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interesting how oil prices zoom past typical inflation
Old 03-22-2012, 01:16 AM   #1
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interesting how oil prices zoom past typical inflation

Playing around with google public data and I created this

http://www.google.com/publicdata/exp...=1269237600000

It seems that if you had invested in oil in 1914 vs just investing in something that would have just matched inflation, you would have come out way ahead.

Anyway this google public data tool is pretty cool, especially when you can upload your own data. I am a total n00b but I like it.


PS: Also pretty interesting how stable oil prices were from 1914 to 1970 (relative to post 1970.)
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Old 03-22-2012, 09:34 AM   #2
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Great chart, nice work!

You would have indeed done well investing in oil over the period you reviewed. [Frankly, I believe you will do well for the same reasons in the next decade or two for the same reasons.]

While they might have tracked somewhat at one time, there's no reason to expect what's now a global commodity to track US inflation, especially a commodity that has gone from abundant (relative to demand) to less than abundant or worse. And global demand is increasingly beyond the influence of US demand. So much has changed over the period you looked at.
  • In 1914, the US was energy independent and (easily produced) US supply was much greater than domestic demand. Now we import about 2/3rds of the oil we consume.
  • We used to have much more influence on oil production (and subsequently prices) in the Middle East, not so much if at all.
  • Where US demand once had more influence on world oil prices, demand has increased in other developing countries. Oil prices now reflect world demand, our consumption has less and less impact on oil prices.
  • Domestic oil production peaked around 1970, so that's probably a factor in the decoupling you note.
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File Type: jpg 1-us-oil-production-1940-2011.jpg (28.0 KB, 2 views)
File Type: png imports.png (315.0 KB, 3 views)
File Type: jpg chart-of-the-day-crude-oil-history-june-2011.jpg (205.8 KB, 6 views)
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Old 03-22-2012, 10:52 AM   #3
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Quote:
Originally Posted by mickj View Post
Playing around with google public data and I created this

100 dollars(adjusted for inflation) vs oil price - Google Public Data Explorer

It seems that if you had invested in oil in 1914 vs just investing in something that would have just matched inflation, you would have come out way ahead.

Anyway this google public data tool is pretty cool, especially when you can upload your own data. I am a total n00b but I like it.


PS: Also pretty interesting how stable oil prices were from 1914 to 1970 (relative to post 1970.)
Interesting chart, thank you. This is because whatever boosters and cornucopians like to say, oil is a very usefull, hard to replace and wasting asset.

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