Has oil hit a record high? It’s debatable

When it comes to the price of oil, there is no shortage of ways to calculate the all-time record.

According to some calculations, a new high has been set. But others say a record is still $3 to $5 a barrel away. Economists don’t even agree on when the previous record was set.

Cambridge Energy Research Associates believes the record is $99.04 a barrel, a level it said was reached in inflation-adjusted terms in April 1980.

The International Energy Agency agrees that April 1980 was the peak month but says the price would translate to $101.70 a barrel today.

The Energy Department’s Energy Information Administration has a different view.

It said the previous inflation-adjusted record -- $93.48 a barrel -- was set in January 1981. That would make the price reached Tuesday, an increase of $2.72 to $96.70 a barrel, a new record closing price. Earlier Tuesday, the price climbed to $97.10 a barrel.

All three entities agree that the previous high for oil was reached because of tensions in the Middle East. Cambridge Energy Research notes that in April 1980 -- as now -- tensions between the United States and Iran were helping to drive up prices. “Today’s high prices have a ‘back to the future’ quality,” said Daniel Yergin, chairman of the consulting firm.

The Energy Department said, however, that it was not until the next year, after war between Iraq and Iran started, that the previous price high was set.

Two key factors account for the differences: which price is used as a benchmark and what inflation rate is used to translate into 2007 dollars.

Today, most people point to the crude-oil price for delivery in the nearest month on the New York Mercantile Exchange. The type of oil used for that benchmark is a crude known as West Texas Intermediate.

The Mercantile Exchange did not establish crude-oil trading until March 1983. So Cambridge Energy used the average “posted price” that U.S. producers said they would charge for crude oil. It changed every month. In April 1980, it was set at $39.50 a barrel in 1980 dollars.

Energy Information Administration analysts say the price U.S. refiners paid for imported oil is a better indicator. The agency said the posted price did not change from April to July 1980, suggesting that it wasn’t responding to events or market forces.

The price of imported oil, by comparison, is “a fairly representative measure of world crude-oil prices based on actual transactions,” the Energy Information Administration said in an analysis it published recently.

That isn’t perfect either. Today, upgraded refineries can use cheaper, lower-quality oil than they could in 1980. That makes it hard to compare today’s prices with those a generation ago.

“The way we determine [oil] prices has fundamentally changed from the early ‘80s until today,” said James Burkhard, who did Cambridge Energy Research’s calculation of peak prices.

“It’s not a perfect apples-to-apples comparison.”

Inflation also varies. Cambridge Energy used an annual average inflation rate based on the consumer price index. The International Energy Agency used monthly figures.

“Given changes in oil markets over time, there is no single correct way to determine the inflation-adjusted price of crude oil,” the agency said. Still, it said, “almost everyone, with the possible exception of some oil suppliers, agrees that current oil prices are very high.”