The real price of oil

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What is the real price of oil reported in our purchasing power (SMIC) and corrected by inflation and monetary parity?

Keywords: price barrel oil, crude, $, dollars, euro, €, parity, conversion, corrected.

From an economic point of view

The symbolic $ 50 barrel of oil was reached in recent days.

Yes the media are right: in absolute oil dollars has never been cheap but what about in relative? Ie taking into account the level of inflation and the cost of money. We will see that the oil is not that expensive even now above $ 50!

Indeed, taking into account developments during the $, the media are sadly mistaken as shown by the following curve on which the price of oil was reported to the dollar price of 1998.

Evolution of oil prices
Click to enlarge. Source: World Committee of Energy and British Petroleum

In the early 80 oil was so much more than now as he was in for $ 1998 to nearly $ 70.

But a second correction parity is needed to put the course in dollars 2004.

Thus, according to the Ministry of Economy, Finance and Industry: the average price of smoothed dollars per year was:

In 1998: 5,89960 1 to $ Frs.
In 2004: 1,24333 1 to $ €.

ps: for the value of 2004, it seems that the picture of the Ministry of Finance is reversed since the changeover to the euro. The latest 3 years are $ / € and not € / $ as specified. We obviously corrected ourselves

The € / frs shall be: 6,55957 francs / € according Boursorama

We spend all these figures in $ 2004:
$ 1 from 1998 = 5.89960 / 6.55987 0.899 € = €

Simplify the calculations 1 / 1000 this will be accurate enough!

In 1998, so you had 1 / 0.899 1.11 = € for $ 1.

So we get logically parity $ (1998) / $ (2004): $ 1 from 1998 1.11 = * = 1.243 1.38 of $ 2004.

It is therefore necessary to perform a correction 1.38 (or 38%) of the above chart values ​​for the price of oil in dollars 2004.

There comes a price of oil of $ 2004 in between 1978 and 1981 over 60 * = 1.38 82.8 $ barrel peaking in 1980 69 to * = 1.38 95.22 $ barrel !!!

So during the years 3 barrel was higher than $ 82! So who said that oil was expensive now?

From an ecological point of view, nothing has changed (almost) at the time with a barrel grazing the $ 100.
In the near future nothing will not change as long as the price of fossil fuels will remain so low and it is as we have just shown. This is not to 60 or 70 $ barrel qu'évolueront lasting things.
Obviously there is increasing demand gradually change the economic situation in the near future.

In addition, the cost of pollution is slowly being taken into account via "Carbon scholarships"But again is what the environment and the preservation of resources will be the big winners?

One can doubt strongly ...

From the point of view of your purchasing power

Oil is too expensive, nobody can soon ride? This is wrong ... because oil, based on purchasing power, ie the minimum wage, has been much more!

Thus 1980, it took close to 15 h of smic to "pay" a barrel of crude oil whereas in 2004, it needed a little less 4 h!

Obviously these figures are adjusted:
- By inflation
- The monetary parity

Details, methodology and evolution curve since 25 years: SMIC, smicard and price of oil

From an ecological point of view

Another point that should now be considered in the price of oil: CO2 discharges.

Some experts estimate the cost (environmental future) per tonne of rejected CO2 between 10 and 40 $. Others speak, but it is without doubt unfair to 80 100 to $. Take a reasonably low average of $ 20 tonne.

A ton of oil burned on average rejects 2.5 times its mass in the form CO2.
A barrel weighs 127 320 kg and therefore reject kg CO2 about.

Hence an "extra cost" of the barrel of 0.32 * 20 = 6.4 $. Let 10% be the current course. So much more on a low barrel. With high estimate at 100 $ per tonne we multiply by 5 this figure is more than 50% increase and more 100% increase with one barrel at 25 $.

On the viewpoint econological

Let us calculate the remaining "financial" remaining reserves of oil.
On an ideal base 80 million barrels / day to over $ 40 40 years, it remains at least 46 720 Billion $ without taxes of proven oil reserves.

A 70% tax this figure rises to about 150 000 $ billions.

Obviously this figure is reduced as prices and taxes will tend to rise over the coming decades.

The question becomes: who would be willing to spend such a windfall?

ps: I'm not an economist or financier, I just use the tools I have at my disposal. In this sense any constructive feedback would be welcome. To use this forum: a barrel of oil in dollars 100 finally!

Note the March 20 2008: This page is especially true now, a barrel having passed, sustained the symbolic $ 100 while parity dollars only to fall ...

- Tax and the price of oil: who earns how much?
- Silver and crude oil gains
- Senate report on the oil price
- SMIC, smicard and price of oil


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