AMERICA'S NOT WORTH MANY BARRELS OF OIL
May 13, 2008
Except for the darkest years following the second oil shock in the late 1970s, America is worth less in barrels of oil today than at any time since 1970. Today, the net worth of the entire country can be purchased for a mere 498 billion barrels of oil, says business columnist Scott Burns.
- At the end of 2007, our collective net worth was $57.7 trillion, an unusual drop from $58.3 trillion at the end of the previous quarter.
- Divide $57.7 trillion by the $120-a-barrel price of oil and you get 481 billion barrels of oil as the value of America, a fraction of our national value in 1998, 1995 or even 1990.
- That's a smidgen more than the proven reserves of only three Middle Eastern countries, Saudi Arabia (260 billion barrels), Iraq (115 billion barrels) and Iran (105 billion barrels).
- At about 36 times its 1970 price, oil has outstripped the value created by a full working generation of Americans in a period of dramatic technological change and innovation.
- During the same time, the value of American business shares, as measured by the S&P 500 index, has risen to only 15 times its 1970 level.
In 1970 the Internet was only an arcane toy for academics. The computer chip had yet to be invented. Computer memory was desperately expensive. Bill Gates had yet to enter (or drop out of) Harvard. Steve Jobs was years away from creating the Apple II. AT&T was still a single national company, owning all of the regional Bell companies. All surgery was invasive. Google founders Page and Brin had not yet been conceived.
All of that dynamism and creation simply pales against the price of oil. Either oil is too expensive, or America is too cheap, says Burns.
Source: Scott Burns, "America's Not Worth Many Barrels of Oil," The Eagle, May 11, 2008.
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