Chelsea Green Publishing

Chelsea Green Blog

The cost of a barrel of oil relative to workers’ wages

[Thanks to eagle-eyes of a friendly reader, numbers below regarding the equivalent number of years of labor have been corrected. –JTE (4/30/09)] So yesterday I noted Rob Hopkins’ trivia that a liter of oil (if I guess correctly the volume of the bottle he holds in the video) contains the same amount of energy as a human expends in about five weeks of work. That really shocked me, so I’ve emailed him and asked for his source. He got his numbers from this PDF. It says, more specifically (on p. 8), that a kilogram of petroleum contains the equivalent in energy to about 24 working days, or 200 hours, of human physical labor. That got me thinking: if you were going to hire people to do the work that you get from burning oil, how much would the human-labor equivalent of a barrel of oil cost?
Barrel of oil = between 125 and 154 kg. To keep these calculations “conservative,” I’ll go with 125. x 200 = 25,000 equivalent hours of human labor = 5,000 625 work weeks (assuming 40 hours per week) = 104 13 work years (assuming 4 weeks off each year for vacation and holidays)
How much does human labor cost these days? Here are a few examples from the manufacturing sector for the year 2006 from the Bureau of Labor Statistics (table 2), all converted to US dollars. The oil price is from the Energy Information Administration, Annual Energy Outlook 2008 (table 12).
Country Average hourly wage in manufacturing “Wage” equivalent of a barrel of oil
Norway $46.31 $1,157,750
USA $29.60 $740,000
S. Korea $16.87 $421,750
USA (current Federal minimum wage) $6.55 $163,750
Brazil $5.90 $147,500
Philippines $1.36 $34,000
———— —— —————-
Barrel of Oil (in 2006)   $59
Even at the “horror” of $200 per barrel, that does kind of put our energy addiction in perspective. These numbers are so insane, I do have to wonder if something is just plain off, but assuming the source numbers are even vaguely in the right ballpark, the take-home message remains: this slide down the back of the oil peak is going to be pretty interesting. One further thought: it might make more sense to compare the usable energy in the oil than the total energy. Following that logic (if so it be), and the fact that (according to this site) the ideal efficiency of a diesel engine (my proxy for the efficiency of oil in general) is 56%, then let’s apply a conservative conversion factor of 40% to the kilogram of oil. Accordingly, this brings down the equivalency of a barrel of oil to 10,000 hours of human labor (or nearly 42 5.2 work years), and in terms of equivalent wages, that barrel of oil works out to:
Country Average hourly wage in manufacturing “Wage” equivalent of a barrel of oil
Norway $46.31 $463,100
USA $29.60 $296,000
S. Korea $16.87 $168,700
USA (current Federal minimum wage) $6.55 $65,500
Brazil $5.90 $59,000
Philippines $1.36 $13,600
As Rob’s source notes for the United Kingdom, the use of fossil fuels increases UK physical productivity by a multiple of something like 70 to 100 versus an economy that relied only on muscle power. “Cheap” doesn’t begin to describe the deal we’ve been getting for oil. Well, obviously not cheap in the long run, seeing as the worst costs of using oil are coming to us in the future. I guess you could say this has been one whammy of a “buy now, pay later” scheme. That bill is going to come due. How well will you be prepared? [Image courtesy of woodleywonderworks]

The Limits to Growth and Greece: Systemic or Financial Collapse?

Could it be that the ongoing Greek collapse is a symptom of the more general collapse that the Limits to Growth model generates for the first two decades of the 21st century? Author Ugo Bardi (Extracted: How the Quest for Mineral Wealth is Plundering the Planet) examines the correlation between what is unfolding between Greece […] Read More..

Permaculture Q&A: Mulching Options for Your Garden

As Permaculture Month continues, we are making our expert authors available to answer your burning permaculture questions. If you have a question to submit, fill out this form. This week, Lottie from Florida asked if there are other garden mulch options that are as effective as hay. Josh Trought, one of our soil building and garden management […] Read More..

Designing Your Own Solar Cooker & Dehydrator

In today’s world, nearly everything we use, from phones and computers to cars and kitchen appliances, requires energy derived from fossil fuels. Wouldn’t it be nice to offset some of that energy use by harnessing the renewable power of the sun? Josh Trought, founder of D Acres—an educational center in New Hampshire that researches, applies, […] Read More..

Building a Sustainable Community: The D Acres Model

If you were going to create a community-based homestead or farm from scratch, where would you start? What building materials would you use? What crops would you grow and what animals would you raise? How would you develop an organizational structure and connect with your community? And, how would you make sure all of this […] Read More..

A Man Apart: Remembering Bill Coperthwaite’s Radical Life

A Man Apart is the story—part family memoir and part biography—of Peter Forbes and Helen Whybrow’s longtime friendship with Bill Coperthwaite (A Handmade Life), whose unusual, and even radical, life and fierce ideals helped them examine and understand their own. Framed by Coperthwaite’s sudden death and brought alive through the month-long adventure of building with […] Read More..