With demand increasing at the same pace it had been increasing in the 1990, that drove the price of oil up (Speculators entered the market and push it further up and then down then the market would have otherwise, but that is what speculators do in tight markets, to blame speculators for taking advantage of tight market is like blaming a snake for lying in the grass, it something both of them do naturally).
The price rise as the supply of oil peaked out lead to the present recession. Now, the recession had other causes, including a failure of Congress to rein in the housing market and providing enough money in the subsequent stimulus program. In many ways the failure of the price of oil to drop is what is preventing the economy from booming, to much of the economy is based on cheap oil, which no longer exists.
Side note: Around 2008 I read reports that the price of oil had reached prices not seen since WWI, afterward no such comments were made, for when you do look at the price of oil adjusted for inflation, it is the highest it has been since the Civil War and there is NO prospect of it ever dropping down to WWI prices let along post WWI prices.
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=F000000__3&f=A
Post 1913 Inflation calculator:
http://www.bls.gov/data/inflation_calculator.htm
For prices at the time of the Civil War, you must understand that prior to 1934 the US had a policy of $20 to one ounce of gold. Thus all prices from 1874 to 1934 are viewed as "Inflation free". 1860 is on that list, but in 1862 the US started to have inflation do to Congress deciding to go off the gold standard in December 1861. This Inflation peaked in 1864, then went into a steady decline as Congress tried to restore the Dollar to the $20 to an ounce of Gold Standard (Which Congress did by 1874).
Price of Gold, was as high as $300 for an ounce of gold in July 1864 (but that was a temporary jump caused by an act of Congress that was repealed within two weeks). The price before and after the jump was $200 an ounce. The US went back on the Gold Standard of $20 to an ounce of gold in 1874 (and was the chief cause of what is called the "Long Depression" of 1875-1896).
http://www.bloomberg.com/news/2012-08-02/how-congress-learned-perils-of-shutting-a-market-echoes.html
http://www.nma.org/pdf/gold/his_gold_prices.pdf
Thus you can use 1913 for 1859, 1860, 1861 and post 1874 prices for oil, for you had no real permanent inflation between those dates and 1913. The Civil War prices are trickier for inflation was massive, but you had Gold Dollars being minted at $20 to an ounce of gold (and no one every saw these things) and Paper Dollars for everything else. Thus in terms of Gold, you had NO inflation, but also no domestic usage of Gold Coins. As to paper Dollars, you had some inflation, but not the 1000% inflation one would assume if you look at the market go Paper Dollars to Gold Dollars in 1864.
This is complicated by the price of Silver. In 1849 you had the California Gold Rush, this lead to gold inflation world wide (What you could buy with an ounce of Gold in 1849 is a lot more then you could buy with an ounce of gold in 1860 do to this massive gold inflation. Silver followed a similar inflationary action after the Silver Mines opened up in Nevada. In 1857 the US had reformed its coinage system, setting up the Silver Dollar containing just a hair less then one dollar of silver. By 1900 the Silver in a Silver Dollar was only worth 55 cents (and most of this inflation occurred in the 1860s). Remember Dollars were valued in terms of gold, thus in term of gold, Silver had lost almost half its price starting in 1857 (This was the reason for the Call for "Free Silver" in the 1880s and 1890s, Silver Dollars were technically valued the same as Gold Dollar but cost less to produce and thus by minting Silver Dollars you would have inflation and give the economy a kick, that it needed. The free Silver movement died as the economy did get a kick with Gold Inflation when the South African, Alaskan and Australia Gold booms of the late 1890s).
I bring all of the above up, for adjusting the value of money is complicated by the pre 1934 Governmental policy of trying to stay on the Gold Standard when Gold is NOT money but a commodity that is bought and sold. When you have low production, gold tends to act as a drag on the economy, when you have high production Gold can push an economy into overdrive (as it did in the 1850s, probably the best decade for the US economy prior to the 1920s and in some ways beats out the 1920s, so you have to go to the 1950s and 1960s to beat it out). Low production of gold and the refusal of the US Government to get off the Gold Standard is the reason the Long Depression lasted the almost 2 decades it did and only ended when you had a sudden increase in world wide gold inflation in the late 1890s.
Back to the price of oil. I went into the above to show that any pricing is hard for no one kept any statistics as to the prices of goods till 1913 when the Department of Labor started, to do so. What prices we have for goods vary so much that it is hard to determine if what was the inflation rate was (and from 1874 to 1898 what the Deflation rate was, but to a degree we have an idea but it is based on limited number of goods, not what most people purchased on a day to day basis).
In 1913 the price of oil was 95 Cents a barrel. In 2013 Dollars that is $22.35 a barrel. In 1874 price of a barrel of oil was $1.17 a barrel, in 2013 dollars that is $27.53 a barrel.
Year $.............Dollars in 2013 dollars
1860 9.59................$225.56
1861 .49................$ 11.53
1862 1.05.................$ 24.71
1863 3.15.................$ 74,12
1864 8.06.................$189.66
1865 6.59.................$155.07
1866 3.74.................$ 88,01
1867 2.41.................$ 56.71
1868 3.62.................$ 85.18
1869 5.64.................$ 90.83
1870 3.86.................$ 44.96
1871 4.34.................$102.12
1872 3.64.................$ 85.65
1873 1.83.................$ 43.06
1874 1.17.................$ 27.53
1875 1.35.................$ 31.77
1876 2.52.................$ 59.30
1877 2.38.................$ 56,00
1878 1.17.................$ 27.53
1879 0.86.................$ 20.24
Then the price of oil stayed below $1 ($23,23 in 2013 dollars) till WWI. Reaching a peak price of $3.07 in 1920 ($35.76 in 2013 dollars). Except for a bried time in the early 1930s, when it fell to below $1 a barrel, oil prices stayed under $2 a barrel and above $1 a barrel till 1948, when it hit $2.60 a Barrel ($25.13 in 2013 dollars). The price of oil then ran from $2.50 a barrel to $3.00 a barrel till 1970 when it hit $3.09 a barrel ($18.55 a barrel in 2013 dollars). The price stayed under $4 ($24.02 in 2013 dollars) a barrel till it hit $6.87 in 1974 ($32.46 in 2013 dollars).
1975 7.67............$33.21
1976 8.19
1977 8.57
1978 9.00
1979 12.64...........$ 40.88
1980 21.59..........$ 61.60
1981 31.77...........$ 86.55
1982 28.52...........$ 69,33
1983 26.19
1984 25.88
1985 24.09
Thus, adjusted for inflation and using $94.52 as the price per barrel of oil, the present price exceeds all prices since 1871, 1864, 1865, 1860 and 1859 (the first year we have data for the price of oil). If the price of oil goes over $102,12, then we have to go back to 1860 (the 1864 and 1865 prices were driven by the problems the US had with Gold in those years, given that oil had already become a huge export for the US by that time period even as we were fighting the Civil War).
Prices for a barrel of oil was NOT this high during WWI and WWII and the price is NOT retreating even as demand falls do to the high price. That all indicates a tight oil market, which is the main product of peak oil.
= new reply since forum marked as read
