For once, the oil market responded relatively calmly. At least for today.

Oil briefly rose to a record-high $119.93 per barrel on word of a strike-related closed pipeline by BP, before settling back to close Monday up 18 cents to $118.70.

Earlier in the day oil futures watchers -- and anyone else who uses oil or gasoline -- had feared the worst after Bloomberg News reported early Monday that BP plc (ADR) (NYSE: BP) closed the Forties Pipeline System, which carries 40% of the U.K.'s oil production, after a strike at the Grangemouth refinery cut power supplies.

Economist Peter Dawson said despite the size of the BP production disruption, the oil markets interpreted the U.K. shutdown as "a localized event, at least for Monday."

"The wonder is that prices didn't shoot past $120 during the day, which is surprising," Dawson said. "Given the level of investor activity in oil, one would think it would have skyrocketed past $125 today, but it didn't. Perhaps it was because institutions and traders have built up such large long positions in oil, they're maxing-out their risk quotient with oil." Dawson added that he does not own or trade oil futures contracts or any energy contract.

Oil: up 350% since 2001

The price of oil has increased about 80% in the past 12 months and is up an astounding 350% since January 2001. The other major energy commodities also retreated Monday. Heating oil fell about 2 cents to $3.30 per gallon, unleaded gasoline declined about 3 cents to $3.03 per gallon.

Still, Dawson underscored that a one-day underperformance by oil is hardly a cause for a celebration for energy users.

"From a U.S. standpoint, this period is the most serious energy situation since the oil shock in 1979-80. We have record-high gasoline prices over $3.50 per gallon nationally, and rising costs just about everywhere else. Oil prices at these levels cut into disposable income," Dawson said. "That's never good for the U.S. economy."