Monday, 5 September 2011
Crude oil prices History
Crude oil prices behave much as any other commodity with wide price swings in times of shortage or oversupply. The crude oil price cycle may extend over several years responding to changes in demand as well as OPEC and non-OPEC supply.
The U.S. petroleum industry's price was heavily regulated through production or price controls throughout much of the twentieth century. In the post World War II era U.S. oil prices at the wellhead averaged $26.64 per barrel adjusted for inflation to 2008 dollars. In the absence of price controls, the U.S. price would have tracked the world price averaging $28.68. Over the same post war period the median for the domestic and the adjusted world price of crude oil was $19.60 in 2008 prices. That means that only fifty percent of the time from 1947 to 2008 have oil prices exceeded $19.60 per barrel.
Until the March 28, 2000 adoption of the $22-$28 price band for the OPEC basket of crude, oil prices only exceeded $24.00 per barrel in response to war or conflict in the Middle East. With limited spare production capacity, OPEC abandoned its price band in 2005 and was powerless to stem the surge in oil prices, which was reminiscent of the late 1970s.
The U.S. petroleum industry's price was heavily regulated through production or price controls throughout much of the twentieth century. In the post World War II era U.S. oil prices at the wellhead averaged $26.64 per barrel adjusted for inflation to 2008 dollars. In the absence of price controls, the U.S. price would have tracked the world price averaging $28.68. Over the same post war period the median for the domestic and the adjusted world price of crude oil was $19.60 in 2008 prices. That means that only fifty percent of the time from 1947 to 2008 have oil prices exceeded $19.60 per barrel.
Until the March 28, 2000 adoption of the $22-$28 price band for the OPEC basket of crude, oil prices only exceeded $24.00 per barrel in response to war or conflict in the Middle East. With limited spare production capacity, OPEC abandoned its price band in 2005 and was powerless to stem the surge in oil prices, which was reminiscent of the late 1970s.
