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What are historic trends in oil and gas prices?

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Quick Answer

Oil and gas prices, when comparing average annual prices adjusted for inflation, have a close relationship, as reported by InflationData.com. One may move up or down faster than the other during a short period of time, but they tend to move in tandem over the long run, as of 2015.

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Full Answer

Prior to 1972, oil and gas prices tracked closely with each other, according to InflationDate.com. Since then, prices have been much more volatile. Before 1972, oil prices were normally below gas prices. However, beginning with the oil embargo, oil prices have been higher than gas prices most of the time. That is because oil companies attempt to keep gas prices stable by making more money when gas prices are low and maybe losing money on gas when prices are high. By doing that, oil companies don't risk losing as many customers as they might if gas prices moved exactly with oil prices.

From about 1980-2007, supplies grew tighter. As a result, when hurricanes hit oil refining areas, gas prices would spike. When Hurricane Katrina hit, several refineries were shut down for up to six weeks, resulting in a 20 percent drop in supplies. During the recession from 2007-2009, demand for oil and gas dropped, causing a drop in prices. After the recession ended, prices rose through 2012.

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