Nominal and Real Oil Price, 1870-2016 (Dollars per Barrel)

Nominal and Real Oil Price 1870 2016 Dollars per Barrel

Source: BP Statistical Review of World Energy. Note: Real prices are in 2016 dollars (adjusted for inflation) while nominal prices are in dollars of the time.

Historically, oil prices in real terms (in today’s money) have remained remarkably stable, hovering in the range of 10 to 20 dollars per barrel. An increase in oil prices was usually associated with a recession, but not the cause of it. The first oil shock in 1973 and the second oil shock in 1979 saw a radical surge in oil prices, followed by a counter shock that brought back prices in the range of 20 to 30 dollars per barrel. When taking account of inflation (monetary debasement) the surge in oil prices after 2003 was not as acute in real terms as it was in 1980. The second oil shock implied a surge in real oil prices that was not surpassed until 2008 during the Third Oil Shock.