$100 Oil: Is It Significant?

Even with the current rise in WTI light sweet crude due to concerns over Libya, we are still off by over $40 from its nominal high and off by more than $30 from the inflation adjusted high, both hit in 2008 during the financial crisis.

Below we highlight some of the past spikes in crude oil prices -sensitivity to geopolitical events, especially those centered in the Middle East, are clearly some of the leading factors.

  • Summer 2008: Crude oil hit its nominal and inflation adjusted high, with an intraday nominal high of $147.27/barrel, and a monthly inflation-adjusted high of $134.45 hit in June 2008 (CPI was negative)
  • The Gulf War in 1990 - 1991: The war caused another inflation adjusted spike of $58.72 in October 1990 where the nominal price was $35.9/barrel
  • Iranian Revolution in 1979/1980: The next highest inflation adjusted spike (prior to the 2008 inflation and nominal high) came in the wake of the Iranian Revolution when the Iraqi invasion of Iran caused oil production in both countries to be severely disrupted in 1980, causing the inflation adjusted peak of $106.48/barrel and the nominal price of oil to rise to $39.50/barrel
  • 1998 is the inflation adjusted low for oil based on 2011 dollars going back to 1946
    -In Dec, 1998 the inflation adjusted level was $14.96, but the nominal low was $10.73/barrel hit on December 10, 1998

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