The prices of crude oil act as any other commodity in the world, with price swings occurring whenever there is a shortage or oversupply. The price cycle of crude oil can extend over a very long period of time depending on the ever-increasing demand for oil, as well as oil supply produced by the Organization of Petroleum Exporting Countries (OPEC), and non-OPEC oil supply companies.

The history of oil prices shows that the petroleum industry has been heavily regulated in terms of production and price control, especially in the United States, and throughout the duration of the 20th century, into the 21st.

Before WWII, there was an oversupply of crude oil. This was put to the test when oil was discovered in Texas in the 1930s, and the major oil companies were working together to keep the price up. WWII taught the government the importance of having a safe oil supply. In 1933, Americans paid almost $300,000 to Saudi Arabia’s King Ibn Saud for an oil concession. (more…)