Oil and Other Costs

As a former energy economist with a junk-brain full of trivia facts, I fell back asleep the other morning computing the cost of oil relative to the total economy, after hearing an NPR story with some presidential candidates blathering on about oil prices.  As I returned to sleep, I noticed the result was about the same magnitude as another number.

More precise than my mental calculations, here are some statistics in Harper's Index style.

U.S. Daily oil consumption, million barrels:  18

Yearly consumption, million barrels:  6,570

Round number price of a barrel of oil:  $100

Cost of U.S. oil consumption for on year:  $657 billion

U.S. Defense Department budget, 2010:  $663 billion

The last two numbers are surprisingly similar. Of course, that is pure coincidence based on the price of oil and current consumption.  But it makes you wonder how much we could reduce the last number if we reduced the first number.