Lynne Kiesling
This morning finds oil prices hitting $98 per barrel, amid inventory data showing that U.S. inventories have fallen for another week (that’s three in a row). So is this the most expensive oil has ever been in real terms?
“The $100 jackpot is imminent now, despite the fact there aren’t really oil fundamentals that can justify such a level,” said Kamel al-Harami, an independent oil analyst in Kuwait City. “It is only a matter of time for both consumers and producers to be hurt.”
Prices have passed the previous all-time inflation-adjusted record reached in 1981, when Iran cut exports. The cost of oil used by U.S. refiners averaged $37.48 a barrel in March 1981, the Energy Department said, or $84.73 in today’s money.
But, as this LA Times article suggests, whether or not this is the highest-ever oil price depends on whom you ask (and kudos to the writer of the article for the correct use of “whom”!):
Cambridge Energy Research Associates believes the record is $99.04 a barrel, a level it said was reached in inflation-adjusted terms in April 1980.
The International Energy Agency agrees that April 1980 was the peak month but says the price would translate to $101.70 a barrel today.
The Energy Department’s Energy Information Administration has a different view.
It said the previous inflation-adjusted record — $93.48 a barrel — was set in January 1981. That would make the price reached Tuesday, an increase of $2.72 to $96.70 a barrel, a new record closing price. Earlier Tuesday, the price climbed to $97.10 a barrel.
OK, folks, time to dust off those bikes and find those train schedules, because gasoline prices are gonna get ugly … at least in the short run.
What would the price have to be to reach purchasing power parity?
I don’t understand what you mean by parity. Around $100 is the “historical high” in real terms, depending on how you calculate it (as described in the LAT article). PP parity usually refers to the price in one place relative to another place.
Lynne, we ARE in another place! Even taking inflation into account, we are vastly richer than we were back in 1981.
This might be why the economic effect of higher oil prices have not been felt. Yes, oil is at a record price, but we’re so damn rich that it has no effect.
So, what price would oil have to be for it to take up as much of our income as it did in 1981, or however you would do such a calculation.
Lynne, we ARE in another place! Even taking inflation into account, we are vastly richer than we were back in 1981.
This might be why the economic effect of higher oil prices have not been felt. Yes, oil is at a record price, but we’re so damn rich that it has no effect.
So, what price would oil have to be for it to take up as much of our income as it did in 1981, or however you would do such a calculation.