(a) At the current (average 2017) price per barrel of $50, what is the total Glo
ID: 3143639 • Letter: #
Question
(a) At the current (average 2017) price per barrel of $50, what is the total Global value of the entire crude-oil production per year?
[NOTE: This is less than Half of the global value in 2014, when the price was $100/barrel. Therefore, it also means that significantly less income will be received by exporting nations.]
(b) How many “East Texas” super-giant fields would need to be discovered during the next 20 years to equal the Global drawdown of reserves during the next 20 years? [assuming no net increase in consumption].
(c) Russia exports 12 million barrels of oil per day; and nearly all of that incomes goes to the government. How much did the Russian government budget decline in 2016 due to the drop in oil price from $100/barrel to only $40/barrel? [NOTE: This has had major implications for the economic conditions of the Russians during 2015-2017!]
Explanation / Answer
(a) Given in the question the oil price per barrel is $50. To know what is the total production of crude oil in 2017, we have to refer the OPEC(Organization of petrolium export countries) august month journal. The journal shows that the growth in the production was 0.95mb/day, the actual average production of crude oil as of now(for 2017) is 58.3mb/d (million barrels per day).
To find the total Global production of crude oil = 58.3*365 mb/day =21279.5 mb/d
(b) According to the reports we know that "East texas" produces the crude oil of 400mb/year. The growth in the crude oil requirement is 0.95mb/d.
The growth for 20 years is = 0.95*(365*15+366*5)
= 6939.75 mb
So Number of East Texas super gaint fields would need to be discovered during the next 20 years is = 6939.75/400 =17.34~ 18 required
(c) Given that Russia exports 12 mb/d , Oil price before 2016 is $100/barrel , but now it is $40/barrel
Therefore the total budget decline per year = $12*10^6*365*(100-40)/year
= $262800 million
So the Russion government budget decline in 2016 due to the drop in oil price from $100/barrel to $50/barrel is 262800 million dollors.
Thank you
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