Where Did Our Energy Crisis Go? A Look Back to What I Said Last Year

Periodically I write about hot button issues from the current events of the time; differentiating the hype from the substance. Energy prices seem to be the perpetual lightening rod that American

The entry below was written on August 31, 2005:

The New Unfounded Crisis: Oil Prices

Like clockwork, the media continues to promote the next crisis. Fear sells and there is always something to worry about, but the economic apocalypse never comes. Anyone remember the jobless recovery, the bear market that we never would get out of, or the world meltdown of computer systems on Y2K? That was the panic of the past. Today it’s oil prices.

First of all, put things in perspective. You hear all of the news about record prices; that’s in nominal terms, not inflation adjusted terms. Oil has actually lagged inflation over the last twenty five years. If oil increased with inflation since its peak of $38 per barrel in 1980, it would be approximately $97 per barrel today. With oil around $70 a barrel, we still have a long way to go. How about gas? Gas peaked at $2.94 a gallon in today’s dollars back in 1981 and we are a bit closer to that mark. The ramifications of hurricane Katrina may push us closer to inflation adjusted high’s, but we are still in line with prices in real terms. So the daily reports sounding the news of record shattering prices is a slant on the truth.

Maine Today