Tuesday, January 29, 2013

Crude oil use as a percentage of world gross product

Below is a chart of the cost of world crude oil as a percentage of world gross product for the years 1960 - 2012.

Values for 2012 are preliminary, but indicative. Roughly 5% of the world gross product, GWP, went to buying unrefined crude oil. This is the first time since 1984.
However, the oil crisis around 1980 was worse than it is today, as compared to the world economy as a whole.

Due to higher average oil prices, a larger part of the world economy went to crude oil than during 2008, when the price of oil spiked sharply and then crashed with the financial crisis.

The chart could do with a few improvements. The correlation between crashes in real GWP and the relative cost of oil should be added, but this graph is only using data from nominal GWP. Using oil prices as a percentage of real GWP would be incorrect, as real GWP already adjusts for the general price level using a GWP-deflator, which includes the oil price.

The actual cost of oil use is higher than the percentages above, as refined fuel, such as diesel, kerogen or gasoline, is more expensive than crude oil.

Addition: Real GWP from 1980 and forwards added below. 1982 was a very mild global recession, but the world economy didn't start growing significantly until the Reagan-regime convinced Saudi-Arabia to open all taps and the "oil glut" of the 1980:s and 1990:s started.