The History of Oil Prices

 

(Published: Fall 1999)

Throughout the oil industry's history, specific events have impacted oil prices, driving them both up and down. For example, the impact of the following events can be seen in the graph below.

 

 

 

 

1880-99: The Standard Oil monopoly controlled prices for years, but prices rose as reserves in the Northeast declined.               1939-45: World War II brought further stabilization of prices through government price controls.

1901: The Spindletop well in Texas expanded the industry outside the Northeast, but supply exceeded demand, reducing prices.

1950-70: U.S. economic growth fueled by oil led to somewhat higher prices.
    1908-20: Mass production of the Model T created demand for oil with increasing prices. 1973-79: With U.S. oil reserves in decline, OPEC dominated the market and greatly increased oil prices.

1933: Texas' dominance over oil production allowed the Texas Railroad Commission to stabilize prices for decades.

1980-91: OPEC's power declined and so did prices, until the 1990-91 Gulf War shot them upward again.

 

In 1998-1999 a flooded market knocked oil prices down to 50-year lows. With OPEC countries lowering their production, prices began to rise in 1999. As history has shown, though, oil prices have rarely stayed stable for long and cyclical prices can be expected for years to come.

 
 

 

$60
$50
$40
$30
$20
$10
1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990

 

 

U.S. crude oil prices per barrel: Prices are annual averages, adjusted for inflation using constant 1998 dollars.

 


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