Getting to the Bottom of Crushing Oil Prices

It was a much simpler world in the early 2000s where gas prices were concerned. As is the case today, the price of crude played the major role in the price of gasoline and at the start of the decade the price of gasoline was a very affordable and generally stable year-to-year.

Crude oil had averaged out at $28.36 per barrel in 2000 and the retail price averaged about $1.48. But prices were going up from the average of $17.46 per barrel and $1.22 per gallon respectively in 1999. The really big news at the time was that OPEC had established a “price basket” of seven crudes and was adjusting production to keep crude oil prices in a  $22 to $28 per barrel range. Shocking, given the low $12 per barrel price (and resultantly lower gasoline prices) motorists had enjoyed in 1998, but still well below a $35 per barrel spike in 2000.

There had been a number of such price spikes during the summer of 2000 with both crude and regional gasoline prices with gasoline prices in the Midwest cresting the $2 per gallon. These ‘disturbing” prices prompted the usual (for the day) political grandstanding among state attorneys general and those in the Congress and Senate.

A Federal Trade Commission investigation looked into the prices relative to gouging concerns, and as was usual with such investigations, there was no finding of wrongdoing. In 2002, the report stated that the spike: “