World Energy Outlook 2006

the period from 1986 to 1999 (Figure 11.1). Prices rose on average again in
2003, surging to new highs in 2004 and 2005. Prices peaked at well over $70
(almost $80 for West Texas Intermediate, or WTI) in July 2006 – a record at
the time in nominal terms. 2 In 2005, the average IEA crude oil import price
was almost four times the nominal price in 1998. As a result, the average IEA
oil price in real terms has been above that of the 1970s since the start of the
current decade, but still below that of the period from 1970 to 1985.
International oil-product prices (before local taxes and subsidies) have generally
increased in line with crude oil prices. Prices have risen in response to a decline
in spare supply capacity, as demand for oil products has outpaced increases in
crude oil production and refining capacity, as well as to supply disruptions and
geopolitical tensions (see Chapter 3).
dollars per barrel
70
60
50
40
30
20
10
Figure 11.1: Average IEA Crude Oil Import Price
0
1970 1975 1980 1985 1990 1995 2000 2005
Real dollars (2005)
Nominal
Average real price (1970-1985)
Average real price (2000-2005)
Average real price (1986-1999)
Regional oil-import prices expressed in local currency terms have differed
markedly since the end of the 1990s, due to fluctuations in dollar exchange rates
(Figure 11.2). The average European crude oil import price expressed in euros
rose faster than dollar prices in 1999-2000, but then fell – in both absolute and
relative terms. Indexed to the first quarter of 2002, the euro price in real terms
(nominal prices adjusted using the gross domestic product, or GDP, deflator) rose
2. In 2005, the average IEA crude oil import price averaged $5.97 less than WTI and $3.90 less than
Brent.
Chapter 11 - The Impact of Higher Energy Prices 271
11
© OECD/IEA, 2007