Our new oil price paradigm

Environmental Capital marks the anniversary of oil prices hitting $145/bbl:
Friday is the one-year anniversary of crude oil’s record close of $145 a barrel. But commodity traders were in no mood for a party.

Oil prices dropped more than $2 a barrel to below $67 in trading in New York Thursday, beaten down by dismal economic news and word that the Organization of Petroleum Exporting Countries discipline is shaky.
To me, what's more dramatic than the fall over the last year is our collective reframing and reanchoring of how we view oil prices. Brent averaged about $29/bbl (in 2005 dollars) between 1985 and 2005, below even its recent nadir (mid $30s?)... and yet we think about $67/bbl as less than 50% of the recent peak, rather than >100% greater than its long-run average of the past two decades.

P.S. Of course, there are always people out there willing to take the extreme views ($200, $20).

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