Columbia International Affairs Online: Policy Briefs

CIAO DATE: 12/2009

The 2008 Oil Price "Bubble"

Mohsin S. Khan

August 2009

Peterson Institute for International Economics

Abstract

As oil prices began to rise in 2009 from a low point of about $40 a barrel in January to around $70 a barrel in July, a key question is whether the world is in for another oil price spike in the near term similar to that witnessed in early 2008. Several hypotheses were advanced when world oil prices started their inexorable climb from 2003–04 onwards, then skyrocketed from $92 a barrel in January 2008 to cross the $140 a barrel mark in June, fi nally hitting a record high of $147 a barrel on July 11, 2008, before collapsing to less than $40 a barrel in December.