Abstract
In the early 1980s, soft world oil markets were accompanied by two important and unforeseen world economic developments: stagnant economic growth and an appreciating dollar. In most markets, widespread excess capacity would place significant downward pressure on prices. While the price of oil, in dollars per barrel, has increased more slowly than the US inflation rate since 1980, this trend by itself is not indicative of falling real oil prices worldwide. A constant oil price denominated in dollars per barrel could represent an increasing real cost for many countries if the appreciation of the dollar was more rapid than the increase in other goods and services. OPEC's insistence on a relatively constant price in dollars during the 1980-1982 period would then represent an agressive pricing strategy, given the slack market conditions. For this reason, it is important to consider the effect of past appreciation of the dollar on real world oil prices. These trends are discussed. 12 references, 6 tables.
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