Transcript Which Resources Will Matter?

Oil Eyes and Gas Gauges
How much, Where, How long?
Ronnie D. Lipschutz
Politics Department
UC-Santa Cruz
I. How much does oil & gasoline cost?
II. How much of the stuff do we use?
III. Where does it come from?
IV. How much is there?
V. How much is left?
VI. How much will we need?
VII. What can we do?
I. How much does oil and
gasoline cost?
How the price of oil is determined
????
The usual story is
that “the market”
sets the price.
The cost of a barrel in world markets is really
set in commodities markets by traders’
estimates of what oil will be worth 30, 60, and
90 days in the future
This depends on what they
think supply and demand will
look like—whether a disruption
is likely or not.
The future price feeds
back to today’s price,
since you can always
store a barrel until its
value goes up.
How Glutco Oil Ltd. prices its product
G
The production
company pays
$7.50/bbl for
oil from its
fields
G
This is the
futures price
The refining
company pays
$65/bbl for oil
from the
production arm of
the company
G
The consumer
pays $126/bbl
at the pump
The marketing
company pays
$80/bbl for
the refined
product
II. How much of the stuff
do we use?
III. Where does it come
from?
IV. How much is there?
IV. How much is left?
V. How much will we need?
VI. What can we do?
If you must have a car, get a
hybrid
•Transportation uses 13 million barrels per
day = 4.75 billion barrels/year
•Increasing average auto fuel mileage from 25
mpg to 50 mpg could save about 1.2 billion
barrels per year, or about $75 billion per year
in imports
•A $0.50 per gallon fuel tax would generate
about $100 billion/yr.
•A subsidy of $10,000 for each hybrid could enable
purchase of 10 million new cars every year
•Assume average mileage of 25 miles per gallon. If
hybrids get 50 mpg and are driven 15,000 miles/yr.,
they save 300 gallons per year (about 7.15 barrels).
•Each year, that amounts to 3 billion gallons or 70
million barrels = $4.5 billion
•By the end of 10 years, 100 million cars would save
700 million barrels or $20 billion at the pump, and
$45 billion per year in imports