Crude study where the numbers just don't add up
Crude oil less than a fifth cheaper than soda water? I don't think so
Emirates 24/7 are running a story today about how the Organisation of Arab Petroleum Exporting Countries (OAPEC) has conducted a study comparing the price of oil with other everyday commodities such as milk, soda water and perfume.
Using US$70 a barrel (159 litres) as the price for oil, the study says that black gold comes in at $55 cheaper than milk in industrial countries and is less than a fifth of the price of a barrel of soda water.
The study goes on to say that oil is an absolute steal when compared to a barrel of coffee from a coffee shop - $3000 - and is not even worth thinking about when compared to the astronomical $1,200,000 it costs for a barrel of premium perfume.
While there is no greater champion of the hydrocarbons industry than ArabianOilandGas.com I must confess to having a teeny wee problem with the study.
First of all I’d like to know where OAPEC gets its price for soda water from. During my student years I worked in a restaurant and remember giving soda water away to customers for free. The price of a quick blast of carbon dioxide from a bottle stored under the bar was so negligible it was considered tap water. So 159 litres of soda water must have cost all of about $2.
Secondly, I can imagine that farmers sell 159 litres of their cow’s milk for a whole lot cheaper than the price we pay to the supermarkets. This is definitely true of Third World coffee producers if the Fair Trade movement is to be believed.
I’ll also wager that the actual production cost of 159 litres of perfume is about the same as the production costs for a barrel of oil, it’s only a mixture of chemicals after all.
Although maybe that's the solution to all that oil sloshing around at the moment. The oil industry should look into developing its own range of designer perfumes with the surplus.
Crude – the new fragrance from Saudi Aramco?
Er, on second thoughts, maybe not.
If anyone has a copy of the full list could they please email it over and I'll publish it on the blog. Also if anyone can shed any light on exactly how much a farmer receives for milk or coffee or how much a barrel of perfume costs to actually produce then please email in or leave a comment below.