Oil = All Time (Inflation Adjusted!) High

Oil_10395

click for updated chart


>

Oil prices today passed their all time, inflation-adjusted record, just kissing the underside of $104 dollars. As the chart above shows, crude prices have broken out from a 6 month consolidation between $85 and $95.

The commodity looks like it has legs, which is trader talk for its going higher. While I do not make a habit of forecasting commodity prices, $110, and then $125 are our next two  targets.

I got your core inflation right here . . .

Print Friendly, PDF & Email

What's been said:

Discussions found on the web:
  1. Michael Schumacher commented on Mar 3

    And it continues to appreciate even with Oil inventories at 15-16 year highs…..

    Gee…what event was about to occur 16 years ago that is VERY similar to now???

    The oil pits are doing the same thing that Enron did in the electricity marketplace in 2000-2001 in California. Creating the appearance of a shortage when it most certainly shows a lack of one.

    But keep going after Baseball, Football, and Chocolate.

    Ciao
    MS

  2. Jessica commented on Mar 3

    Oil is at its all-time inflation-adjusted high using the government’s figures for inflation, which many, including you, have said under-estimate actual inflation.
    What is the inflation-adjusted all-time high price for oil using more realistic numbers for inflation? Very, very crudely, if real inflation has been 2% higher for the past 10 years, then the true all-time high would be at least 20% higher.

    Of course, what current oil prices do prove, regardless of how one translates the Khomeini spike of the early 80s into current money, is that the drop in the dollar due to the Fed’s dropping interest rates (AKA the hard place of “rock and a hard place”) is showing up more in the devaluation of the dollar against oil, gold, most every commodity, than in devaluation against other currencies.

    Being the Fed Chair right now is about like being the owner of the Knicks.

  3. MooPoint commented on Mar 3

    I mentioned this before, but oil priced in gold hasn’t changed much at all in the past year. Just before the breakout in september, oil was $70, gold was $690 = 0.102 onces/brl and now oil its $103.5 and gold is $990 which gives 0.105 onces/brl. Not really much of a change. Does that mean we are also at ‘peak gold’?

  4. larster commented on Mar 3

    Is it possible that oil inventory measurements are as flawed as the CPI and unemployment measurements?

  5. Kp commented on Mar 3

    Looks as though the spec’s are gonna continue to feed this bubble higher until some significant market event occurs.

    To BB:

    Ignoring inflation is like ignoring cancer, it works until it kills you.

  6. mr commented on Mar 3

    Oil was more expensive in 1980 than now, in inflation adjusted dollars.

  7. ljl commented on Mar 3

    Has the news media ever considered how certain politicians in the United States stand to benefit from the increase in the price of oil, Cheney, Bust, etc. This kind of information would be much more valuable then the drivel we usually get.

  8. kio commented on Mar 3

    How long will it stay so high?

  9. sam commented on Mar 3

    Shorting USO/EOG right here.
    Barry, we will see by year end who wins here.

  10. Pat G. commented on Mar 3

    Yay..now all the cheerleaders can no longer claim that. If the FED keeps cutting, $125 oil will be no problem.

  11. DonKei commented on Mar 3

    Oil at a near record high? My, my, what w/ the pol’s all going protectionist (this time against that other Asian nation), a mideast war, etc., I could swear I must be typing this on an IBM Selectric, while wearing a leisure suit and sporting another day of bad hair.

    Okay, I’ve got the bad hair thing down, thirty years on, but the rest is a time warp.

  12. Pool Shark commented on Mar 3

    Jessica:

    “Oil is at its all-time inflation-adjusted high using the government’s figures for inflation, which many, including you, have said under-estimate actual inflation.
    What is the inflation-adjusted all-time high price for oil using more realistic numbers for inflation? Very, very crudely, if real inflation has been 2% higher for the past 10 years, then the true all-time high would be at least 20% higher.”

    Exactly!

    As I pointed out a few days ago, gasoline was only $0.30 per gallon in 1964 (long before the oil shocks of the 70’s). That’s 3 silver dimes.

    Today, the silver in those 3 dimes is worth $4.35.

    Gas at $3.50 per gallon is around 20% lower than it was in 1964.

    (Not to mention, silver is nowhere near its all-time high of around $50.00 per ounce when the Hunt brothers were trying to corner the market in 1980!)

  13. Francois commented on Mar 3

    “As I pointed out a few days ago, gasoline was only $0.30 per gallon in 1964 (long before the oil shocks of the 70’s). That’s 3 silver dimes.

    Today, the silver in those 3 dimes is worth $4.35.

    Gas at $3.50 per gallon is around 20% lower than it was in 1964.”

    All this is great and far out, but we don’t pay in silver dimes. Even if it has legal tender, no one will take them at the gas station. So, we’re paying in dollahs, and they ain’t growing aplenty one year to the next in my wallet.

    I wouldn’t mind paying in e-gold but they don’t accept that either.

    Given the above, pray tell what is the practical point of these calculations?

  14. Darkness commented on Mar 4

    >Schumacher: Oil inventories at 15-16 year highs…..

    Not by the measure of “days of supply” they sure as heck aren’t. http://tonto.eia.doe.gov/dnav/pet/hist/w_epc0_vsd_nus_daysw.htm

    Oil demand is higher than it’s ever been. Oil companies always stock up over the winter to be ready for the summer driving season. Ergo, to have enough oil for the highest driving season ever they have the highest ever stock. But it’s a paltry 21.2 days of supply when back in 1984, we had 30 days of supply at this time.

  15. RobZ commented on Mar 4

    “Oil prices today passed their all time, inflation-adjusted record”

    Oil price adjusted for an inflation rate that does not include energy (i.e. oil).

    Gotta love it!

  16. Observer of History commented on Mar 4

    Inflation ALWAYS peaks during or right after a war:

    WWI
    WWII
    KOREA
    VIETNAM
    GULF WAR I (an exception since it was quick and Bush got his buddies to pay)

    GULF WAR II (still unfolding but commodities are going nuts)

    Start a war in the Middle East and guess what happens to the price of oil. You didn’t have to be a genius to see this coming.

    The four rules of war continue to be:
    -They cost a lot of money
    -People die
    -They are easier to start than stop
    -The results are unpredictable

    Inflation, sky high oil, yes, but that is what happens when you enter an extended war
    especially when you do it on borrowed money and in the Middle East.

  17. zot23 commented on Mar 4

    Inconceivable! Everyone knows you never fight a land war in Asia, and never bet a Sicilian when death is on the line!

    Seriously though, is anyone surprised by any of this? You start a war in the Mid-east, you get a war. We use our soldiers to inflict pain on them, they use the price of oil to inflict pain on us. More soldiers = higher oil prices. Enjoy their “surge”.

  18. Pool Shark commented on Mar 4

    Francois,

    The practical point is to refocus the analysis from how expensive oil is to how cheap the US$ is (measured in virtually every commodity).

  19. rick giberson commented on Mar 4

    I like your comments and thoughts. Any chance you could use spell check and use correct grammar (since you are being seen in a printed medium)?

  20. The Big Picture commented on May 9

    What is Next for Crude Oil ?

    The commodity looks like it has legs, which is trader talk for its going higher. While I do not make a habit of forecasting commodity prices, $110, and then $125 are our next two targets. I got your core inflation right here . . . That was our March 3r…

Read this next.

Posted Under