Historically, crude oil or petroleum prices in the United States have been affected by a variety of global factors. In the beginning of the 20th century, crude oil production began to be controlled by the US government, with restrictions on the amount of production and price to conserve this valuable energy source. Following the Second World War, demand for petroleum could not be met through local production alone, and the US started importing increasing quantities of crude oil.
Up until the 1972 war between Israel and Syria and Egypt, global crude oil prices were fairly stable at about $3 a barrel. An oil embargo by major oil-producing countries in 1973 led to the first steep increase in crude oil prices, to $12 a barrel. Following the Iran revolution of 1979 and the Iran-Iraq war, crude oil prices rose to $35 a barrel by 1981. However, by 1986, the OPEC cartel’s control over global crude oil prices began to falter as member countries exceeded their production limits, dropping prices to around $10 a barrel. Prices gradually rose over the next decade, but the South-East Asian economic crisis of 1998 drove prices down again as demand dropped. Prices rose to $25 a barrel by the end of the 20th century, but a variety of factors, including reduced supply and war, made crude oil prices spiral to $70 a barrel in 2005.
Today, trading in oil futures on the floor of the New York Mercantile Exchange (NYMEX) increasingly drives crude oil prices in the US. Increasing consumption has resulted in increasing dependence on imported crude oil supplies. While futures trading will continue to determine crude oil prices in the foreseeable future, oil conservation and the development of alternative and renewable energy sources are both essential to ensure a stable energy supply and price in the longer term.