CXC3000 Posted February 16, 2012 Share Posted February 16, 2012 Can someone tell me what the hell that means to the average person on the street ? We don't exactly buy our oil in huge barrels so which idiot decides to use that as some sort of measurement ? Thanks. Link to comment Share on other sites More sharing options...
alchresearch Posted February 16, 2012 Share Posted February 16, 2012 Maybe it's just a container volume that's easy to imagine, just like the media like to measure stuff in London bus lengths. I can't imagine the whole oil - petrol process filling and emptying barrels all day long! Googling the question gave this: http://www.wisegeek.com/why-do-we-measure-oil-in-barrels.htm Link to comment Share on other sites More sharing options...
HeadingNorth Posted February 16, 2012 Share Posted February 16, 2012 Can someone tell me what the hell that means to the average person on the street ? It doesn't. The average person in the street does not buy crude oil. Link to comment Share on other sites More sharing options...
CXC3000 Posted February 16, 2012 Author Share Posted February 16, 2012 Maybe it's just a container volume that's easy to imagine, just like the media like to measure stuff in London bus lengths. I can't imagine the whole oil - petrol process filling and emptying barrels all day long! Googling the question gave this: http://www.wisegeek.com/why-do-we-measure-oil-in-barrels.htm It doesn't. The average person in the street does not buy crude oil. Thanks, but as asked earlier, what does that mean to you and me ? At the moment, the cost of petrol is about £1.30 a litre; what's the current price of oil (in barrels) and what would it mean if it hit, say $300 a barrel ? Link to comment Share on other sites More sharing options...
HeadingNorth Posted February 16, 2012 Share Posted February 16, 2012 Thanks, but as asked earlier, what does that mean to you and me ? At the moment, the cost of petrol is about £1.30 a litre; what's the current price of oil (in barrels) at the moment and what would it mean if it hit, say $300 a barrel ? As far as I can make out, the cost of the raw ingredients is a very minor part of the cost of petrol, so it's hard to say with any authority. Obviously is crude oil goes up, petrol goes up; but by how much? I don't have the answers to that. What's more significant is the vast number of other products which depend on crude oil at some point in the manufacturing process; rises in the price of crude oil affect all sorts of things much more heavily than they affect the cost of petrol. Link to comment Share on other sites More sharing options...
alchresearch Posted February 16, 2012 Share Posted February 16, 2012 US related but still interesting: http://business.whatitcosts.com/refine-oil-pg3.htm Link to comment Share on other sites More sharing options...
cgksheff Posted February 16, 2012 Share Posted February 16, 2012 So many variables, as mentioned above industry averages imply that a $2/barrel change in crude equates to something like 1p at the pumps. http://www.ukpia.com/files/pdf/ukpia-briefing-paper-understanding-pump-price.pdf Link to comment Share on other sites More sharing options...
Cavegirl Posted February 16, 2012 Share Posted February 16, 2012 Just to bring a different perspective to the discussion I can add a brief history of crude oil prices and that might help you to understand their modern significance. From the post WWII period 1945 to the peak of US oil in 1971 the average oil price was around $20 a barrel (or $28.5 adjusted to $2010 for the purpose of overcoming inflationary issues). As this was a period of major transport infrastructure building (shipping, flying, railroads and driving) in the west it's fair to say that the basis of the modern economy was built on oil at this price. The oil embargo of 1973-4 led to prices in excess of $40 a barrel (in $2010s) and this was followed by the Iranian Revolution and the Iran/ Iraq war which pushed the oil price to more than $70 (in $2010) as the world lost 6.5 million barrels per day of production which, in turn, pushed Britain into recession in 1981. From 1986 to 2001 the Middle East situation stabilised and the oil price dropped to between $20 to $30 which is considered it's 'normal' range. However, since the attack on the World Trade Centre in the US in 2001 and the subsequent turmoil in the Middle East (and to a lesser extent Africa) we've had to cope with constant oil prices that are well above 'normal' and our transport infrastructure has seriously suffered, which in turn has led to problems in other sectors of the economy and eventually led to the recession of 2007-8. In 2008 the oil price was around $90 a barrel (in $2010s), which was unsustainable and so large parts of the western global economy essentially went under, having a knock on effect with their suppliers and thus with reduced demand the price dropped in 2009 to around $60 a barrel (in $2010s). In 2010 the Arab spring uprisings and the war with Libya, alongside weak global growth have effected the oil price rather more dramatically than perhaps you would expect essentially pushing it up above $90 a barrel once more. The reason for this seems to be that oil production was not increased to make up the shortfall from Libya despite the Saud's promising to do so. In fact, non- OPEC oil production has not increased at all since 2003, essentially plateauing at 42 million barrels per day (mbpd), whilst OPEC production has fluctuated between 30-32 mbpd with a slight peak at 32.5 mbpd in 2008. It's impossiblt to say at this point whether this plateauing in production is due to a current or even permanent inability to produce more oil or whether it's related to countries/ companies artificially keeping production low in order to maintain the high prices. To me, the latter seems unlikely because every country that produces oil must be under intense pressure from other countries to sell them their oil more cheaply during a global recession. Anyway, the upshot of all this is that if the oil price falls to between $20-30 a barrel again then the economy might be able to grow again without us needing to make any changes to our infrastructure. If however, the price remains at between $60-90 then we'll have to take a serious look at our economy's dependence upon oil. If the price continues to rise then we've already hit global peak oil and it will be too late to make effective changes, we'll just have to cope with the outcome of a world with declining oil and hope that the decline is more gradual than quick. Link to comment Share on other sites More sharing options...
gnvqsos Posted February 16, 2012 Share Posted February 16, 2012 A dollar change in the price of oil will alter the pump price by 10cents,as the government rightly tax the pollutsnt to deter excessive use and waste by otherwise profligate motorists who would drive upstairs to bed at night if parking permitted. Link to comment Share on other sites More sharing options...
Rupert_Baehr Posted February 16, 2012 Share Posted February 16, 2012 A dollar change in the price of oil will alter the pump price by 10cents,as the government rightly tax the pollutsnt to deter excessive use and waste by otherwise profligate motorists who would drive upstairs to bed at night if parking permitted. That depends where you live. In Jan 2007, I was living in Mississippi. At that time, 1 US gallon of petrol (roughly 4 litres) cost $1.60. During 2007, oil prices rose sharply and - because tax represents a relatively small portion of the pump price in the US - pump prices rose dramatically - to about $3.40 a gallon. Small businesses - many of which didn't make large profits - saw their operating costs increase dramatically and some closed as a result. Prices rose in Europe too, but because tax represents a considerably larger proportion of the pump price, the price rises - as a percentage - were somewhat lower. If (or when) oil reaches $300-$400 a barrel, then airlines, shipping companies, agriculture and other industries which use oil (but which don't pay much tax on it) are likely to see significant cost increases and those increases will be passed on to their customers. If European governments freeze the tax (in numerical terms)(but they probably won't!) then the price increases on road fuels will be smaller as a percentage of pump prices - though they will still be significant. I suspect that Air Fares (and probably Ferry fares) this year will be higher than they were last year. Airport taxes, security charges and departure taxes now make up a significant amount of the cost of an air ticket - which may reduce the effect of oil price rises (slightly), but - from the quotes I've received recently - transatlantic travel costs this year are significantly higher than they were last year. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.