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The Oil Crisis 20 Years Later : The World's Petroleum Tiger has Been Tamed--for Now.


After prices shot up with the 1973 embargo, economists predicted soaring crude oil prices into the next century. Defying the predictions, oil prices plummeted beginning in 1981 and have remained relatively low ever since, except for a brief rise during the 1991 Gulf War.

Price per barrel (U.S. and foreign composite, annual average), 1987 dollars

1973: Arab oil embargo delivers the first "oil shock" to U.S. consumers.

1979: The second "shock": Islamic Revolution takes Iran's oil off the world market, creating fresh shortages.

1981: Market forces catch up with inflated prices, which begin to fall.

1985: Saudi Arabia, the world's largest producer, reverses policy--boosting production and dropping prices even further.

1990: Iraq invades Kuwait and threatens the oil fields of Saudi Arabia, briefly driving prices up.

1993: Oil prices remain under $20 with little near-term prospect of change.

Paying at the Pump

In inflation-adjusted terms, the price of a gallon of gasoline in the United States is lower today than in the mid-1970s--and dramatically below the oil crisis-era peak in 1981.

Price per gallon (unleaded regular, including taxes, annual average) in 1987 dollars

One Word: Plastics

Petroleum products, particularly naphtha, are primary ingredients in plastics. So low oil prices--naphtha costs less now in real terms than it did 10 years ago--have helped control the price of plastic products, from carpeting to cabinets, grocery bags to insulation.

Spot price per gallon of naphtha (annual average) in 1987 dollars

The Plane Truth

While the airline industry has been losing billions of dollars over the last few years, one--perhaps the only--financial bright spot has been the relatively low cost of jet fuel, which also costs less than it did 10 years ago in inflation-adjusted terms.

Price per gallon of jet fuel (annual average) in 1987 dollars

Source: U.S. Department of Energy; Platt's, the commodities division of Standard & Poor's

Researched by ADAM S. BAUMAN / Los Angeles Times

The Power Elite

Low prices for coal, crude oil and, in recent years, natural gas have kept down the cost of generating electric power in the United States through these conventional sources. Alternative energy sources have a mixed track record in terms of being competitive.

Cost per kilowatt-hour (in 1993 dollars)

1980 1990 2000 (projected) Conventional* .06 .05 .05 Wind .30 .08 .04 Photovoltaic 2.00 .40 .20 Solar thermal .25 .11 .08 Biomass .08 .07 .05 Geothermal .08 .07 .06

* Hydroelectric, natural gas and coal

Source: Electric Power Research Institute

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