Conventional oil and gas production and Crude oil

Energy flows from crude oil to conventional oil and gas production; conventional oil and gas production needs crude oil; their prices have moved together.

Conventional oil and gas production (energy) and Crude oil (energy): 3 relationships.

How they are linked

1. Energy flow

Physical flow · 87% of flow · Crude oil → Conventional oil and gas production

Wells draw oil that flows naturally or under pumping from reservoirs.

• 87% of Crude oil's energy goes this way

2. Material need

Physical flow · Direct · Crude oil → Conventional oil and gas production

Building or running Conventional oil and gas production needs crude oil.

3. Price link: product

Cost and price · Strong · Both ways

Producers sell crude at world prices, and the proxy is the average of Brent, Dubai and WTI. It moves almost as one with Brent, with monthly changes correlating at 0.99, so this mainly confirms the benchmarks track each other.

• 0.99 monthly change correlation
• 1.00 12-month change correlation
• 0.98 fitted elasticity

Built from the site data on production routes, energy flows, industry value chains, input-output tables and prices.