2005

In 2005, nominal oil prices increased by about 40% and reached new records. World oil production, world oil demand, world oil trade, and US oil imports also hit new records. The oil producing countries generated record revenues, experienced budget surpluses, and enjoyed higher rates of economic growth. Many oil companies generated record quarterly profits. The economies of various countries, especially the US, India, and China, continued to grow at high rates, unfazed by higher energy prices.

Why have oil prices exceeded expectations? Why have they not started the process of oil demand destruction? Here are nine lessons from the high price experiences in 2005 that will affect the 2006 outlook.

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