Sunday, October 08, 2006

False Comparison

Paolo Scaroni, the CEO of Italian Oil company said, "Today, a barrel of oil is worth half a barrel of Coca-Cola. So you should put things into perspective."

Sarconi's comparison is absolutely false. If he were comparing some other fuel price to the price of a barrel of oil he might have a point. A comparison such as BTU per dollar or Euro would be a great comparison.

Another reason this is a false comparison is simply the amount of each product put to use. If oil was only consumed as purely a luxury item as Coke is, I expect it would be FAR more expensive per barrel than it is now. Of course it used to simply bubble up out of the ground in places which made it cheap to extract. In it's current state though where extraction of oil is an expensive and complicated process, the cost per barrel would likely be prohibitively expensive to produce in the same quantities as Coke is today. I tried to look up the annual figures of Coca-Cola production. The closest I could come is that something like a billion servings a day are consumed. If you think in terms of barrels of syrup compared to barrels of oil produced per day, I can't imagine that Coke even comes close to oil production levels.

Try another comparison to justify your stupid oil prices Mr. Scaroni, you're not fooling me!