Trends and Super Cycles in Crude Oil and Coal Prices

This paper uses the band-pass filter approach of Cuddington and Jerrett (2008) to (i) study longterm trends in crude oil and coal prices and (ii) to search for evidence of super cycles in these energy commodity prices. Although Cuddington and Jerrett found evidence of super cycles in metals prices, it is unclear a priori whether one would expect to find them for oil and coal due to differences in market structure and relative importance in the industrialization process during different epochs. We find that long-term trends have varied over time, with real coal prices trending downward and crude oil trending upward in the post World War II period, with different implications on the depletion-technology battle. There appear to be four super cycles in coal prices over the period 1800--2009 (with two uncertain periods) and three super cycles in oil prices over the period 1861--2010 (with one uncertain period). These coal super cycles roughly match the timing of those for oil and metals prices after WWII---but not in the pre WWII period---and their timing suggests that they were caused by episodes of industrialization and urbanization in various countries or regions in the global economy. Thus, the post WWII evidence is consistent with the super-cycle hypothesis.