THE PRICE OF OIL vs THE COST OF OIL

.
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 - $7.00
Canada - $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.

IT'S OIL IN THE WRONG PLACE - Watch out for thieves !

I've just spent a couple of hours researching where all the oil is, who needs it the most, how much we all use and how long it will last.

I have listed the results in a table.

The table shows the top 10 oil producing countries with the most proven reserves. Please note that these 'proven' reserve figures are usually exaggerated by each country in order to reduce 'the fear' in the commodities markets and to insulate their respective domestic economies.

The table also shows how long each country's reserves would last if the world were dependent entirely on that country.

It also shows the top 10 oil consuming countries and how long they could survive if they had to rely on only their own oil, for instance if the world went all protectionist due to a world war or an extreme economic fear event.

You can click on the table to get a better view.

I think that you will agree that the results are startling.

It really does demonstrate the frailty of western oil guzzling economies. Look how vulnerable Japan, South Korea, Germany, France and Italy are.

Looks like the best places to be (in terms of prosperity and energy security) are Canada and Brazil.

You can also see why Iraq was so important to the Western forces and why the U.S. have built the largest embassy complex in the world.

http://en.wikipedia.org/wiki/U.S._Embassy,_Baghdad

FOOD MADNESS - Counting the calories

Chasing the calorie trail.

It takes 10 fossil fuel calories to produce 1 food calorie on a first world table.

An oil burning machine is used to plough a field.
That ploughing machine and all of the raw materials in that machine were manufactured using oil, gas and coal based energies.

An oil burning machine is used to plant seeds.



That seed drilling machine and all of the raw materials in that machine were manufactured using oil, gas and coal based energies.



The seeds are treated in a factory with germination products derived from oil.
The factory uses oil, coal and gas based energies to run.

The factory uses oil burning machines to bring raw materials to it and oil burning machines to deliver seeds to distribution centres.

These distribution centres consume oil, gas and coal based energies.


They use oil burning machines to transport their seed products to farms.

An oil burning machine is used to apply a high yielding fertiliser.



That fertiliser is derived from oil.


That fertiliser is produced in a factory that uses oil, gas and coal based energy sources.
That factory uses transportation methods and energy sources to distribute its product as the seed company.

The farms often rely on irrigated water systems.
Oil, gas and coal based energies are used to extract water from aquifers and pumped large distances using pumps that consume oil, gas and coal based energy sources.
Pesticides are used throughout the growing period.
These pesticides are derived from oil.
Like the seeds and the fertilisers, these pesticides are made in factories using oil, gas and coal based energies and are transported and distributed using oil burning machines.

The crops are harvested using a multitude of oil burning machines.

The crops are transported to distribution centres using oil burning machines.

The distribution centres use oil, gas and coal based energies.

The goods are packaged in plastics and cardboard.

The plastics are oil derived products.
Cardboard use huge amounts of oil, gas and coal based energies for their extraction, production, transportation and distribution needs.
These packaged products are transported to distribution centres using oil burning machines.
They are then redistributed to supermarkets using oil burning machines.
Millions of people collect their food from supermarkets each day using oil burning machines.














To reiterate then. For each calorie of food on a first world table, another 10 calories of fossil fuel derived energy has been used to put it there.

And finally to put this in perspective.

Each person requires around 2000 food based calories per day to maintain themselves. In power terms this equates to 2.326 KWh; about the same as an electric kettle running for 1 hour or 15 TV sets running for an hour. And given that it takes 10 calories of fossil fuel to produce and transport 1 calorie of food to your table, each person uses the equivalent of 23.26 KWh of fossil fuel energy per day. That is about twice the amount of fossil fuel energy that the average family uses each day for their domestic electricity requirements.

OIL IS THE KEY.

EVERYTHING DEPENDS ON IT AND IT'S RUNNING OUT FAST.