The price of one key U.S. oil grade is already the lowest in the modern era of the market, when adjusted for inflation. Louisiana Light Sweet crude, a key crude stream on the U.S. Gulf Coast, has fallen below $5 a barrel in real terms, the lowest in data going back to 1983, according to Bloomberg calculations using the U.S. urban consumer price index.

Some U.S. crude is already the lowest in decades in real terms
Data is patchy before the early 1980s, but real prices of U.S. mid-continent crude, a similar grade, only ever came close to that level prior to the Arab oil embargo of 1973 to 1974 — the geopolitical crisis that ended the era of cheap energy and ushered in the primacy of OPEC. It’s perhaps the most striking sign yet of the magnitude of the simultaneous shocks affecting the market, as the coronavirus crisis shatters demand while Saudi Arabia and Russia engage in a vicious price war.

Futures on exchanges in London and New York have so far only slumped to the lowest since 2002 in nominal terms, with West Texas Intermediate crude slipping briefly below $20 on Monday. That’s not to say the world is about to return to the age of cheap abundant energy that powered post-war economic growth. Consumers are largely unable to take advantage of bargain gasoline prices when about three quarters of the population U.S. is subject to lockdowns to slow the spread of coronavirus.

“The gain is not monetizable, in terms of purchasing the real good, if you’re under confinement conditions,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA.