Oil Price Movements

By Ian

Via Econopundit I saw this post over at Powerline. Thought it was interesting to look at, so I figured I'd look at a few past years. I've neglected 2003 since Powerline's graph includes some of it, and because the Iraq war introduces an issue that I wanted to sort of skirt around because of time constraints on my end.

Here are the calendar year movements for prices for 2000 -- 2002, all nominal dollars. It's less that I've not got time to adjust the dollars, but more that I was only really interested in the pattern of the movements. (Note: all seasons discussed in terms of Northern Hemisphere -- not meant as a slight to any Southern friends stopping by the site.)

2000.gif

Hmm. That looks a little like we might expect for a seasonal movement in energy. The summer travel season increases demand, while the climb post 11/4/00 might correspond to similar concerns about heating oil supplies we've heard about on the news in relation to current price movements. Possibly a reduction in travel, and potentially the level of oil stocks helped the decrease late in the year.

2001.gif
Summer here is relatively flat. But again we do see that there is some price easing when moving through the late months of the year.

2002.gif
And again a slight increase during the summer into fall, with a reduction in price preceding/entering winter. The difference here, of course, is a marked upturn at the end of the year. Now, what is it that might have occured in late 2002 that made people anxious about oil and oil-producing regions?

The upshot: I'm not terribly convinced that oil prices have moved along with the US campaign for the presidency. Seeing significant movement after controlling for the seasonality of oil prices (that summer is a big time for travel and trasportation -- the biggest sector of oil use -- corresponds to a heated time for the election strikes me as pure conincidence) would do more to sway me towards "conspiracy!!!".

UPDATE: Cite your sources, man! So sorry...all data taken from here.

-- December 6, 2004 3:06 PM |

Comments

Kevin Brancato wrote:

I'm confused: just who is supposed to have a financial incentive to lower prices after the election? Or why do they want to reward Americans for their election choice?

-- December 6, 2004 4:41 PM ∞

Ian wrote:

I dunno either. I thought it was kinda weak myself. But I figured it was a decent reason to take a look at the stuff for the past couple of years.

Of course, I jump on any chance to use the EIA site. One of my favorite new places on the web since I've been knee-deep in oil industry stuff for work.

-- December 6, 2004 4:53 PM ∞

Kevin Brancato wrote:

And their data is some of the best quality economic data--ever!

-- December 6, 2004 5:14 PM ∞

Ian wrote:

Wait, was that sarcasm? I've not really looked into the quality of this stuff. It seemed to fit with what a couple other outfits had, but...I dunno.

-- December 6, 2004 9:59 PM ∞

Kevin Brancato wrote:

Don't worry; it was an honest assessment. Actually, this happens all the time--my sense of humor!

I was surprised by the size scope of the sampling mechanism used in the gasoline price data. The oil spot prices are like stock data--almost perfect.

-- December 7, 2004 6:29 AM ∞

Ian wrote:

I attribute it to the medium. Tone is hard to convey.

Glad to hear the data is good, though. Means I don't have to scrap several months of work. Which is always, you know, nice.

-- December 7, 2004 7:56 AM ∞

Bob wrote:

I had made a post where I mentioned that some people thought that prices were driven higher to make Bush lose. I had said this was a possibility since oil was at that time was already high and yet Opec was talking about possible cutbacks. This was an extremely odd thing for the organization to be talking about at the time since oil was somewhere near the high end of the price band.

Was this a case of manipulation to defeat Bush? Frankly, I don't have a clue, but putting together the talk of cutting production and the enemies in the ME that Bush made, there is a chance Saudi Arabia didn't rush to increase production. My hunch is that the demand and run-up in prices took most people by surprise. If you so choose to beleive me at this point, I actually saw this coming 2, 3 years ago.

-- December 7, 2004 5:31 PM ∞

Jason wrote:

The only "conspiracy" regarding oil prices around the election was that the markets were feeling significan uncertainty. There are only two factors that affect markets - fear and greed. This was a classic case of fear driving the market. When traders are unsure of major geopolitical or economic events, they tend to push oil prices higher and stock prices lower. Considering how the last election went, which took nearly a month to resolve, many traders, (myself included,) had no idea what the outcome would be, and thus took defensive positions in case the election was disputed. You'll notice that once the election was over, the stock market rallied for a week straight.

-- December 7, 2004 10:59 PM ∞

panos kelaidis wrote:

should someone invest in the price of oil what is the name of the index/stock to look for?

-- May 7, 2008 9:17 AM ∞

Post a comment