People seem to think that oil is expensive now that it’s moved back above $70 per bbl. It’s tough to know how anything should be priced in fiat dollars, so I thought a look at oil priced in gold would be interesting. The chart below shows that for all the crazy swings in the oil price, over the long-term it seems to apprecate about 3½% per year against gold. The chart also suggest that the middle of it’s long-term range right now would be about 1/10 oz of gold per barrel, which suggests about $93. per barrel for oil at current gold prices.
click chart to enlarge