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Thursday, 12 August 2004

Newsflash: Oil Prices NOT at Record High

Practically every American news outlet has been flipping out over prices in oil trading. Everywhere you turn someone's spouting off about "record levels"

Oil prices touched record levels Thursday as an escalating battle in Iraq, approaching storms in a U.S. production region and continued uncertainty about Russian exporter Yukos led to more speculative buying.

At around noon ET, U.S. light crude for September delivery rose 58 cents to $45.38 on the New York Mercantile Exchange after setting an all-time record of $45.50 a barrel minutes before. The price stands well above the record high for New York crude futures of $45.04 struck Tuesday.

Anyhow, I was sitting around watching Headline News with my dad when one of the pundits started in on the party line, and my Dad said it was total bullshit. He said that oil prices were WAY higher than they are now during the Iran/Iraq war.

I was skeptical, but I figured it couldn't hurt to Google it. Wouldn't you know it, he's right:



(click to enlarge)


According to WTRG Economics, the price of oil in 1981-82 was over $50 a barrel without taking inflation into account.

As anyone with half a braincell will recall, the Bush Administration has been accused of striking a deal with the Saudis to drop oil prices just before the election:

In an interview that aired Sunday on CBS, Woodward, a Washington Post editor, said that Saudi Arabia's ambassador to the United States, Prince Bandar bin Sultan, had promised President Bush that the Saudis would cut oil prices before November to ensure the U.S. economy was strong on election day. Woodward is the author of the new book "Plan of Attack" on Bush's preparations for the Iraq war.

It wouldn’t be the first time Saudi Arabia has used oil as a political or diplomatic weapon, most notably during the embargoes of the 1970s that brought gasoline rationing in the U.S. More recently, the Saudis increased production to ease oil prices at the start of the Gulf War in 1990 to support the first Bush administration in its effort to turn back Iraq’s invasion of Kuwait.

When the prices DO drop, W will get credit for easing the price of oil down from the so-called record highs.

Posted by flow Frazao on August 12, 2004 at 01:04 PM in World News | Permalink



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