A plot of the monthly oil and gas prices (green and red graphs, respectively) indicates the extreme fluctuations during the last 30 years–between $8.03 and $128.08/Barrel for oil, and between $1.02 and $13.42/Mcf for natural gas. The most recent drop, in both oil and gas prices, began in July 2008.
Please note that these average monthly prices have not been adjusted for inflation, so the recent price spike seems to be many times higher than the prices of the “boom times’ during the early 80′s. However, when adjusted for inflation, the recent spike is only slightly HIGHER than the peak price of late 1979, in 2008 dollars. Here’s some more info on Oil Price History and Analysis.
Near the top of the graph are annotations of significant world events (in blue text) that influenced the product prices during the graph’s timespan. It is pretty easy to see where the major product price spikes and downturns occurred, and for those not around during the early years of the graph, let me tell you it was a bumpy ride!!
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The Seismic Crew Count (orange graph) peaked at 744, on September 1981–about six months behind the peak oil prices (green graph above). Three months after that, the Active Drilling Rigs also peaked (4521 rigs on blue graph). Nearly five years later, following the oil price collapse during the mid 80′s, the market for drilling rigs and seismic crews nose-dived, along with the drastic reduction in employment within the oil industry (see Mining Employees graph, below). The first half of 1986 saw nearly a 65% reduction in the number of Active Drilling Rigs. Unfortunately, despite several subsequent oil price peaks during the past 15 years, neither the Seismic Crew Count, nor Active Drilling Rigs has ever significantly recovered–currently at a level of about 10% and 29%,respectively, of the number that was active during the “boom days”, in 1981!
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The database of mining industry employment data (which includes petroleum extraction and production) from the Bureau of Labor Statistics, indicates that about 1.18 million people were employed during the hiring peak in the early 80′s (blue graph). However, as recently as April 2003, only about 42% of this 1.18 million (about 500,000 people), were employed in the industry — the results of several periods of massive layoffs. During the worst period of layoffs in 1983, the unemployment rate rose to a maximum of 20.7% (black graph). As of March 2009, the unemployment rate had increased to about 12.6%, due to the most recent steep product price decline.
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The interrelationship between oil prices, number of drilling rigs, and mining employees can be seen more clearly in this combined plot. The price of oil (green graph) is the leading indicator, followed by the drilling rig count (black graph), seven to nine months later. This is then followed by the number of mining employees (red graph), one to three months later.
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This plot indicates a disturbing, long-term trend for the U.S., towards an increasing dependence on imported oil to meet our current consumption levels–more than it’s ever been!! While consumption (purple graph) has been steadily increasing, since a low in the early 80′s, domestic production (red graph) has been declining since the mid 80′s. Since then, we have been importing an increasing amount of crude oil from foreign sources, as evidenced by the diverging trends. Currently about 64% of our total domestic consumption–down from the recent high of about 21.67 million barrels of oil per day.
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Ranking the oil reserves of the top 25 countries illustrates the vast difference between first-ranked Saudi Arabia and twelfth-ranked U.S.–we have slightly less than 8% of Saudi Arabia’s total reserves (we do a little better in the category of natural gas reserves however, ranking 5th in the world). Another sobering statistic derived from this data, is that the top five countries (Canada, and four OPEC members: Saudi Arabia, Iran, Iraq, and Kuwait) currently control about 800 billion barrels–nearly 60% of the world’s oil reserves (the entire group of OPEC countries control nearly 70%!!). The top five, middle-eastern OPEC countries are all within a few hundred miles of each other–the four largest, share common borders. Iraq and Iran, which are potentially the most unstable of the middle-eastern OPEC countries, control almost one-fifth of the world’s oil reserves!!
A bright spot in the world oil reserve data however, is that Canada’s oil reserves, at just over 178 BBO (billion barrels of oil), still ranks at second place in reserves (the Oil & Gas Journal indicates that this reflects the inclusion of Alberta’s oil sands, which are recoverable using current technology). A few years ago, Russia’s tremendous gas reserves (1680 TCF) offered a glimmer of hope (mainly for the European markets) against the OPEC oil monopoly. However, because of increasing tensions in the last few years, between Russia, and the West, that enthusiasm has been all but dampened. Also this year, the ranking of the United States’ oil reserves is at 12th place, dropping slightly to 21.3 BBO, while it’s natural gas reserves rank at fifth place, increased slightly to 237.7 TCF (trillion cubic feet). The world’s total oil reserves increased overall to 1,342.2 BBO, as well as natural gas reserves at 6,254.4 TCF.
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