OIL PRICES
165
anarchy through the move to a series of unstable or fickle governments, which may send prices into an upward spiral once more.
Nevertheless, over the last three decades, other than token
efforts, the oil-consuming nations have not launched into alternate energy programs in a manner sufficient to influence crude
oil prices. It is the swings in the price of crude oil that have controlled the alternate-energy-related programs of the oil-consuming
nations. Over the past decades, not one country has made the decision to bite the bullet and initiate full-scale research into alternate
energy with the goal of commercialization. On the other hand,
the OPEC member nations know it is a matter of economics that
to conserve the sales of a product, the price of that product must
remain competitive. If oil is to remain competitive, the price must
be such that it will be uneconomical for oil-consuming nations to
institute programs related to alternate energy. In 1978, Mr. Sadam
Hussein (then-Vice President of Iraq) explained this to the author
very simply and effectively.
However, for the purposes of pricing, crude oil is generally
classified based on the API gravity and sulfur content (Chapter 4). For
example, light sweet crude oil has low density, low viscosity (there
are no exact numbers assigned to this, because the classification is
more practical and theoretical), and low sulfur content making it easier to transport and refine and, therefore, more expensive to purchase.
For example, the petroleum industry generally classifies crude oil by
the geographic location it is produced in (e.g. West Texas, Brent, or
Oman), its API gravity, and by its sulfur content.
Light sweet (high API gravity) crude oil is more desirable than
heavy sour (low API gravity) crude oil because it produces a higher
yield of gasoline (Table 6.1), while sweet oil commands a higher
price than sour oil because it has fewer environmental problems
and requires less refining to meet sulfur standards imposed on
fuels in consuming countries. Each crude oil has unique molecular characteristics that are understood by the use of crude oil assay
analysis in petroleum laboratories. Some of the common reference
crudes are (Chapter 4):
• West Texas Intermediate (WTI), a very high-quality,
sweet, light oil delivered at Cushing, Oklahoma for
North American oil
• Brent Blend, comprising 15 oils from fields in the Brent
and Ninian systems in the East Shetland Basin of the
165
anarchy through the move to a series of unstable or fickle governments, which may send prices into an upward spiral once more.
Nevertheless, over the last three decades, other than token
efforts, the oil-consuming nations have not launched into alternate energy programs in a manner sufficient to influence crude
oil prices. It is the swings in the price of crude oil that have controlled the alternate-energy-related programs of the oil-consuming
nations. Over the past decades, not one country has made the decision to bite the bullet and initiate full-scale research into alternate
energy with the goal of commercialization. On the other hand,
the OPEC member nations know it is a matter of economics that
to conserve the sales of a product, the price of that product must
remain competitive. If oil is to remain competitive, the price must
be such that it will be uneconomical for oil-consuming nations to
institute programs related to alternate energy. In 1978, Mr. Sadam
Hussein (then-Vice President of Iraq) explained this to the author
very simply and effectively.
However, for the purposes of pricing, crude oil is generally
classified based on the API gravity and sulfur content (Chapter 4). For
example, light sweet crude oil has low density, low viscosity (there
are no exact numbers assigned to this, because the classification is
more practical and theoretical), and low sulfur content making it easier to transport and refine and, therefore, more expensive to purchase.
For example, the petroleum industry generally classifies crude oil by
the geographic location it is produced in (e.g. West Texas, Brent, or
Oman), its API gravity, and by its sulfur content.
Light sweet (high API gravity) crude oil is more desirable than
heavy sour (low API gravity) crude oil because it produces a higher
yield of gasoline (Table 6.1), while sweet oil commands a higher
price than sour oil because it has fewer environmental problems
and requires less refining to meet sulfur standards imposed on
fuels in consuming countries. Each crude oil has unique molecular characteristics that are understood by the use of crude oil assay
analysis in petroleum laboratories. Some of the common reference
crudes are (Chapter 4):
• West Texas Intermediate (WTI), a very high-quality,
sweet, light oil delivered at Cushing, Oklahoma for
North American oil
• Brent Blend, comprising 15 oils from fields in the Brent
and Ninian systems in the East Shetland Basin of the