The latest surge in oil shook stock-market investors' confidence, though economists said most U.S. consumers and businesses appear to be absorbing higher energy costs surprisingly well.
"Two years ago I might have said that $70 or $75 a barrel would be some kind of a tipping point. Now I'm not so sure anymore," said Nariman Behravesh, chief economist at Global Insight, a private forecasting firm.
Still, Behravesh said lower-income Americans are suffering disproportionately from higher energy costs and "I could certainly make a policy case for helping them out on a temporary basis."
American drivers, who use 40 percent of the world's gasoline, used more gas last month than ever before – over 9 and a half million barrels everyday, reports CBS News correspondent Anthony Mason.
Light sweet crude for August delivery shot up as high as $76.85 a barrel on the New York Mercantile Exchange before settling at $76.70. The rally came as fighting between Israel and Lebanon intensified, explosions hit Nigerian oil installations and a diplomatic standoff dragged on between the West and Iran over its nuclear program.
The previous Nymex settlement record of $75.19 was set July 5. The previous intraday record of $75.78 was posted two days later.
Adjusted for inflation, oil prices would need to rise to about $90 a barrel to exceed the highs set a quarter century ago when supplies tightened in the aftermath of a revolution in Iran and a war between Iraq and Iran.
In the United States, the national gas price average now hovers near $3 a gallon. Stock trader Eric Bolling said the forces driving up prices are only accelerating.
"Nothing has really changed. There's still terror. There's still geopolitics. And there's still great demand for oil and oil products. There's no question that you could see $100 barrel for oil," Bolling said.
That would push gas to more than $4 dollars a gallon. Even if political tensions eventually ease, analysts say gas prices are likely to get worse before they get better, Mason reports.
Oil prices are being pushed higher by rising global demand and worries that the world's limited supply cushion would not be adequate to offset a lengthy disruption to output in major producing countries, such as Iran or Nigeria. There are also concerns about the risks hurricanes pose to U.S. production.
The latest fear being priced into the market is that the conflict between Israel and Lebanon could spill over into other corners of the Middle East, the region that produces nearly a third the world's oil and contains almost two-thirds of its untapped reserves.
Israel intensified its attacks against Lebanon on Thursday, imposing a naval blockade, twice hitting Beirut's airport and blasting two Lebanese army air bases near Syria. Hezbollah fired more than 100 rockets into Israel, which said one also struck the port city of Haifa. More than 51 people have died in two days of violence following the capture of two Israeli soldiers by Hezbollah militants, who have financial links to Syria and Iran.
"It plays psychologically in people's minds," said Larry Goldstein, president of the Petroleum Industry Research Foundation, a New York-based industry-financed think tank. "You don't have to hear them say it."
In Nigeria, government officials said twin explosions hit oil installations belonging to an Italian oil company in the volatile southeastern delta region. Elsewhere, militants attacked a group of 11 boats carrying supplies to Chevron's offshore oil fields Wednesday, killing four navy sailors who were escorting the convoy, Brig. Gen. Alfred Ilogho said Thursday.
"The oil price has become a register of geopolitical tensions and fears," said Daniel Yergin, who heads Cambridge Energy Research Associates.
Yergin said petroleum supply-demand fundamentals are improving, with global oil inventories and spare oil-production capacity rising, but clearly not enough to offset the geopolitical unrest.
The surge in oil prices rattled stock market investors, sending the Dow Jones industrials sharply lower for the second straight day. Shares of Wal-Mart Stores Inc., the world's largest retailer, slumped 2 percent on the New York Stock Exchange on concerns that high energy prices are cutting into consumers' discretionary income.
"The economy took $50 oil in stride," Yergin said. "It's clearly not taking $70 or $75 a barrel in stride. This is a rougher adjustment."
With U.S. oil companies such as Exxon Mobil Corp. and Chevron Corp. earning record amounts, some members of Congress have proposed taxing "windfall" profits in order to finance energy assistance programs for the poor, but the idea does not have wide support.
The energy-policy debate in Washington right now centers around efforts to repeal the ban on offshore drilling and to fix a law that allows oil and natural-gas companies to avoid billions of dollars of royalty payments on offshore drilling leases.
Critics say Congress has failed in its approach to deal with soaring energy costs because it has not given as much attention to curbing demand as it has to adding supplies, such as a hotly debated proposal to open an Alaskan wildlife refuge to oil drilling.
"We too often forget that the United States is far and away the biggest consumer of oil," said Tyson Slocum, an energy expert at Public Citzen, a Washington-based consumer watchdog. Slocum said the country needs to invest more in public transportation and to sharply increase automobile fuel-economy standards.