17 October 1973: Arab oil producers wield the oil weapon
Arab oil producers, in response to US support for Israel during the Yom Kippur War, announced production cuts that soon became an embargo on the United States and others. Oil prices roughly quadrupled within months, gas stations ran dry, and the West tumbled into stagflation. Stocks fell into one of their worst bear markets since the Depression. Cheap energy, it turned out, had been a political arrangement, not a law of nature.
The lesson: Assume anything you depend on can become expensive overnight, and plan accordingly.
What it meant for investors
$1,000 in Crude oil (barrel) at the start of 1990 → $2,955 today, vs $19,429 in the S&P 500.
We start the clock at the start of 1990, the first year in our price data after the event. That is 3.0 times the money, but $16,474 less than a plain index fund made over the same years.
What Crude oil (barrel) teaches: You cannot easily own oil itself, only futures contracts; the negative print of April 2020 showed that storage and contract mechanics can dominate supply and demand.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 1990 | $22.00 | $2,955 | $19,429 |
| 1995 | $18.00 | $3,611 | $14,783 |
| 2000 | $26.00 | $2,500 | $4,626 |
green = beat the S&P 500 · red = lost money
What if you bought Crude oil (barrel)? Every starting year and the full story →
More Crude oil (barrel) history
- 17 January 1991: Oil collapses as Desert Storm begins
- 20 March 2003: The Iraq War begins
- 20 April 2020: US oil prices go negative
- 11 July 2008: Oil peaks at $147 a barrel
- 29 August 2005: Hurricane Katrina hits the Gulf Coast
- 26 November 2021: Omicron spoils Black Friday
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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