Comparison

Inflation Rate v. The Price Change in Crude Oil

The Inflation Rate demonstrates the change in price of the whole market over a period of time. When this is compared to a specific good on the market, it is possible to see how the product compares to the rest of the market. For our example, we explore how the price of crude oil has changed. As shown before, from September 2001 to September 2006, the price of crude oil rose by 144.3 percent. Prices on the market, however, only rose by 13.8 percent. This obviously shows some disparity between the market and the price of oil.

While the market has only grown by 13.8 percent over the selected period, the price of crude oil has risen by 144.3 percent. Had the price of crude oil followed the same patterns as the rest of the market, its price would only have risen by 13.8 percent. At this rate, the price of crude oil should stand at $27.64 as the graph demonstrates; however, it stands at $59.34. This phenomena can be explained by many reasons including:

Logistics and Statistics | Market Movements | OPEC | Affects of Oil on the Potential Level of Output | Oil: Post 9/11