The Magic 50
Category: Economy & Business...
Posted Friday, October 01, 2004 at 02:26 PM [GMT-6]

I just got a notice that crude oil futures closed at $50.12 on NYMEX, the first time in history that oil prices have ended the day above that mythic level.

I remember a chart hanging on my office wall in 1982. It was an extrapolation of predicted oil prices, working off the run-up from the preceding few months. $50 was the cap on that graph; it represented the dreamed-of-but-unobtainable Holy Grail for oil producers everywhere.

We never got there. In fact, it wasn't long thereafter that we (those of us who still had jobs, that is) were looking at prices in the $8-$10 range. $50 oil once again became a pipe-dream.

Now that it's here (and recognizing that it's still $10/barrel or so below its previous peak on an inflation-adjusted basis), it's kind of anti-climactic. Producers I know are grateful for the premium, but nobody's actually doing deals based on it, or running economics using it. And thus far, I haven't seen any signs of the telltale oil-boom excesses that accompanied prior run-ups: new Benzes in the high school parking lots; yachts parked out in the horse pasture awaiting transplantation to water, somewhere; Lamborghinis with trailer hitches; signs announcing new private clubs. Sure, there seems to be a few more Hummers tooling around town than usual, but AFAIK, Rolls-Royce isn't planning on re-opening a dealership in Midland.

Check back with us in six months. If oil's still at $50, I suspect there'll be some very entertaining stories starting to emanate from the Patch.