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The spot price[1] for a barrel of oil more than doubled between 2020 and 2022, from an average of $44.28 to $94.90. By October 2023, the price per barrel had gone down to $88.03.

Several factors have influenced fluctuations in oil prices in recent years, and its price could foreshadow the direction of the broader economy.

How has the price of oil changed historically?

Price per barrel hovered near $20 through the 1990s. But after the turn of the century, the price increased, hitting a high point of $99.67 in 2008. Since then, the price per barrel has fluctuated relative to the 1990s.

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What factors influence oil prices?

The oil economy operates in a global context. Because oil is produced in countries across the world and traded internationally, the price per barrel of oil is determined on a global scale from numerous inputs.

These prices have fluctuated over the past two decades in response to the economic, social, and political events occuring in oil-producing countries around the world.

Economic factors

Price per barrel went from about $30 in the year 2000 to nearly $100 in 2008. The cost increase in the 2000s largely stemmed from China’s rapidly growing demand for oil. In 2004, China’s demand for petroleum ranked second after the United States, reflecting 15% growth compared to the previous year, according to the Congressional Budget Office. China demanded more petroleum, which crude oil is used to produce. The two products’ supply-demand dynamics influence each other.

Political factors

The price per barrel dropped to $62 during the financial crisis and Great Recession of 2008–2009. The subsequent spike in 2011 ($95/barrel) resulted from various factors: There were pipeline transportation issues in the US, and social unrest in Saudi Arabia and Libya contributed to supply issues. Meanwhile, demand was increasing from China and the Middle East.

Price per barrel fell again in 2015 ($49/barrel) when supply outweighed demand. Global inventories grew at a rate of 1.72 million barrels a day, reaching levels not seen since 1996. Prices then rose in 2018 ($65/barrel) following an OPEC agreement to cut production by 1.2 million barrels a day. However, prices fell later that year when forecasts didn’t materialize and geopolitical dynamics disrupted attempts to balance supply and demand.

Social factors

The average price per barrel was $39 in 2020, a low point that hadn’t been registered since 2003–2004. The outbreak of COVID-19 led to business shutdowns and decreasing demand for oil, resulting in increasing supply and diminishing storage space.

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Frequently asked questions about oil prices

How much oil is in a barrel?

Each barrel contains a total of 42 gallons of oil. When thinking about fuel prices, the focus often goes toward the cost of a gallon of gas, but crude oil is measured differently — it is priced by the barrel.

Who controls oil prices?

While no single entity has total control over the cost of oil, the OPEC has an outsized influence in the market and can increase or decrease supply based on the production targets it gives to its members.

Given that its member countries produce 40% of the world’s crude oil and export 60% of the petroleum traded in the market, the organization’s decisions influence oil prices.

What is the price of crude oil today?

The US Energy Information Administration shares oil price per barrel daily. Prices vary slightly depending on the oil’s source area. The average price of West Texas Intermediate (WTI) crude oil for the third quarter of 2023 was $82.29.

Is oil price an economic indicator for the United States?

Oil prices are an indicator of oil supply and demand, according to the US Energy Information Administration.

The Census Bureau’s Index of Economic Activity tracks data that may signal trends in the broader US economy. However, it doesn’t include oil prices. The index uses a weighted combination of data from 15 sources, including business formation statistics, exports of goods and services, construction, and real estate sales, to create a snapshot of economic activity.

Demand for oil can be one indicator of broader economic health. Growing and high-production economies like the US have higher energy and product distribution demands, and oil powers much of transportation, industrial operations, and even electric power. The COVID-19 pandemic recently underscored this relationship. When the economy was faltering in 2020, the price per barrel of WTI oil dropped to $44.28 — its lowest point since 2002.

Will oil prices go down?

Events that impact oil pricing are often unpredictable, such as natural disasters or political tensions that suddenly cross a tipping point. Sometimes they are planned supply manipulations that don’t provide the desired results. However, the impacts of past events on the market can inform general predictions about future oil prices.

The key is supply and demand, influenced by political, economic, or environmental events. Any events that would decrease demand, like the COVID-19 pandemic, would result in lower prices. Conversely, events that would decrease supply, like the Russia-Ukraine war or a natural disaster that impacts production, would change the supply-demand ratio and result in price increases.

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From the barrel to the pump
Last updated
October 2020
Index of Economic Activity
Last updated
November 9, 2023
Drilling Into the Basics of Crude Oil

“Spot” prices refer to the current market price for certain goods, like food crops, precious metals, or oil.