Readers of The Economist magazine will be familiar with the Big Mac Index, its clever chart showing the price of a McDonald’s Big Mac in various countries, as a crude way of measuring the purchasing power of various currencies. Gregor Macdonald has taken the idea in a different direction, looking at how many Big Macs you could buy for a barrel of oil, at average prices throughout the year.
Says Gregor: “Two aspects of this chart surprised me. First, even as oil began to take off in 2004 there was still a trailing stability in its relationship to the Big Mac. A barrel of oil could still be purchased for less than 15 Big Macs throughout much of 2004. The second insight I gleaned from this chart is that despite the advance in the price of the Big Mac since 2001, and equally despite the spectacular price crash of oil from the highs of 2008, a barrel of oil still costs nearly 20 Big Macs. In some sense, therefore, we can think of Oil as having moved from a previous pricing era of 10 Big Macs, to a new era of 20 Big Macs.”
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