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OilOil1.1. The economics of oil.The economics of oil.

2.2. Oil consumption.Oil consumption.

3.3. Oil production.Oil production.

4.4. Oil politics.Oil politics.

Arctic coastal plain

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1. Oil economics1. Oil economics

Oil is not a luxury, it is a necessity.Oil is not a luxury, it is a necessity.

Oil is not democratic; not everyone has it.Oil is not democratic; not everyone has it.

When dealing with issues about oil, you mustWhen dealing with issues about oil, you must

Think BigThink Big

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The 2002 Fortune 500 - GlobalThe 2002 Fortune 500 - Global

Company Company Revenues ($ Revenues ($ millions)millions)

1.1. Wal-Mart StoresWal-Mart Stores General merchandiser 219,8122.2. Exxon MobilExxon Mobil Petroleum refining 191,5813.3. General MotorsGeneral Motors Motor vehicles & parts 177,2604.4. BPBP Petroleum refining 174,2185.5. Ford MotorFord Motor Motor vehicles & parts 162,4126.6. EnronEnron Energy 138,7187.7. DaimlerChryslerDaimlerChrysler Motor vehicles & parts 136,8978.8. Royal Dutch/Shell GroupRoyal Dutch/Shell Group Petroleum refining 135,2119.9. General ElectricGeneral Electric Diversified Financials 125,91310.10. Toyota MotorToyota Motor Motor vehicles & parts 120,814

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Global Oil ProductsGlobal Oil Products

Diesel fuel: _____ % of crude oil.Diesel fuel: _____ % of crude oil.

Gasoline: _____ % of crude oil.Gasoline: _____ % of crude oil.

Percentage of petroleum products:Percentage of petroleum products:

• Heating - _____%.Heating - _____%.

• Engine grease - _____%.Engine grease - _____%.

• Jet fuel - _____%.Jet fuel - _____%.

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Oil ProductsOil Products

• Alcohol and methylated Alcohol and methylated spirits.spirits.• Aspirin and other drugs, Aspirin and other drugs, ointments, anesthetics, and ointments, anesthetics, and medicinal products.medicinal products.• Bitumen for sealing road Bitumen for sealing road surfaces.surfaces.• Cosmetics.Cosmetics.• Dyes.Dyes.

• Explosives.Explosives.

• Food additives.Food additives.

• Fertilizers.Fertilizers.

• Hydrogen.Hydrogen.

• Industrial fuels (for power Industrial fuels (for power plants, factories and ships).plants, factories and ships).

• Insecticides.Insecticides.

• Detergents and solvents.Detergents and solvents.

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Oil ProductsOil Products

• Kerosene for heating and Kerosene for heating and lighting.lighting.• Lubricants (for everything Lubricants (for everything from scientific products to from scientific products to aircraft).aircraft).• Liquefied Petroleum Gas Liquefied Petroleum Gas (LPG) for heating, cooking, (LPG) for heating, cooking, and some cars.and some cars.• Oil-based paint.Oil-based paint.•Resin.Resin.

•Synthetics like nylon Synthetics like nylon fibers, rubber, and glass.fibers, rubber, and glass.

•Toothpaste.Toothpaste.

•Turpentine.Turpentine.

•Wax and polish.Wax and polish.

• Some plastics.Some plastics.

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2. Oil Consumption2. Oil Consumption

2001:2001:• global oil demand was at _____ million barrels global oil demand was at _____ million barrels

per day. (demand is approx. a function of per day. (demand is approx. a function of population and level of development)population and level of development)

SevenSeven countries accounted for ____% of the countries accounted for ____% of the global oil demand: United States, Japan, China, global oil demand: United States, Japan, China, Germany, Russia, Italy and France.Germany, Russia, Italy and France.

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Oil consumption by sector (by 2000)Oil consumption by sector (by 2000)

Electric Utilities

1%

Residential - Commercial

2% Industry9%

Transportation88%

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World Oil Demand(1000 barrels per day)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

1970 1980 1990 2000 2004

World United States Europe Canada Japan

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Oil consumption by regionOil consumption by region

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World Oil Consumption, 1980-2000World Oil Consumption, 1980-2000

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World Oil Consumption, 2001World Oil Consumption, 2001(in 1,000 of barrels per day)(in 1,000 of barrels per day)

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World’s largest oil consumers World’s largest oil consumers (1999)(1999)

CountryCountry Million barrels/day Million barrels/day % world total% world totalU.S.A.U.S.A. 17.74 17.74JapanJapan 5.79 5.79 ChinaChina 4.01 4.01 Soviet UnionSoviet Union 3.99 3.99

World’s largest oil importers (1999):World’s largest oil importers (1999):• USA - 11.2% of world totalUSA - 11.2% of world total• Japan - 9.1% of world total Japan - 9.1% of world total

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Canada consumes ~ 1,665,000 barrels of Canada consumes ~ 1,665,000 barrels of oil per dayoil per day

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Annual production of carsAnnual production of cars

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World total of carsWorld total of cars

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Consumption of resourcesConsumption of resources

US military uses _____% of total US energy.US military uses _____% of total US energy.

Worldwide: _____ of all jet fuel is used by military Worldwide: _____ of all jet fuel is used by military aircraft.aircraft.

F-16: one hour flight uses F-16: one hour flight uses ____ fuel used by average ____ fuel used by average American motorist in one American motorist in one year.year.

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3. Oil Production3. Oil Production

In 2000, global oil production was at _____ million In 2000, global oil production was at _____ million barrels per day.barrels per day.

Oil production is marginal or non-existent in a many Oil production is marginal or non-existent in a many countries, most notably in Africa.countries, most notably in Africa.

Eight producers accounted for _____% of the global Eight producers accounted for _____% of the global production: Saudi Arabia, the United States, production: Saudi Arabia, the United States, Russia, Iran, China, Venezuela, Mexico and Russia, Iran, China, Venezuela, Mexico and Norway.Norway.

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World Crude Oil Production, 1980-2000 World Crude Oil Production, 1980-2000

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World oil reserves – by regionWorld oil reserves – by region

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World oil reserves – by countryWorld oil reserves – by country

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Major Crude Oil Reserves, 2001Major Crude Oil Reserves, 2001

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4. Oil politics4. Oil politics

Oil cannot be discussed without reference to the Oil cannot be discussed without reference to the politics of oil.politics of oil.

Since oil is a fundamental characteristic of every Since oil is a fundamental characteristic of every economy in the world, and large reserves of oil are economy in the world, and large reserves of oil are found in very few countries, this imbalance puts a found in very few countries, this imbalance puts a great deal of power into the hands of a very small great deal of power into the hands of a very small number of people.number of people.

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World’s largest oil reservesWorld’s largest oil reserves

Country Barrels (Billions) % world total261.5261.5112.5112.597.897.896.596.593.093.071.771.765.465.4

Top five countries account for 63.7% of global oil reserves.

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Most of the Most of the

world’s oil isworld’s oil is

located inlocated in

one region: theone region: the

Middle East.Middle East.

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World’s top oil producers (1999)World’s top oil producers (1999)

CountryCountry Million barrels/day Million barrels/day % world % world totaltotal

9.359.35

8.468.46

7.227.22

6.156.15

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The Persian Gulf,The Persian Gulf,

from the shuttlefrom the shuttle

Endeavour.Endeavour.

Strait of Hormuz

Is one of the most strategic waterways in the world due to world oil Is one of the most strategic waterways in the world due to world oil transportation.transportation.

This is the world's most important oil "chokepoint," accounting for This is the world's most important oil "chokepoint," accounting for the transit of approx. two-fifths of all world oil.the transit of approx. two-fifths of all world oil.

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Main global oil transportation routesMain global oil transportation routes

Major problem: getting the oil from the Persian Gulf to the Major problem: getting the oil from the Persian Gulf to the rest of the world, and getting it through the choke-points.rest of the world, and getting it through the choke-points.

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