Thursday, March 8, 2007

91 Days

Oil Drilling Platform
Everyone has their pet theory on how gasoline prices are established in the real world. Of course, many people think it is simply tied to the price of crude oil and simple supply and demand. Wish it were so!

For a detailed analysis of the last three years of oil pricing and the influence of political and military events around the world on oil prices, please read this assessment and hope it isn’t at all accurate.

Three facts jump out of the document:

  1. The United States has the largest demand for oil by far, using around 25% of the world's total oil production and 40% of the world's gasoline production -- with only about 5% of the total world population.
  2. Approximately 2/3 of the oil and gasoline consumed by the U.S. is being imported from foreign countries. This dependency leaves the U.S. highly vulnerable to any supply disruption.
  3. At any one time there are about 54 days of stock in the OECD system plus 37 days in emergency stockpiles. 54 + 37 = 91 days.

If oil stopped flowing for whatever reason – terrorism, war, natural disaster – it would only take about 91 days before the economy and world social order spiraled into chaos.

You didn’t want to hear that, did ya?

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