Oil Prices Peak? Well, No.

Note to world: don’t compare oil prices without adjusting for inflation.

Oil prices soared to a new record high over $59 a barrel on Monday, extending last week’s surge as a threat against Western consulates in OPEC member Nigeria jolted traders already worried about tight supplies.

Oil prices climbed more than 9 percent, or nearly $5, last week, drawing additional buying interest from trend-following hedge funds as they surpassed the previous early April high.

Boston.com: Oil scales new peak, eyes $60 on demand

What Reuters fails to mention is that $60 in 2005 isn’t worth $60 in 1981. In 1981, oil prices reached their all time high of $39 (1981 dollars). $39 in 1981 was worth what $94.48 is worth in 2005. So you tell me… which is bigger: $94.48 or $60.00?

What we have now is a 13-year peak. This is the most that a barrel of oil has cost, in real dollars, since 1992.

Here’s a picture, for those who have problems understanding.

8 thoughts on “Oil Prices Peak? Well, No.

  1. Dave (subscribed)

    So you tell me… which is bigger: $94.48 or $60.00?

    Doesn’t that depend on the circumference?

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  3. zev (subscribed)

    I am fascinated with this question. I do a google search and cannot find anyone who has a shadow of a doubt in the peak of oil production. I read a National Geographic, and I filtered out all the factless drama of most of the article, and pieced together what actual facts I could find about consumption, production, and the future of oil and did not see a glaring problem. I saw so much needless and dishonest hype in that article. Very sad. I’m suprised they didn’t include a close-up of an oily baby seal just to rub it in.

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