Have you ever wondered why energy prices have It increased by 200% since 2002? I certainly have, and since I spent the afternoon crunching statistics I thought I might share my findings with you.

In the infographic below I have plotted the monthly spot prices for Brent crude oil and the UK quarterly figures for gross domestic product per capita. I have added a simple analysis tool, line of the peaks and line of the troughs, used by traders to estimate when a commodity is approaching its upper and lower price limits.

Until 2002 the oil price appears to be the product of a mature commodity trading market. The oil price is relatively stable showing a gradual increase in the peaks, but a stable floor to the price. GDP per capita in the UK grew throughout this period at a rate comfortably above the growth rate in oil price. The two exceptions to this are the 1990 recession, coinciding with a peak in price triggered by the Iraqi invasion of Kuwait and the Asian financial crisis which triggered a collapse in oil prices as supply outstripped the demand. Then there is another peak followed by the dotcom bubble. Co-incidence?

Don’t ask me what happened to change the nature of the oil market in 2002, I have no idea: I hope someone does, it looks like a completely new paradigm. Again using the lines of peaks and troughs we can identify trigger points. You can probably find other fits, but since the market appears to be starting afresh with nothing to go on it is likely to have been a volatile time. Nevertheless we can see how our economy has become increasingly sensitive to oil price. Not only that, but now oil prices are rising at a much faster rate than GDP. That must mean that we are in for trouble.

Data from the UK Office of National Statistics and US Energy Information Administration