Oil prices at record level for 2nd successive year

Brent Jan13.pngCrude oil prices remained at a record level for the second year running in 2012. As the chart shows, Brent prices averaged $112/bbl versus $111/bbl in 2011 (blue line). By comparison, 2008 averaged $97/bbl, or $102 if adjusted for inflation (red):

• 2008 still holds the record for the highest-ever daily price at $144/bbl on 3 July
• It also holds the record for the 2 highest quarters – $127/bbl in Q2; $120/bbl in Q3

But until 2011, we had never seen prices sustained at over $100/bbl for a full year. And we have certainly never had to suffer them at this level for 2 years in a row.

Equally, as the pink columns show, every period of oil prices above $50/bbl on an inflation adjusted basis has led to recession. So either ‘this time is different’. Or, recession is waiting around the corner. It would be a brave company who ignored this risk, and simply assumed that high oil prices no longer matter to the global economy.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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