High Oil Prices Have Significant Effects on
Consumers and the U.S. Economy
This analysis estimates the impact of sustained high oil prices on consumers and the U.S. economy. Since 2002, real oil prices have risen dramatically. Recently, oil futures traded for more than $100 a barrel. Crude oil prices for January 2008 were $92.95/barrel, and monthly prices are rapidly closing in on the all-time inflation-adjusted high of $98.94/barrel, which was reached in April 1980. There are numerous causes for the recent rise in oil prices, including decisions made by OPEC and other oil-producing countries, stagnant production in Iraq, and ongoing concerns about political and supply stability in a number of oil-producing countries. However, it is the longer-term structural factors in the rise in oil prices, most notably greatly increased demand in developing countries such as China and India, which have led many experts to believe that we are likely to have sustained high oil prices for the foreseeable future.