HOW REALLY EXPENSIVE IS OIL?

HOW REALLY EXPENSIVE IS OIL ?

Everybody says that crude oil has increased the price but is that really the case? If so , How much?

I have analysed

a) the $/barrel cost since 1973
b) the €/$ exchange rate since 2001 and the peseta/$ exchange rate since 1973, with the exchange rate 166,386 pts = 1 € to make it comparable.
c) I have calculated the €/barrel cost multiplying a) and b).
d) I have corrected the cost by taking the inflation rate into consideration, multiplying each value €/barrel by 1/(1+i) where i means the anual inflation. I Have done this for Spain. I will do it for the German market as well. Realistic inflation rates are a fiction but they help to estimate the present value of a currency and purchasing power ¡¡¡


SOURCES OF INFORMATION :
I have used the EURO DÓLAR EXCHANGE RATES from http://www.oanda.com/convert/fxhistory

Spanish inflation rates from IESE, documento de investigación nº 446 , de 2002.


The oil cost series from
http://bitsandpieces.us/2008/06/14/crude-oil-prices-1970-2008/ (BP/BLOOMBERG)






What is the cost in €? And with the (Spanish) inflation adjustment?I have used a 100 base index to make it more clear :




Copyright. Jordi Delcor http://www.jordi-delcor.com/

Conclusions :

The cost in € (pesetas before 2000) has increased since the year 28 in the graph (2000) when Bush took power.
The present cost is similar to the 80’s with the Iran Revolution .
Spanish crude oil cost peaked in 1983 instead of 1980 because the Spanish peseta had 3 devaluations between 1981 and 1983 puting off the whole impact of the Iranian Revolution.
The crude oil cost taking inflation into consideration has not changed so much¡¡¡¡
The cost measured in 2006 $ peaked in 1980, when the Sha of Persia (Iran) was demoted by the Ayatollah Revolution and in 2008 but has been low for a long time (this graph is not shown, pelase see below).
Geopolitycal factors have a deep effect on price quotations more than the estimated resources. In the next post we will analyse the main oil producers and consumers, the surplus and deficit they show, what effect has China on this subject and the oil policy that the USA is carriyng out.

Jordi Delcor PhD.

IF YOU WANT THE WHOLE STUDY CHECK http://www.jordi-delcor.com/ENERGYSOURCES.htm or directly
http://www.jordi-delcor.com/informes/ENERGIA/OIL/HOW EXPENSIVE REALLY OIL IS.pdf