Energy prices are on the back burner. The focus on economic growth, or lack thereof, has moved to whether credit markets will open up and how soon housing prices will recover. Focusing on mortgages and whether businesses and individuals will have access to money is a sensible approach, but that leaves oil hiding in the shadows.

Economists argue that the value of houses in the US could drop another 10% to 15%. That would put a lot more mortgages "underwater," making many home impossible to sell. If the person owning a home is swamped by other expenses or loses a job, the loan almost certainly goes into default. Paulson and Congress say that there will eventually be direct aid to the mortgage market, but government is slow and that day may be many months off.

It will also be many months, or perhaps a year, before the relatively normal process of lending will be a part of the economy. Banks still face write-offs. Goldman Sachs just said that Citigroup (C) may not make money until the end of 2009. The large financial supermarket’s credit and write-off troubles are that grim. Banks without capital are not going to be lenders no matter how much Paulson bullies them.

The head of Wal-Mart (WMT) is in Beijing this week beating on suppliers. He wants safer products and he wants goods made by companies who do not pollute the environment. He may have to travel around China for a decade to get his wish. But, the chief of the world’s largest retailer made another telling comment. If energy prices rise, the recovery is cooked. That is the same recovery which is probably a year away.

Wal-Mart does rely on energy costs more than many businesses. Most people cannot walk to its stores and carry all the junk they buy there back home. Heating those big box retail outlets has to be expensive. But, oil and gas prices figure in a recovery at a level much greater than what Wal-Mart cares about.

OPEC is likely to cut output, perhaps by a great deal. It needs more money from the West and China. Crude at $70 a barrel does not get that done.

Even if OPEC tries the squeeze play, a deep recession could keep prices fairly low. That helps people who have to heat their homes and drive to work.

But, when the economy begins even the smallest effort to recover, a tight supply of crude will be waiting around the corner to mug it. Oil prices may not be an issue at the trough. They become a very big issue when the time comes to mount a charge back in the direction of positive GDP growth.

Oil prices are still a big deal. It is just hard to see that now.

Douglas A. McIntyre

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