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.