How surging oil prices could affect you this year. We explain in simple terms.

When the news reports that oil prices have surged to a hundred dollars a barrel, consumers clutch their pearls and shudder, but very few of them know what oil prices, let alone barrels of oil, mean. We try to dispel the misconceptions, misunderstandings, and misgivings you may have when it comes to the oil industry and explain, in layman’s terms, how it all works. The good news? You don’t have as much to worry about as you think. 
 
The origins of the oil industry.
 
For centuries, the world didn’t care about petroleum and its byproducts and ran entire industries with the use of coal, steam, and horses. This changed with the discovery that refined oil could be used as cheap fuel that was far more efficient and plentiful than other energy sources. An industry was born and it has been chugging along ever since.
 
What is a “barrel” of oil?
 
A barrel is a container in which oil, or other things, can be put inside. You’ve probably seen barrels many times in your life. For instance, Cracker Barrel features a barrel that has nothing to do with oil. Another kind of barrel is the wine barrel, often called a “cask.” Some people may even remember the children’s game, “Barrel of Monkeys,” in which kids opened a plastic barrel with a lot of plastic monkeys inside and would see how many of them they could connect together. This kind of barrel is not what oil is contained in. 
 
One way to think of it is that an actual barrel of oil is not exactly what you may think it is. It’s large and it contains oil, but when someone says “barrel of oil” it’s really just a way to measure the volume of oil. If you measured a barrel of oil in milliliters, centiliters, liters, or even gallons, you would stop thinking in terms of “barrels” and start thinking in terms of standard measurement units for volume. 
 
One more barrel reference before we move on. Many Americans used to use the term “barrel of laughs,” as in, “you’re a barrel of laughs.” This meant that someone was VERY funny. Sometimes this was used sarcastically. Nonetheless, the term “barrel” meant a lot of something. In this case, laughs. By now, we hope you get the idea about what a barrel is.
 
What is refined oil?
 
We’ve covered what the container for oil is, but let’s talk a bit further about the oil itself. Oil is a substance that we drill for and extract from the ground, but it can also be substances we don’t drill for and extract out of the ground. Confused? Don’t worry. Most people are. The term “oil” can pertain to things like olive oil, avocado oil, and even “oil of Olay,” which women spread on their bodies. Speaking of bodies, bodies create their own oil. Ever heard someone say that you have “oily” skin? That’s a kind of oil too. But it’s on your face. 
 
Unfortunately, the oils you buy in the grocery store or that come from your face cannot be used for fuel—at least not in the way refined petroleum is. Imagine going to a gas station and hooking up a pump to your face or pouring a bottle of canola oil into your gas tank. (Spoiler: it doesn’t work.) When we talk about oil in the oil industry, we mean “refined” oil. But what does that mean?
 
Start with the word “refine.” We think of people who are refined as those who are incredibly composed, worldly, and tasteful. Refined oil is worldly—it moves all over the world. And refined oil is composed (of oil). But refined oil is not something to taste. This is perhaps the major difference between refined people and refined oil. 
 
A side note.
 
Someone just asked what if you filled up the barrel of monkeys barrel with refined oil. Yes. You could do that, but it would be a much smaller barrel than the ones used in commerce. Also, you couldn’t really fill it to the top because the barrel separates in the middle, making a mess unless it’s filled with plastic monkeys. Good question though. 
 
Other kinds of oil.
 
Before we forget, there’s also baby oil and lube. Those are two very similar things. But they do not come in barrels. Unless you’re P-Diddy! Hahahahahahaha. Sorry! Had to do it, right? Hahahaha. 
 
Back to “What is refined oil”?
 
To elaborate further, oil is not what you think and the same goes for barrels. Nothing, in fact, is what it seems, right? Sometimes you see someone from a distance, and you say, Hey, that woman is beautiful, but when she gets up close you realize she’s not and she’s a dude and not a beautiful one but now you’ve made eye contact so you have to sleep with him if he offers. 
 
Oil fuels the world and when prices rise it means that costs for things like gas (at a gas station) and gas for your lawn mower or something (also obtained at a gas station) will also rise. Think of it this way—let’s say you sell lemonade, and you charge 35 cents a glass. The lemons you use cost about 15 cents a glass and the sugar costs another 10 cents. That gives you a profit of 10 cents a glass. Now imagine that lemon or sugar prices rise. Now that lemon costs 25 cents and if you keep charging 35 cents a glass, you’re making no profit. So, you raise the price to 45 cents a glass and people are mad at you but they have to keep buying the lemonade because, let’s just say in this scenario, if they don’t they’ll die or something. Like maybe the lemonade keeps them living and if they don’t drink it, they disintegrate. That’s kind of like oil. Only you don’t drink oil (see above). 
 
Now imagine that lemons come in barrels. So instead of buying a lemon at 25 cents, you buy a barrel of lemons at whatever price that would be. Now you’re looking at a pretty huge price for lemons. This is, essentially, how the oil industry works. Oh, and imagine that lemons were extracted out of the ground and needed to be refined. That’s even closer to reality. 
 
Where does this all leave you, the consumer? You may feel at the mercy of the oil industry and as if you are forced to pay for a product that if you don’t pay for it you can’t go anywhere, hold a job probably, or in many cases, get food, unless you pay someone to deliver it and they use their own gas (refined oil). If you feel that way, you are correct.
 
The future of oil.
 
Predicting the future of oil is very difficult because the future is difficult to predict. For instance, in yesteryear, people would consult crystal balls and oracles in attempts to see what would happen before they happened. This probably didn’t ever work unless they just guessed and were really lucky. An example: A “soothsayer” looks at a crystal ball and thinks he kind of saw something and then he just elaborates on that, saying something like, "I think I’m seeing a dragon and that’s a bad sign, so everyone should stay inside this week." Later, a dragon comes by and is looking to eat the villagers but they’re all inside and it leaves. Everyone’s like “Hey, Brent is really good at that crystal ball thing” and even he starts thinking it’s working, until, of course, next time he looks at it he thinks he sees a snow storm and everyone stops farming and they lose all their crops because they thought there would be a snowstorm, so they publicly execute Brent in a way that disgusts them but they do it any way, out of tradition. 
 
Conclusion.
 
Oil is a fickle mistress. We think that says it all. Also, we are done writing now. Goodbye. 

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