Magic number (oil)
Encyclopedia
The magic number is a term in economics
that denotes the price of crude oil (measured in dollars per barrel
) at which a crude oil exporting economy runs a deficit.
Some countries support almost all spending from income derived from oil exports. As the price of oil drops, these countries take in less revenue
from oil. The magic number denotes the point at which the revenue from oil is no longer sufficient to pay for spending. Mathematically, this can be expressed by the inequality:
where Q is the quantity of oil exported, P is the price, and S is spending. The magic number is the value of P at which this inequality no longer holds true - that is, that the economy runs a deficit.
PFC Energy publishes the magic number for all the OPEC
nations.
"Qatar
is at $21 a barrel, because it brings in much more oil money than it spends. Saudi Arabia
's break-even point is at $49 a barrel. And Venezuela
is at $58, second only to Nigeria
's $65."
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
that denotes the price of crude oil (measured in dollars per barrel
Barrel
A barrel or cask is a hollow cylindrical container, traditionally made of vertical wooden staves and bound by wooden or metal hoops. Traditionally, the barrel was a standard size of measure referring to a set capacity or weight of a given commodity. A small barrel is called a keg.For example, a...
) at which a crude oil exporting economy runs a deficit.
Some countries support almost all spending from income derived from oil exports. As the price of oil drops, these countries take in less revenue
Revenue
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
from oil. The magic number denotes the point at which the revenue from oil is no longer sufficient to pay for spending. Mathematically, this can be expressed by the inequality:
where Q is the quantity of oil exported, P is the price, and S is spending. The magic number is the value of P at which this inequality no longer holds true - that is, that the economy runs a deficit.
PFC Energy publishes the magic number for all the OPEC
OPEC
OPEC is an intergovernmental organization of twelve developing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC has maintained its headquarters in Vienna since 1965, and hosts regular meetings...
nations.
"Qatar
Qatar
Qatar , also known as the State of Qatar or locally Dawlat Qaṭar, is a sovereign Arab state, located in the Middle East, occupying the small Qatar Peninsula on the northeasterly coast of the much larger Arabian Peninsula. Its sole land border is with Saudi Arabia to the south, with the rest of its...
is at $21 a barrel, because it brings in much more oil money than it spends. Saudi Arabia
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...
's break-even point is at $49 a barrel. And Venezuela
Venezuela
Venezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...
is at $58, second only to Nigeria
Nigeria
Nigeria , officially the Federal Republic of Nigeria, is a federal constitutional republic comprising 36 states and its Federal Capital Territory, Abuja. The country is located in West Africa and shares land borders with the Republic of Benin in the west, Chad and Cameroon in the east, and Niger in...
's $65."