SINGAPORE (Reuters) - Oil prices rose to touch $60 for a second day on Friday, extending a streak of record highs that have yet to curb robust U.S. energy demand.So we're still a bit shy of the halfway mark for the year, and oil prices are already up nearly 40% for the year. Interestingly, The Oil Drum points out that we're closing in on prices that, in real terms, are about as high as what we endured during the 1970s.
U.S. crude futures on the New York Mercantile Exchange traded up 39 cents to $59.81 a barrel, having earlier reached a peak of $60 to match Thursday's record -- the highest since the contract began trading in 1983.
The data tell us that the price of oil averaged $51/bbl in 2005, whereas oil averaged $66.20/bbl in 1981, adjusted for inflation....Ouch. Of course, we still use less oil (per $1000 of GDP) then we did in 1979, so it's possible that the we're not about to hit the joys of stagflation yet. On the other hand, the main use of oil is still transportation fuel, and fleet efficiencies haven't improved any since 1979 - or rather, they did, but SUVs have basically eliminated any improvements we made since then, on average.
That means, by this way of looking at the data, we're not actually at 63% of the 1981 high in 2005 as I discussed in an earlier post.
Instead, with this more valid data, we're at 76% of the 1981 price!
And, in the spirit of Live 8, I should point out that as bad as high oil prices will be for us, it's quite possible that the third world is in for another "Lost Decade" from fuel costs if prices stay high. (Stridency Alert!) People are going to die because of our consumption. So, please people: Slash tires, key doors, do anything you can to damage SUVs, and other cars if you feel like it. Walk, bike, do whatever you can.