Crude Oil ( ) Brent Crude ( ) Natural Gas ( ) S&P 500 ( ) PHLX Oil ( )

Oil prices coming in line with their historic levels during the past 41 years

ECI Oil Price Adjusted for Inflation Final

As companies, analysts and others look at oil prices stabilizing in the $45-$50 range for U.S. crude oil benchmark WTI as a post-Thanksgiving 2014 “new normal,” Oil & Gas 360® along with EnerCom Analytics took a historic look at the price of oil and found the new normal may not be new at all.

Looking at oil prices back to the first quarter of 1974 forward to Q2’2015, EnerCom found that the average nominal price for U.S. crude oil over the 41-year span was $35.97. Adjusting for inflation, that price comes to $53.12, well below the $100+ oil prices that were seen between 2010 and 2014..

Early concerns over peak oil, spikes of unrest in the Middle East, the decline in the value of the dollar and U.S. petroleum reserves, price speculation, and a number of events not directly related to oil (Hurricane Katrina, for example) all pushed oil prices significantly higher than the historical average.

The oil and gas industry in 2015 is struggling to deal with lower commodity prices than the $90+ per barrel years that opened up lending and fueled the shale boom, but $50 oil is hardly a new phenomenon. From a historical perspective, are things finally getting back to normal after a period of unusually high prices?

While not likely to be filed as “good” news by operators and service companies trying to get the 2015 economics to work, oil prices returning to their historic levels won’t stop efficiencies from increasing as oil and gas companies continue making adjustments to how they go about producing the energy that fuels the global economy. If the historic numbers don’t lie, maybe what we’re seeing is just a return back to “normal” for oil prices.


Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.