only 1.3 …