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Throughout the 20th century, the U.S petroleum industry’s price has been strictly regulated through production or price controls. Post World War II, US oil prices averaged $24.98 per barrel. The price would have averaged $27 per barrel, matching world prices, in the absence of price controls.
Crude oil prices in the US averaged $21.05 per barrel since 1869, adjusted for dollars in 2006. World price in the same period averaged $21.66. Over half of the time prices both in U.S. and the world stood below the median oil price of $16.71 per barrel. Crude oil prices ranged from $2.50 to $3.00 from 1948 to the end of the 1960’s.
Formed in 1960, OPEC had five initial founding members – Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. During the early meetings, two representatives were versed in the art of price manipulation by limiting production. This was an arm-twisting procedure refined to perfection by the Texas Railroad Commission. By 1971 OPEC had expanded to eleven, with six new members -- Qatar, Indonesia, Libya, United Arab Emirates, Algeria and Nigeria.
From 1958 to 1970, prices were stable at about $3.00 per barrel. In 1972 the price of crude oil was about $3.00 per barrel and by the end of 1974 the price of oil had quadrupled to over $12.00. This was consequent on the Yom Kippur war of 1973, started by an attack against Israel by Egypt and Syria. The western world supported Israel and in protest the Arab nations curtailed production by 5 million barrels per day driving global prices sky-high.
The Iran/ Iraq war sparked off another round of crude oil price increases in 1979 and 1980. Prices more than doubled from $14 to $35 per barrel in 1981.
Following what is known as the Gulf War to liberate Kuwait, crude oil prices experienced a phase of steady decline, until in 1994 inflation adjusted prices attained their lowest level since 1973.
In the wake of 9/11 attack on the WTC, crude oil prices again plummeted.
In 2005, impotent against surging oil prices, OPEC threw up its hands. The condition was similar to that prevailing in the late 1970s.
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