The oil price

Oil is in the news with the price soaring sharply due to supply disruption in the Middle East. But it was already very cheap in real terms at only 26% of its 1950 value.

At only 26% of its 1950 post-war value, in real terms oil is remarkably cheap. Oil was only cheaper during Covid, when storage facilities ran out while speculative longs on Comex paid to avoid taking delivery. Meanwhile in dollars, the price of a barrel has risen 38 times.

There are common objections to this method of valuing a commodity. Supply and demand characteristics for a single commodity vary over time, but that is true even