Ryan Smith
Blog Posts from this author:
August 9, 2010– 1

On August 2, The New York Times reported that the (near) final estimate for the total amount of oil leaked into the Gulf of Mexico as a result of British Petroleum’s (BP) Deepwater Horizon drilling accident is approximately 4.9 million barrels. It would be nice to understand what this number means in the context of the commodity markets where oil is traded. It would also be nice to better understand what this oil spill did to BP stockholders.

Wolfram|Alpha can help answer these questions. For example, someone might wonder what all this oil would be worth on the oil market. The input “price of 4.9 million barrels of oil” tells us that the value of this oil on the oil futures market is around $398.8 million (at the time this was written). That’s a lot of money just floating around the Gulf! But to be fair, much of it was cleaned up. Wolfram|Alpha also shows a graph of how the value of this oil has fluctuated over time as well as the latest quote of a barrel of oil on the New York Mercantile Exchange.

Price of 4.9 million barrels of oil

Someone might wonder whether the amount of spilled oil was enough to affect the price of oil in the U.S. The input “oil futures open interest” gives us the number of oil futures contracts currently in existence for the front-month contract.

As the graph illustrates, open interest starts out strong every month (as the front-month contract rolls forward to the next month). As the contract approaches expiration, some people close out their positions while others roll their positions forward into a future month’s contract. The best measure of open interest would be the higher numbers shown immediately after the front-month rolls forward (especially since other contract months aren’t accounted for here).
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