However, I am not certain how much longer the economy can continue to absorb out-of-control energy costs and not see a resurgence of inflation.
Exactly, we could see a situation with inflation and a falling economy at the same time.
the price of oil does not cause inflation. The amount of money in circulation is inflation. If that has not increased inordinately then as oil goes up other things must go down commensurately. That is not currently the case. Inflation is strong. Much of it is exported to China as China uses its dollars to buy US securities and prices inside China go up. Here we have exploding housing prices and, of course, oil. These manifestations are dismissed as not being part of the "core" inflation rate.Because these prices are rising so strongly and the so-called core rate is NOT declining, inflation is strongly indicated.