$190 Oil
There are 42 gallons of oil in one barrel of crude oil. The current price of crude oil is about $140 per barrel, which is equivalent to $3.33 per gallon. Now the price of gasoline is selling at about $4 per gallon.
One gallon equals to 231 cubic inches. One inch equals to 2.54 centimeters. Based on this relationship, one can obtain that one gallon equals to 3.7854 liters.
The energy content of one liter of fuel oil is about 11.69 KWH. There is 3.7854 liter in one gallon. So the energy content of one gallon of fuel oil is 44.25 KWH. The current average electricity price in US is about 10.2 cents per KWH. So one gallon of fuel oil should be valued approximately at $4.514 per gallon. If the price of $4.514 per gallon is used for calculating an upper bound for crude oil price, the crude oil should be valued about $189.6 per barrel. Then the gasoline price will be increased to about $5.42 per gallon.
So if everything converges at the energy content level, the potential oil price could reach approximately $190 per barrel. Correspondingly, the gasoline price could reach $5.5 per gallon.
In the above calculations, the complex energy conversion efficiencies were not considered. If the energy conversion efficiencies were considered, the crude price could be much lower. The actual future price of crude oil could be determined by burning oil for electricity. Today there might be no oil-powered electricity generating station because the oil price is too high and therefore it can not be competitive compared to other sources of energy such as coal or natural gas.
One way to estimate the energy conversion efficiency is to use the internal combustion engine efficiency. Most internal combustion engines have average efficiencies of about 20%. If this efficiency of 20% was used for calculating the energy conversion efficiency for fuel oil, the crude oil price equivalent to the current 10.2 cents electricity price would be 20% of the $190 per barrel price tag, or $38 per barrel. If most people were driving electric cars, the crude oil price should be reduced to around $40 per barrel.
But that is only in theory. We had seen that price of $40 per barrel for crude oil for a long time. When so many people were buying SUVs a few years ago, the oil owners had seen what were coming.
What should be the reasonable prices for oil? Should it be $40, $140, or $190? Everyone can be the judge.
One gallon equals to 231 cubic inches. One inch equals to 2.54 centimeters. Based on this relationship, one can obtain that one gallon equals to 3.7854 liters.
The energy content of one liter of fuel oil is about 11.69 KWH. There is 3.7854 liter in one gallon. So the energy content of one gallon of fuel oil is 44.25 KWH. The current average electricity price in US is about 10.2 cents per KWH. So one gallon of fuel oil should be valued approximately at $4.514 per gallon. If the price of $4.514 per gallon is used for calculating an upper bound for crude oil price, the crude oil should be valued about $189.6 per barrel. Then the gasoline price will be increased to about $5.42 per gallon.
So if everything converges at the energy content level, the potential oil price could reach approximately $190 per barrel. Correspondingly, the gasoline price could reach $5.5 per gallon.
In the above calculations, the complex energy conversion efficiencies were not considered. If the energy conversion efficiencies were considered, the crude price could be much lower. The actual future price of crude oil could be determined by burning oil for electricity. Today there might be no oil-powered electricity generating station because the oil price is too high and therefore it can not be competitive compared to other sources of energy such as coal or natural gas.
One way to estimate the energy conversion efficiency is to use the internal combustion engine efficiency. Most internal combustion engines have average efficiencies of about 20%. If this efficiency of 20% was used for calculating the energy conversion efficiency for fuel oil, the crude oil price equivalent to the current 10.2 cents electricity price would be 20% of the $190 per barrel price tag, or $38 per barrel. If most people were driving electric cars, the crude oil price should be reduced to around $40 per barrel.
But that is only in theory. We had seen that price of $40 per barrel for crude oil for a long time. When so many people were buying SUVs a few years ago, the oil owners had seen what were coming.
What should be the reasonable prices for oil? Should it be $40, $140, or $190? Everyone can be the judge.
posted by Unknown at 6:17 PM
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