Excerpted for Forbes Content

The also discuss demand increasing 12% in January due to our very cold winter.

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The also discuss demand increasing 12% in January due to our very cold winter.

And Joe Bastardi is predicting an even colder winter for 2014-2015. What will that do to natgas prices? My guess, with the pressure to export, and increased use as a motor fuel, not to mention power plant changeover from coal, will push gas to the magic $6.00 land.

When prices dropped from over $10/Mcf in 2008 to under $2/Mcf in 2012 (wellhead average), howls of pain emitted from the Southwest as many drillers could not cover costs, even excluding those who overpaid for acreage. And drilling did, in fact, respond, with the number of gas directed rigs in the US falling to 300 from the high of 1500.

There is an obvious answer to this problem. Those with skills, and possibly equipment, should market drilling and fracking overseas.

I consider a producing well in Argentina, Poland or Oz almost as big a boost to US energy independence and national security as one here.

Our longterm goal should be to make energy common and its production widespread. This will cut off the power of Russia and the Muslim countries more effectively than just about anything else we can do.

Due to the higher inherent costs of this type of production, it's unlikely we'll ever be able to bankrupt them, but their power, as opposed to income, is a result of a cutoff in deliveries or a mere threat to do so. If Europe was as close to independent in energy as we are becoming, our adversaries' leverage would be greatly reduced.

Yet despite these three major bullish pressures, the price on the long-term futures strip remains below $5/Mcf. Possible explanations include speculators who are afraid that shale gas production will come roaring back; producers who, seeing prices above $4/Mcf, sold on the futures market to lock in revenues; and the prospect that, actually, the long-run equilibrium price is about $4/Mcf. There has not been a major increase in drilling at these prices but production has stabilized.

Which, oddly enough, is about where prices settled out after the long nightmare of price controls (from 1954) and phased decontrol (1978-85), adjusting for inflation of course. For those of us who have long argued that energy prices tend to be mean-reverting, this is a pleasant affirmation.

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We got into this discussion a couple months back to the effect that the mean price of natural gas is in the $4 range which was similar in terms of price per btu’s to the current price of coal. And that both coal and natural gas were near their long term mean price. But oil in terms of btu’s was much higher. That the mean long term price for oil in terms of equivalent btu’s for oil gas and coal was somewhere in the $40@barrel range.

We were unable to confirm that with hard numbers.

Historical Crude Oil Prices (Table)

March 6, 2014 by Tim McMahon Leave a Comment

Oil Prices 1946-Present

The first table shows the Annual Average Crude Oil Price from 1946 to the present. Prices are adjusted for Inflation to January 2014 prices using the Consumer Price Index (CPI-U) as presented by the Bureau of Labor Statistics.

Note: Since these are ANNUAL Average prices they will not show the absolute peak price and will differ slightly from the Monthly Averages in our Oil Price Data in Chart Form.

Also note that although the monthly Oil prices peaked in December 1979 the annual peak didn't occur until 1980 since the average of all the monthly prices was higher in 1980.

Inflation adjusted oil prices reached an all-time low in 1998 (lower than the price in 1946)! And then just ten years later Oil prices were at the all time high for crude oil (above the 1979-1980 prices) in real inflation adjusted terms (although not quite on an annual basis).

Prices are based on historical free market (stripper) oil prices of Illinois Crude as presented by IOGA . Price controlled prices were lower during the 1970's but resulted in artificially created gas lines and shortages and do not reflect the true free market price. Stripper prices were allowed for individual wells under special circumstances (i.e. the wells were at the end of their life cycle) but the oil they produced represented the actual free market prices of the time.

Annual Average Domestic Crude Oil Prices (in $/Barrel)
1946-Present
Year	Nominal Price	Inflation Adjusted Price
1946	$1.63	$19.23
1947	$2.16	$22.60
1948	$2.77	$26.96
1949	$2.77	$27.22
1950	$2.77	$26.96
1951	$2.77	$24.96
1952	$2.77	$24.41
1953	$2.92	$25.48
1954	$2.99	$26.05
1955	$2.93	$25.55
1956	$2.94	$25.32
1957	$3.14	$26.13
1958	$3.00	$24.32
1959	$3.00	$24.07
1960	$2.91	$23.04
1961	$2.85	$22.30
1962	$2.85	$22.04
1963	$2.91	$22.24
1964	$3.00	$22.63
1965	$3.01	$22.33
1966	$3.10	$22.34
1967	$3.12	$21.88
1968	$3.18	$21.35
1969	$3.32	$21.18
1970	$3.39	$20.43
1971	$3.60	$20.80
1972	$3.60	$20.14
1973	$4.75	$24.82
1974	$9.35	$44.29
1975	$12.21	$53.04
1976	$13.10	$53.86
1977	$14.40	$55.55
1978	$14.95	$53.65
1979	$25.10	$80.14
1980	$37.42	$106.36
1981	$35.75	$92.10
1982	$31.83	$77.21
1983	$29.08	$68.32
1984	$28.75	$64.75
1985	$26.92	$58.54
1986	$14.44	$30.80
1987	$17.75	$36.54
1988	$14.87	$29.45
1989	$18.33	$34.58
1990	$23.19	$41.40
1991	$20.20	$34.70
1992	$19.25	$32.09
1993	$16.75	$27.13
1994	$15.66	$24.71
1995	$16.75	$25.72
1996	$20.46	$30.50
1997	$18.64	$27.17
1998	$11.91	$17.10
1999	$16.56	$23.20
2000	$27.39	$37.19
2001	$23.00	$30.40
2002	$22.81	$29.64
2003	$27.69	$35.22
2004	$37.66	$46.60
2005	$50.04	$59.88
2006	$58.30	$67.63
2007	$64.20	$72.30
2008	$91.48	$99.06
2009	$53.48	$58.20
2010	$71.21	$76.38
2011	$87.04	$90.52
2012	$86.46	$88.11
2013	$91.17	$91.54