[Olle]

Isn't this a new historic high? $79.64 /bl link

Anyway, I believe 2008 actually gonna be the last year of oil production growth, It will beat all the records from 2005 and 2006, i.e. we are not going to see oil substancially over $80 until 2009/2010

[KevO]

Expletive deleted. ! when did that happen? I missed that one!!
can someone copy it up for posterity?

[mekrob]

$this->bbcode_second_pass_quote('', '
')
Analysts attribute much of the recent increase to price spikes in the Midwest and Plains states caused by the closing of a 108,000-barrel-per-day refinery in Coffeyville, Kan., due to flooding and a 250,000-barrel-per-day refinery in BP PLC's Whiting due to a leak.

[eXpat]

And according to IEA global oil demand will actually rise in 2008 link, demand destruction everyone?

[Starvid]

Oil was still more expensive duting the oil crisis of the 1970's, adjusted for inflation.

[Olle]

$this->bbcode_second_pass_quote('Starvid', 'O')il was still more expensive duting the oil crisis of the 1970's, adjusted for inflation.

[whereagles]

here: (can't make it an image on-screen - how do I do that??)

http://inflationdata.com/inflation/imag ... _Chart.htm

If you can't be bothered to click, here's the catch: max price was $100.28 in dec 1979

[Zardoz]

$this->bbcode_second_pass_quote('Olle', 'I')sn't this a new historic high? $79,64 /bl

[Olle]

$this->bbcode_second_pass_quote('whereagles', 'h')ere: (can't make it an image on-screen - how do I do that??)

http://inflationdata.com/inflation/imag ... _Chart.htm

If you can't be bothered to click, here's the catch: max price was $100.28 in dec 1979

[Madpaddy]

PStarr,

I think you are correct. When Oil hit $78 last year, the Irish media reported that it was almost at the inflation adjusted value of $80 reached the year of the Iranian revolution.

Of course, maybe the dollar has dropped 25% in value since last year - they are going to get caught out by their own lies eventually.

[Bas]

it'll be all over the news, all over the world in the coming month.

[whereagles]

$this->bbcode_second_pass_quote('pstarr', 'I') think somebody at that inflation-calculator site is playing a game or working for Bush. We have been through these numbers here at PO before, and I believe the price of a barrel crude in the late 1970's was $80 adjusted. Why did it just jump to $100? suspicious.

[fletch961]

CPI-U Index (not seasonally adjusted)

Dec. 1979 = 76.7
Jan. 2007 = 202.42

202.42/76.7 = 2.63911 which means 163.9% inflation over that time

Oil $38 in Dec. 1979 (monthly ave) = 38*2.63911 = $100.29 in Jan 2007.

As of May 2007 the CPI-U stood at 207.95. That Dec. 1979 oil would have to go to (207.95/76.7)*38= $103.03 to be an all time adjusted for inflation.

Reasons for the $80 figure:

a. They used a peak annual figure instead of monthly figure. An average annual price of oil in 1979 of about $30 would give you your $80 figure. Although I believe 1981 is the year used for highest annual average price.

b. The media is a bunch of idiots. They were parroting old figures. Use 1998's CPI index to compare 1979 prices to today and you get useless information.

c. The one this board likes the best. The conspiracy theory. The government is lying to us and tell us that inflation is much higher than it actually is. The more inflation the government reports the higher oil prices have to go up today just to keep up. If inflation was only 100% over the last 28 years than oil would only have to exceed (2*38 ) $76 to be at all time highs. Of course this goes against one of the primary conspiracies here is which the government is actually under reporting inflation, but conspiracies don't need to make sense do they?

In short, you will more than likely find that today's highs are at or above 1979's annual average, but below it's all-time monthly average, and way below the all-time intraday high when adjusting for inflation. Is it fair to compare one day's high against a yearly average? If you want to compare apples to apples then compare monthly averages to monthly averages. To me it's not an all-time high until it is higher than the price over the same time period.

Hope that clears up the confusion as to why different figures are used.

[DantesPeak]

Use of the CPI as a benchmark is flawed in two different ways:

1. Changes in oil prices tend to take a great deal of time to be fully reflected in the CPI

2. By using the CPI which itself includes oil prices, the measurement of the effect of oil prices on the CPI may be diminished. For example, if oil prices and products using oil rose 20%, and the price of everything else noy using oil stayed the same, but the CPI rose 10% over two years – has the price of oil risen only 10% in inflation 'adjusted terms' – or 20%? Logic would say oil prices have risen 20% - period – but these media stories would say it has only risen a relative 10%, so that's not so bad.