Oil has risen, not doubled
A widely shared Facebook post would have you believe the price of oil more than doubled in six weeks since early January.
That would be a remarkable spike, if it were true. But it isn’t. The price did rise in those six weeks — but by about 18%.
The Feb. 19 post claimed:
“Oil is now $61.30 a barrel & rising drastically! On Jan 5th, it was about $25.00 a barrel Are you awake yet? Gas & milk going up too.”
The post was flagged as part of Facebook’s efforts to combat false news and misinformation on its News Feed.
The latest daily prices for two benchmark products is roughly in the $61 range on the spot market. But neither benchmark has been in the $25 range since May 2020, according to the U.S. Energy Information Administration. At that time, oil prices were hammered by plummeting demand due to worldwide shutdowns to deal with the pandemic.
The daily spot price of West Texas Intermediate crude oil, the U.S. benchmark, trended upward from $49.78 per barrel on Jan. 5 to $59.12 on Feb. 19. That’s an increase of 18.8%. West Texas Intermediate hasn’t been in the $25 range since the price was $25.37 on May 13, 2020.
The daily price of Europe Brent crude, the global benchmark, also trended upward, from $53.16 on Jan. 5 to $62.84 on Feb. 19.
That’s an increase of 18.2%. Brent Europe was last in the $25 range on May 11, 2020, when it was $25.53.
The price increases are generally attributed to optimism regarding a world economic recovery, and expected demand rising faster than had been previously expected, among other factors, said economics professor Robert Godby, deputy director of the University of Wyoming’s Center for Energy Regulation and Policy.
Matt Smith, director of commodity research at ClipperData, said prices increased because of optimism about post-COVID-19 demand recovery and because of OPEC production cuts.
Stacey Morris, director of research at Alerian, which tracks energy and other investment markets, said a number of factors have contributed to the gain in oil prices, “but a near-term tightening in supply has been a key driver.”
Morris said that on Jan. 5, Saudi Arabia announced it would make additional production cuts of 1 million barrels per day for February and March. And she said severe winter weather during the week of Feb. 15, particularly in Texas, temporarily reduced oil production by more than 1 million barrels per day.
Richard Swann, global director of clean refined products at S&P Global Platts, an energy analytics firm, also cited the OPEC cuts and the severe U.S. weather as among the key factors.
Our ruling
A Facebook post claimed: “Oil is now $61.30 a barrel and rising drastically! On Jan. 5, it was about $25 a barrel.”
The latest prices for two major benchmarks as of the date of the post were roughly in the range of $61. But that was up from about $50, not $25, on Jan. 5.
We rate the post False.