Many of my friends and relatives keep asking about oil and its economics. I have tried to answer a few.
Will demand in US affect OIL Prices?
Yes! US is the single largest consumer of world’s oil quantifying to about 23.9% (943.1 million tons). Next is China whose consumption is about 9.3%
India consumes 3.3% after Japan 5.8%
(2007 Figures)
China and India are responsible for increase in OIL demand and Oil Prices in the recent years
May Be! The %change in consumption from 1997 to 2007 is 88% for China and 48.5% for India. Considering the consumption of Coal it may be possible that the total emissions contributed by these two nations over the recent years may be really very high
(2007 Figures)
OPEC nations production cut will influence oil prices
Not really! OPEC nations produce only 38.2% of the total production. IRAQ is not considered here as OPEC nation as it does not follow the quota system.
Saudi Arabia and Russian Federation are major producers at 12.6% each.
(2007 Figures)
Who holds most of the world’s oil?
Saudi Arabia (21.3%)
Iran (11.2%)
Iraq (9.3%) – Also explains why US eyed Iraq.
Kuwait (8.2%)
India (0.4%)
Oil Producing Nations earn the most money out of Oil
Untrue. The Tax revenue from Oil of the G7 (Canada, France, Germany, Italy, Japan, the UK and the USA) for the period 2003-07 is 2585 Billion USD while the total revenue from Oil of the OPEC nations is 2539 Billion USD.
The Tax collected is 100% profit while the OPEC’s revenues also include the cost of Exploration and Production. UK Tax is the highest.
Some Interesting Facts
Even though Russia is one of the major producers its reserve stands at only 6.4%
The R/P ratio which gives and indication of Reserve to Production is high in Middle East. In future at these rates of production the OPEC nations may dictate Oil prices as theirs will be the last available reserves.
Ref: BP World Energy Outlook 2007, OPEC Publications
Leave a Reply