Yesterday, two pieces of news conspired to push the price of crude oil to new heights. The first is that U.S. oil inventories aren't as robust as everyone thought, and the second is that OPEC, the Organization of the Petroleum Exporting Countries, decided not to increase production of their black gold, Texas Tea. With these two nuggets of bad news, oil futures climbed $5/barrel yesterday, peaking at $104.95 before closing at $104.52. Even when adjusting for inflation, yesterday's closing price beats the previous $103.76 ($39.50 at the time) record set in April 1980 during the second oil crisis. This was all on the evening news yesterday, so you may have heard your favorite network news anchor get really funky with his inflection talking about it.That was yesterday. Today things got worse, with the price of crude sky rocketing up to $105.97 per barrel, nearly 106 bucks (!), early in the trading session. Why the panicking? Apparently there was an explosion in New York City at Times Square this morning, and before anyone knew what had actually happened, fear of the unknown pushed prices higher. It turns out that the explosion wasn't that big, no one was injured, and it doesn't appear to be a terrorist attack of any sort, and thus the price of oil has since fallen back to a more palatable but still tough to swallow $104.11 per barrel. For some perspective, we found this post written in October 2005 about the price of oil hitting a 2-month low: $61.36 a barrel.
[Source: MarketWatch, Photo by ADEK BERRY/AFP/Getty]
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Reader Comments (Page 1 of 5)
dropscience @ Mar 6th 2008 11:03AM
No surprise there.
Andrew @ Mar 6th 2008 11:04AM
HURRR CAN'T WAIT FOR THE CAMARO HURRRRRRRR
mike @ Mar 6th 2008 11:05AM
Damn that government that wants to increase the fuel economy.
Jon @ Mar 6th 2008 11:09AM
I am really getting tired of these 'Shocking', 'Highest' Reports about Oil Prices. Oil Prices today are the highest they have ever been. Period. If Oil Prices go up tomorrow, then tomorrow's Oil Prices will be the highest ever! News media Must report that which is most shocking, and then blow it out of proportion. Stop Kicking that Dead Horse, we know it is dead, go find something else to report on.
Mat_the_frog @ Mar 6th 2008 11:27AM
Jon - Obviously you don't understand the concept of "inflation adjusted". The importance of this milestone in oil price is that oil is now more expensive than it ever was compared to everything else. Of course we crossed the absolute figure of $39.50 a long time ago but you don't earn $12K a year anymore either. Everything is relative.
Now the big question we should all be asking is 'what's going to happen'. If this price level triggered a crisis in the 80s, then there's a pretty good chance there will be consequences this time around. Let's hope that it will be a reduced interest in gaz-guzzler and not some ill-advised policy like price controls (like Canada in 1980) or subsidies (corn...)
3seriesisking @ Mar 6th 2008 11:13AM
Could the NY explosion been by one of those guys who holds up the "The End is Near" signs at Times Square. The bomb might have been a ploy to raise the price of oil more to make people believe his philosophy??????? Just speculating here.
rouse42 @ Mar 6th 2008 11:17AM
springs right around the corner.
and it looks like were gearing up for $4.00+ gal.
dont worry. this fall it should be back down to $3.79 or so.
only to see $4.50+ this time next year.
Esprit bird @ Mar 6th 2008 11:23AM
Man this sucks for my kid...and well you're average high school student earning 6.50 an hour at their jobs.
Craig @ Mar 6th 2008 6:25PM
Well, your kid might just have to ask for a raise. Same thing the rest of us do.
Eddie @ Mar 6th 2008 11:25AM
There is an explosion in NY so oil prices rise? How are the two even remotely related?
zamafir @ Mar 6th 2008 12:26PM
There not, the sad thing is many are unaware of the mercantile exchange and it's overwhelming effect on oil prices... and those many still live in the good old days when oil prices were determined by supply and demand.
Thedevil @ Mar 6th 2008 11:27AM
Good thing my father inlaw 08 H2 hummer burns less gas than his previous 02
Chuck @ Mar 6th 2008 11:29AM
Oil was $25 a barrel in 2005 and $50 a barrel at the beginning of 2007. If you all greet the price this morning of $105 with a shrug, I hope you can shrug off the cost of every consumer good and service increasing dramatically in the coming months.
This isn't just about cars!
2004m3driver @ Mar 6th 2008 1:38PM
Yup its hitting me on all fronts. I manufacture clothes and it requires oil to create polyester fabric so my cost is rising too. This sucks. Everything is rising except my paycheck. I am screwed.
sr20de @ Mar 6th 2008 6:09PM
Guess it's time to trade that M3 for a Prius! ;)
bruno @ Mar 6th 2008 11:37AM
Keep in mind that this is due to the dollar's fall, not simply demand and supply of oil.
Soybeans, wheat, corn, gold, silver, paladium, etc, they're all going up too as we print/create through lending money to "save" the economy and pay for things our government can't afford to provide.
The dollar hit a new low vs the Euro today.
Owen @ Mar 6th 2008 9:03PM
Ah, an intelligent reply. The rest of the world buys oil in USD, when the value of the Euro goes from .9 to 1.52, they very well may be paying the same for oil today (in Euros or Yuan, or whatever) as they did 6 months ago, however we are not because of the exchange rate. The falling value of the US dollar has more impact than even speculation has, and certainly more than supply and demand has.
Richard S. @ Mar 6th 2008 11:37AM
Well, perhaps higher oil prices will have the effect of forcing people to conserve more energy. Goodbye to Ford Expedition EL, say hello to Mazda CX-7.
Seriously, it is time for the Big 2.5 to come with a radical plan to bring small, spacious, safe, with good performance and fuel economy that does not look like a shoe box and does not cost the same as a Buick.
Why can't GM, Ford and Chrysler get together and develop a small car platform that they can all share. I am sure the DoJ will not look as ant-trust issue. They can spread developmental costs and let each one sell their own version with its own sheetmetal. Of course they could just build in Mexico their Fiestas and Corsas and bring it over, but if they do that, make sure to give the buyers similar options for engines that Euro buyers have.
Syco @ Mar 6th 2008 11:48AM
Agreed, Its time for the big boys to get serious about premium small cars. If/when gas hits $4.50 a gallon, the big 2.5 are going to take serious hits..
TMC @ Mar 6th 2008 11:48AM
"Goodbye to Ford Expedition EL, say hello to Mazda CX-7."
Actually, I'd say more like goodbye Exp EL, say hello to Mazda5.
FWIW, I am ok with the mass exodus of the land barge.