US Consumption of Petroleum Products versus the Cost of Finance

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 The cost of finance in 2019 was four times the cost of petroleum consumed:

Graph #1: The Cost of Petroleum (blue) and Finance (red)

The blue line shows the number of barrels of petroleum consumed in the US each year, multiplied by that year's average price per barrel. The red line shows the cost of finance attributable to financial corporate business, as measured by GVA. (GVA measures GDP by industry.)

The cost of corporate finance is always more than the cost of petroleum, except for six years between 1973 and 1983.

Graph #2: The Cost of Finance as compared to the Cost of Petroleum

The blue line shows the Finance/Petroleum ratio, based on the data from Graph #1. 

At the 1.0 level on the graph, the cost of finance and the cost of petroleum are equal. When the blue line goes below the 1.0 level, the cost of finance is below the cost of petroleum. At the 2.0 level, the cost of finance is twice the cost of petroleum. At the 6.0 level, the cost of finance is six times the cost of petroleum.

GVA of financial corporate business is only one way to measure the size of finance. There are others. On the graph below I show the cost of interest paid, along with the finance and petroleum data from Graph #1:

Graph #3: Petroleum (blue) and Finance (red) from Graph #1
and Monetary Interest Paid (green)

As noted above, the cost of corporate finance in 2019 was four times the cost of petroleum consumed. The cost of interest alone, if you count it all, was twice the cost of GVA finance, and 8 times the cost of oil.

Sometimes people point out that every dollar of interest cost we pay is income to somebody. Sure. And every dollar we paid for gasoline and oil and petroleum in the 1970s was income to somebody. Yet the cost of oil created problems for us and for our economy. 

So does the cost of finance.

 

 

For petroleum prices I used FRED's Spot Crude Oil Price: West Texas Intermediate. 

For petroleum quantities, the U.S. Energy Information Administration's "Petroleum & Other Liquids" Data tab, in the +Summary section, under Petroleum Overview, the XLS download, the Annual Data.

Their spreadsheet provides several columns of data. I used the rightmost column, "Petroleum Products Supplied". Their data units are "1000 barrels per day". FRED's prices are "dollars per barrel". I went with 365 days in a year and "billions of dollars per year".

For the "Finance" comparison I used FRED's Gross value added of financial corporate business.

For "The Cost of Interest" I used FRED's Monetary interest paid.

Note: "EIA uses product supplied to represent U.S. petroleum consumption."