Even though the price of a barrel of oil is fixed by just a couple of commodity exchanges around the world, the actual cost of oil extraction varies greatly from country to country.
It is much easier to extract oil from land based drilling platforms than it is from offshore rigs.
It is much easier to extract oil when it is close to the surface.
It is much harder to extract oil from tar and shale deposits.
In essence, the harder it is to extract, the more expensive the production costs.
The above is a simplification but other cost factors like local wages, distance from markets also contribute to costs.
I have spent some time researching these costs from various sources and the results are shown below.
Crude prices on the open market currently range from £100 to £120 US dollars per barrel.
The following is a list of average extraction costs by country (in US dollars per barrel).
Saudi Arabia - $1.50
Kuwait - $2.00
Iraq - $5.00
Libya - $5.50
UAE - $7.00Canada - $8.50
Russia - $12.00
Iran - $12.50
Nigeria - $22.50
Venezuela $25.00
UK - $50.00
With profit margins this big, it is easy to see why western governments and businesses cosy up to non democratic middle eastern regimes.
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