Crude oil price likely to hit peak Crude oil prices appear increasingly likely to hit a record in real terms reached during the second oil crisis in 1979, as nominal prices on Monday continued rising well above $90 a barrel. West Texas Intermediate crude hit a fresh nominal all-time high of $93.20 a barrel on Monday on a combination of renewed geopolitical tension over Iran's nuclear programme, weakness of the US dollar and low inventories. (...) In real terms, adjusted for inflation, oil is at its highest price since the early 1980s but still below its modern historical peak - equivalent to about $100-$110 a barrel in today's money - reached in late 1979 after the Iranian revolution. (...) There are also discrepancies among energy economists on which level represents the true adjusted record, as WTI futures did not exist in the early stages of the second oil crisis in 1979. That obliges to use for the calculation other crude oils streams that are not exactly comparable. There is also disagreement about which inflation measure should be used to adjust the price - world inflation or US inflation. But most agree that $100-$110 a barrel will represent roughly the real terms record. A measure taking account of the evolution over time of the rich countries' per capita income has crude oil prices well below the adjusted record. G7 per capita income is now sufficient to buy 456 barrels of crude oil, well above the 320 to 350 barrels between 1980 and 1982. To bring G7 purchasing power down to this level would require oil prices rising to between $120-$130 a barrel, according to Deutsche Bank.
Crude oil prices appear increasingly likely to hit a record in real terms reached during the second oil crisis in 1979, as nominal prices on Monday continued rising well above $90 a barrel.
West Texas Intermediate crude hit a fresh nominal all-time high of $93.20 a barrel on Monday on a combination of renewed geopolitical tension over Iran's nuclear programme, weakness of the US dollar and low inventories.
(...)
In real terms, adjusted for inflation, oil is at its highest price since the early 1980s but still below its modern historical peak - equivalent to about $100-$110 a barrel in today's money - reached in late 1979 after the Iranian revolution.
There are also discrepancies among energy economists on which level represents the true adjusted record, as WTI futures did not exist in the early stages of the second oil crisis in 1979. That obliges to use for the calculation other crude oils streams that are not exactly comparable.
There is also disagreement about which inflation measure should be used to adjust the price - world inflation or US inflation. But most agree that $100-$110 a barrel will represent roughly the real terms record.
A measure taking account of the evolution over time of the rich countries' per capita income has crude oil prices well below the adjusted record. G7 per capita income is now sufficient to buy 456 barrels of crude oil, well above the 320 to 350 barrels between 1980 and 1982.
To bring G7 purchasing power down to this level would require oil prices rising to between $120-$130 a barrel, according to Deutsche Bank.
still below its modern historical peak
Huh!? What sense does this make? If you look at GDP, shouldn't change in per capita oil use also be taken into account? As in, driving larger cars and getting more stuff transported on trucks and ocean-going ships? *Lunatic*, n. One whose delusions are out of fashion.
You only have to know the price of oil, the amount of imports and the GDP at any given time.
Speaking very roughly nad back-of-the-hand, the share of GDP spent on oil imports in Sweden should be somewhere between 1/8 and 1/4 compared to back in the 70's. Peak oil is not an energy crisis. It is a liquid fuel crisis.
By the US GDP deflator, we are already past the 1979 peak of about $86 in current US dollars. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
