How expensive is oil currently?

On April 22, 2008, a barrel of crude oil reached a record high price of nearly $120.

(Associated Press)

Are today's oil prices high by historic standards?

The previous record of $39.50 was set in April 1980 — a level equal to about $104 a barrel at today's prices.

The earth was endowed with over 3.3 trillion barrels of conventional recoverable oil. A total of about one trillion barrels has been used since the dawn of human history. (U.S. Geological Survey)

(International Herald Tribune)

How much oil is there on earth?

The earth was endowed with over 3.3 trillion barrels of conventional recoverable oil. A total of about one trillion barrels has been used since the dawn of human history.

(U.S. Geological Survey)

Is the world ever likely to run out of oil?

There are currently more than 1.1 trillion barrels of oil currently in "proven" oil reserves — reserves that scientists are reasonably certain will be recoverable in years to come. That is enough to fuel the world economy for 38 years — even at today's consumption rates.

(ENI)

But what gives cause for concern?

The peak in U.S. oil discoveries was back in 1932 — and the production peak was in 1970. In the North Sea, the height of discoveries was in 1973 — and production peaked in 1999. World oil discoveries peaked in 1964, and some of the largest finds are 70 years old.

(Barron’s)

What else?

Fewer than 2,500 rigs are drilling for new oil and gas around the world — less than half the peak number in 1981. And oil-refining capacity has remained at roughly the same level for 25 years.

(Wall Street Journal)

How about recently?

In 2006, spending by 228 global oil and gas companies increased 45% to $401 billion — generating only a 2% increase in oil reserves.

(John S. Herold, Inc.)

What kind of oil is being discovered today?

If oil production continues at January 2006 levels, only the United Arab Emirates, Iraq and Kuwait have remaining reserves that would last 100 years or more. (Financial Times)

The world's oil supply is increasingly tilting toward stickier, or "heavier," grades of crude.

(Wall Street Journal)

Why does that matter?

Typically, heavy-crude deposits are easier to locate than undiscovered light-crude pools — but the oil they contain is more difficult and costly to extract, transport and process into fuels like gasoline and diesel.

(Wall Street Journal)

Where are the world’s proven oil reserves located?

Among the world’s proven oil reserves, 17 billion barrels are in Western Europe, 40 billion in Asia, 55 billion in North Africa, 57 billion in sub-Saharan Africa, 59 billion barrels in North America, 74 billion in Eastern Europe, 79 billion in Venezuela — and 743 billion barrels in Persian Gulf region (as of 2005).

(U.S. Energy Information Administration)

Which countries currently have the largest remaining reserves?

If oil production continues at January 2006 levels, only the United Arab Emirates, Iraq and Kuwait have remaining reserves that would last 100 years or more.

(Financial Times)

What about Russia?

Russia has more than a quarter of the world's proven reserves of natural gas, 17% of its coal — and 6% of its oil.

(Harvard University)

How does economic growth impact the global demand for oil?

Each rise of one percentage point in global GDP growth rate requires roughly a 500,000-barrel-a-day jump in oil use.

(Global Insight)

And vice versa, how does a rising oil price affect the global economy?

There are currently more than 1.1 trillion barrels of oil currently in "proven" oil reserves — enough to fuel the world economy for 38 years, even at today's consumption rates. (ENI)

A sustained $5 rise in the oil price subtracts about 0.3% from global growth in the following year. A $10 rise could thus shave just over half a point off global GDP.

(Financial Times)

How can rising demand be met?

New technology has made it cheaper to recover oil from existing fields. Average production costs fell from about $7.30 per barrel in the early 1990s to $5.95 as of 2003.

(Bear Stearns)

But doesn’t technology have its limits?

On average, the oil industry takes about 16 years between devising a new production technique and implementing it into general use.

(U.S. National Petroleum Council)

What makes the situation even more serious?

As a percentage of total demand, the spare oil buffer is only about 1% now compared to 2% in 1973 — as consumption of oil has risen about 44% in the past three decades.

(Wall Street Journal)

Why is the buffer significant?

OPEC officials privately estimate that a buffer of 4% is needed to keep prices in equilibrium.

(Wall Street Journal)

Why is oil measured by the barrel?

Oil is measured in "barrels" because the first commercial oil drillers (mid-19th century Pennsylvanians) poured oil into barrels to sell it. They chose 42-gallon barrels apparently for convenience — because the standard barrel at the time held 42 gallons of herring, lard and other products.

(Slate Magazine)

What else is peculiar about oil nomenclature?

The acronym "bbl" does not mean "barrels" but "blue barrels," because the early 20th-century monopoly Standard Oil painted its barrels blue.

(Slate Magazine)

The world's oil supply is increasingly tilting toward stickier, or "heavier," grades of crude. (Wall Street Journal)

Why might one want to take predictions about the future of oil prices with a grain of salt?

When the price of oil went over $40 a barrel in the 1980s, it was estimated to rise up to $100. In 1999, when oil was below $11, it was estimated to fall to $5.

(U.S. National Petroleum Council)

Which oil company stands out among its peers?

The November 1999 merger between Exxon Corp. and Mobil Corp. — formerly known as Standard Oil Co. of New Jersey and Standard Oil Co. of New York —put the two biggest chunks of the John D. Rockefeller oil empire back together again.

(Washington Post)

And finally, which country was the Saudi Arabia of its day?

In the early 20th century, Azerbaijan was producing half the world's oil.

(Washington Post)