Historical Oil Prices and What We Can Read From Them
Sunday, September 27th, 2009
Jayeshvasava asked:
As a freely traded commodity, crude oil has seen vast shifts in the post-war era based upon speculation as well as the fundamentals of supply and demand. Oil was the basis for the emergence of the United States as a major industrial power in the modern era, powering the development of modern transportation and trade, as well as opening up the gates for expansion of international trade. Oil prices play an important economic and political indicator for major developed nations.
Major geopolitical events ranging from the Suez Canal crisis to economic conflicts in the Middle East can be traced to shifts in the price of oil. Major energy producers such as Saudi Arabia and Russia have leveraged their energy supplies to ensure the world of a steady supply of freely traded Crude oil. The recent conflicts in the Middle East further highlight the impact of oil prices upon world politics. Oil prices, therefore, reflect perceptions on how freely traded the commodity will be in the near future, as well as estimates of anticipated future demand patterns for the commodity.
At a core level, oil prices reflect the fundamental prediction of both supply and demand for crude petroleum. While the supply of world reserves continues to grow, many analysts expect that the freely available, traded level of crude will begin to fall relative to demand. Strategic sovereign oil firms have limited oil supply through cartels such as OPEC, which results in higher prices, as we saw prices nearing $80 per barrel in the early 1980s. The embargo on exports created conflict in the West, and further highlighted the political power of oil prices. Demand for oil hinges on the expansion of industrial power, and China has increased its domestic demand for petroleum twice over in the past decade.
Kohler Plumbing Fixtures
As a freely traded commodity, crude oil has seen vast shifts in the post-war era based upon speculation as well as the fundamentals of supply and demand. Oil was the basis for the emergence of the United States as a major industrial power in the modern era, powering the development of modern transportation and trade, as well as opening up the gates for expansion of international trade. Oil prices play an important economic and political indicator for major developed nations.
Major geopolitical events ranging from the Suez Canal crisis to economic conflicts in the Middle East can be traced to shifts in the price of oil. Major energy producers such as Saudi Arabia and Russia have leveraged their energy supplies to ensure the world of a steady supply of freely traded Crude oil. The recent conflicts in the Middle East further highlight the impact of oil prices upon world politics. Oil prices, therefore, reflect perceptions on how freely traded the commodity will be in the near future, as well as estimates of anticipated future demand patterns for the commodity.
At a core level, oil prices reflect the fundamental prediction of both supply and demand for crude petroleum. While the supply of world reserves continues to grow, many analysts expect that the freely available, traded level of crude will begin to fall relative to demand. Strategic sovereign oil firms have limited oil supply through cartels such as OPEC, which results in higher prices, as we saw prices nearing $80 per barrel in the early 1980s. The embargo on exports created conflict in the West, and further highlighted the political power of oil prices. Demand for oil hinges on the expansion of industrial power, and China has increased its domestic demand for petroleum twice over in the past decade.
Kohler Plumbing Fixtures
