12 May 2008

Oil Prices Record High In Real and Nominal Terms

The previous high in real dollar oil prices (i.e. adjusted for inflation) was $103.80 a barrel set in April 1980. The nominal price at the time was $39.50 a barrel.

The $103.8 real-term record was calculated with crude prices posted on the Wall Street Journal and adjusted by the CPI.

Other methods of calculating the real price back in 1980 suggest a $90 peak. Prior to 1980 the previous peak was when: "A barrel of oil once reached $20 in 1859, shortly after oil was found in the United States . . . . That translates into a real-term price of over $400[.]"

Oil reached about $120 a barrel this month. It has done so without the dramatic embargo or supply interruption seen in previous oil price surges (although, of course, there are always less dramatic supply interruptions in the oil market).

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