A Century of Cheap Oil

A Century of Cheap Oil

 

From 1880 to 1971, oil was less than $40 per barrel (in today's money)

From 1986 to mid-2004, oil was cheap again

Then there was a price "spike" from 2004 to 2008

As reserves are depleted, prices will become increasingly volatile.

 

Notes


This graph shows the international price of oil from 1861 to mid-2008, when we had a major oil price “spike”.
 
The price has been less than $40 per barrel for most of the century (in 2008 dollars).  That is because it has been possible for supply to keep up with demand, for most of the last 150 years.
 
Prices rose to over $100 per barrel in the late 1970’s, when oil production in the US peaked, and the world became more reliant on Saudi Arabian oil.  The Organisation of Petroleum Exporting Countries (OPEC) decided to restrict supply, which drove up the global price of oil.
 
The past 20 years have seen relatively low prices once again.  
 
However the brief oil price spike we saw in 2007 and 2008 saw prices rise sharply reaching $140 per barrel briefly, followed by a decline in early 2009.
 
Image: http://en.wikipedia.org/wiki/Peak_oil