Oil Price History: What’s Caused the Highs and Lows Since 1974 explained by professional Forex trading experts the “ForexSQ” FX trading team.
Oil Price History: What’s Caused the Highs and Lows Since 1974?
From 1948 to 1970, oil prices ranged between $2.50 and $3.00 a barrel. That’s around $17 to $19 a barrel if adjusted for inflation. The United States was the world’s dominant oil producer. It regulated prices. Domestic oil was plentiful. Cheap oil and gas made the expansion of interstate highways, interstate trucking, and auto ownership part of the America Dream. Families moved in droves to the suburbs.
In 1960, Saudi Arabia and other foreign oil-exporting nations formed OPEC. They wanted more control over oil prices. In 1971, regulators allowed U.S. companies to pump as much oil as they wanted. That eliminated any surplus. It also meant prices would rise, as supply was limited. America became vulnerable to future shortages.
OPEC did not really flex its pricing muscle until President Nixon effectively took the U.S. dollar off of the gold standard in 1971. The value of the dollar plummeted, taking oil revenues down with it. That’s because oil contracts are traded in U.S. dollars, so oil prices also vary with the value of the dollar.
In 1973, OPEC halted oil exports to the United States, both to boost oil prices and in retaliation for the Yom Kippur War. The Strategic Petroleum Reserve was created to provide a 90-day supply to prevent future shortages.
Since 1974, oil prices have been extremely volatile.
They are affected by more than the laws of supply and demand. They are based upon the price of oil futures contracts on the commodities markets. That means commodities traders control oil prices. They will drive prices up even if they only think there will be a surge in demand, such as during the summer driving season, or a shortage, such as during the Libyan uprising.
For more, see How Oil Prices Are Determined.
In 2011, oil prices began to develop a predictable seasonal swing. Prices rise in the spring as oil futures traders anticipate high demand for summer vacation driving. Once demand has peaked, prices normally drop in the fall and winter.
Oil Prices by Year: Average, High, Low, and Events
The following chart shows the average annual WTI price since 1986 (first date available.) It’s followed by the high and low imported oil prices that year and the month they occurred. It points out reasons for the price variations and the accompanying events. ( Source: “Daily Oil Prices,” Energy Information Administration.)
| Year | Average | Low | High | Causes |
|---|---|---|---|---|
| 1974 | $9.59 Jan | $13.06 Jun | OPEC oil embargoended. | |
| 1975 | $12.77 Jan | $15.04 Nov | Stagflation. | |
| 1976 | $13.27 Jan | $13.71 Dec | Economy recovered. | |
| 1977 | $14.11 Jan | $14.76 Dec | Fed raised and lowered rates. | |
| 1978 | $14.41 Feb | $14.94 Dec | ||
| 1979 | $15.50 Jan | $28.91 Dec | Iran-Iraq War. Fed rate 20%. | |
| 1980 | $30.75 Jan | $35.63 Dec | Iran oil embargo. | |
| 1981 | $35.43 Oct | $39.00 Feb | Reagan cut taxes. | |
| 1982 | $32.78 May | $35.54 Jan | Recession ends inflation. | |
| 1983 | $27.95 Apr | $31.40 Jan | ||
| 1984 | $28.02 Dec | $29.26 May | ||
| 1985 | $26.21 Dec | $27.60 May | ||
| 1986 | $15.05 | $10.91 Jul | $24.93 Jan | OPEC adds to supply. |
| 1987 | $19.20 | $16.45 Jan | $19.32 Aug | |
| 1988 | $15.97 | $12.66 Nov | $15.93 May | |
| 1989 | $19.64 | $16.04 Jan | $20.05 Dec | |
| 1990 | $24.53 | $15.15 Jun | $32.88 Oct | Gulf War. |
| 1991 | $21.54 | $17.17 Dec | $22.30 Jan | SPR released oil. |
| 1992 | $20.58 | $16.00 Feb | $19.83 Jun | |
| 1993 | $18.43 | $12.56 Dec | $18.35 Apr | |
| 1994 | $17.40 | $12.90 Feb | $17.52 Jul | NAFTAallowed cheap oil. |
| 1995 | $18.43 | $16.29 Oct | $18.56 May | |
| 1996 | $22.12 | $17.48 Jan | $23.22 Oct | |
| 1997 | $20.61 | $15.95 Dec | $23.02 Jan | |
| 1998 | $14.42 | $9.39 Dec | $14.33 Jan | |
| 1999 | $19.34 | $10.16 Jan | $24.35 Dec | Prices doubled. |
| 2000 | $30.38 | $24.29 Apr | $30.56 Sep | |
| 2001 | $25.98 | $15.95 Dec | $24.63 May | Recession. 9/11 attack. |
| 2002 | $26.18 | $17.04 Jan | $27.14 Sep | Afghanistan War. |
| 2003 | $31.08 | $24.48 Apr | $32.23 Feb | |
| 2004 | $41.51 | $30.11 Jan | $45.36 Oct | |
| 2005 | $56.64 | $37.56 Jan | $58.79 Sep | Hurricane Katrina. |
| 2006 | $66.05 | $52.70 Oct | $67.99 Jul | Bernankebecomes Fed chair. |
| 2007 | $72.34 | $49.57 Jan | $85.53 Nov | |
| 2008 | $99.67 | $35.59 Dec | $127.77 Jul | See 2008 Gas Prices. |
| 2009 | $61.95 | $36.84 Jan | $74.40 Nov | Great Recession |
| 2010 | $79.48 | $73.73 Feb | $85.59 Dec | |
| 2011 | $94.88 | $87.61 Jan | $107.98 May | |
| 2012 | $94.05 | $92.99 Jul | $108.54 Apr | Iran threatened Straits of Hormuz. |
| 2013 | $97.98 | $90.36 Nov | $104.16 Aug | |
| 2014 | $93.17 | $57.36 Dec | $100.26 Jun | Dollar rose 15%. U.S. shale oil increased. |
| 2015 | $49.08 | $34.72 Dec | $58.90 Jun | |
| 2016 | $50.89 | $36.36 Jan | $50.50 Jun |
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More History
- History of U.S. Recessions
- Fed Funds Rate History
- National Debt by Year
- GDP Growth Rates by Year
- Unemployment Rate by Year
- Inflation by Year
- Gold Prices by Year
Oil Price History: What’s Caused the Highs and Lows Since 1974 Conclusion
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