Oil Price History: What's Caused the Highs and Lows Since 1974?

What's the "Right Price" for Oil?

oil price history
A car driving by the main oil pipeline in Saudi Arabia. Credit: Wayne Eastep/Getty Images

Oil Price History

From 1948 to 1970, prices ranged between $2.50 and $3.00 a barrel, or around $17 to $19 a barrel if adjusted for inflation. That's because 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 the Organization of Oil Producing Exporters (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 now 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. For more, see Gold Standard History.

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 (SPR) 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  JunOPEC oil embargo ended.
1975  $12.77  Jan $15.04  NovStagflation.
1976  $13.27  Jan $13.71  DecEconomy recovered.
1977  $14.11  Jan $14.76  DecFed raised and lowered rates.
1978  $14.41  Feb $14.94  Dec
1979  $15.50  Jan $28.91  DecIran-Iraq War. Fed rate 20%.
1980  $30.75  Jan $35.63  DecIran oil embargo.
1981  $35.43  Oct $39.00  FebReagan cut taxes.
1982  $32.78  May $35.54  JanRecession 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  JanOPEC 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  OctGulf War.
1991 $21.54 $17.17  Dec $22.30  JanSPR 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  JulNAFTA allowed 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  DecPrices doubled.
2000 $30.38 $24.29  Apr $30.56  Sep 
2001 $25.98 $15.95  Dec $24.63  MayRecession.  9/11 attack.
2002 $26.18 $17.04  Jan $27.14  SepAfghanistan 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  SepHurricane Katrina.
2006 $66.05 $52.70  Oct $67.99  JulBernanke becomes Fed chair.
2007 $72.34 $49.57  Jan $85.53  Nov 
2008 $99.67 $35.59  Dec$127.77  JulSee 2008 Gas Prices.  
2009 $61.95 $36.84  Jan $74.40  NovGreat 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  AprIran threatened Straits of Hormuz.
2013 $97.98 $90.36  Nov $104.16  Aug
2014 $93.17 $57.36  Dec $100.26  JunDollar 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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