OIL PRICES
Getting to the Bottom of Crushing Oil Prices
What’s driving our new oil reality—supply and demand or rampant speculation? BY KEITH REID
NOTE: A slightly modified version of this article previously ran in NPNMagazine I
T WAS A MUCH SIMPLER WORLD IN THE EARLY 2000S WHERE gas prices were concerned.As is the case today, the price of crude played the major role in the price of gasoline and at
the start of the decade the price of gasoline was a very afford- able and generally stable year-to-year. Crude oil had averaged out at $28.36 per barrel in 2000 and the
retail price averaged about $1.48.But prices were going up from the average price in 1999 of $17.46 per barrel and $1.22 per gallon respectively.The really big news at the time was that OPEC had
20 APRIL 2011 | FUEL OIL NEWS | www.fueloilnews.com
established a “price basket”of seven crudes and was adjusting pro- duction to keep crude oil prices in a $22 to $28 per barrel range. Shocking, given the low $12 per barrel price (and resultantly lower gasoline prices) motorists had enjoyed in 1998, but still well below a $35 per barrel spike in 2000. There had been a number of such price spikes during the summer of 2000 with regional gasoline prices in the Midwest cresting the $2 per gallon. These “disturbing” prices prompted the usual (for the day) political grandstanding among state
