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SIn 2004, crude oil prices almost doubled
from 2003, rising from about $30 per barrel at the end of 2003 to peak at
$56.37 on October 26.
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SThis is a significant change from what we
experienced in much of the 1990’s, when prices seemed to average close to $20
per barrel.
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SPrices plunged to almost $10 per barrel in
late 1998 as a result of the Asian financial crisis slowing demand growth
just when extra supply from Iraq was entering the market for the first time
since the Gulf War.
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SOPEC reacted to that low price by pulling
back production, and we saw prices not only recover, but increase to what
seemed to be a new level of about $30 per barrel as demand grew in the face
of OPEC production discipline.
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SIs the 2004 run-up a harbinger of a new,
even higher level, and what is behind this latest increase in price?
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