Oil is Dirt Cheap… Literally [Chart]
A barrel of oil is the same price as a barrel of “Scott’s Turf Builder”
The Chart of the Week is a weekly Visual Capitalist feature on Fridays.
In theory, a barrel of crude oil seems quite valuable.
It’s well-known, for example, that from one barrel of oil, a refinery can make 19 gallons of gasoline, 12 gallons of diesel, and four gallons of jet fuel.
That’s the equivalent of six billion joules of energy, or enough to power the average U.S. household for 1.8 months.
A Dirt Cheap Experiment
However, sometimes the laws of supply and demand work in mysterious ways. While it seems like oil has good intrinsic value, the glut of supply available to the market is so great that “black gold” has become very cheap.
Some would even say “dirt cheap”.
As a part of our landmark investigation, we went all the way to the Home Depot’s website to verify if this were actually true. The results were astonishing, and this information will definitely be helpful the next time I need to do some gardening.
|Price||Bags Needed||Cost per barrel|
|Loose bulk top soil||$204.00||0.04||$8.48|
|Scotts Turf Builder||$6.97||3.74||$26.09|
|Crude Oil (WTI)||$31.72|
We started by going for the bulk stuff.
For only $135, it’s possible to buy 5 cubic yards of loose bulk top soil. That’s enough for 24 barrels worth, which seemed like a steal. The only downside was that it cost an extra $69 to schedule a dump truck to come by our house, which made it likely overkill for this experiment.
Next, we checked out a bag of Miracle Gro. It’s got the brand name reputation, and this particular bag had a user rating of four stars. At $7.97 for a two cubic feet, we’d just need just less than three bags to fill up a barrel. That works out to $22.38 a barrel. Not bad.
However, if we’re going to be serious about our dirt, we’re going to need something that promotes a strong root system and creates a prime seed-growing environment. We took a peek at Scotts Turf Builder, which is only $6.97 per bag. However, with only 1.5 cubic feet per bag, it’s going to take up over 3.7 to fill up our barrel, bringing our total cost to $26.09.
We’re now within $1.50 of oil’s 52-week low of $27.56.
As we continued to shop online for dirt, a five-star gem caught our eye. The brand name was Proven Winners. How could we go wrong with that?
We took a look at the user reviews to be sure.
“I have a high-quality soil-test kit and tested this soil. It is very high in nitrogen, potassium, and phosphorus, so though it will be excellent for plants it is NOT a soil for starting seeds or potting up seedlings,” wrote a previous buyer.
Noted. We will not use it for starting seeds or potting up seedlings. We checked out the price, and for $10.99 per bag containing 1.5 cubic feet, we had our winner. It takes 3.7 of these to fill up our barrel, bringing our cost per barrel of this particularly good dirt to $41.13.
Unfortunately that’s about $10 more than a barrel of oil, but I guess we’ll hedge our bets.
Mapped: Every Power Plant in the United States
What sources of power are closest to you, and how has this mix changed over the last 10 years? See every power plant in the U.S. on this handy map.
This Map Shows Every Power Plant in the United States
Every year, the United States generates 4,000 million MWh of electricity from utility-scale sources.
While the majority comes from fossil fuels like natural gas (32.1%) and coal (29.9%), there are also many other minor sources that feed into the grid, ranging from biomass to geothermal.
Do you know where your electricity comes from?
The Big Picture View
Today’s series of maps come from Weber State University, and they use information from the EPA’s eGRID databases to show every utility-scale power plant in the country.
Use the white slider in the middle below to see how things have changed between 2007 and 2016:
The biggest difference between the two maps is the reduced role of coal, which is no longer the most dominant energy source in the country. You can also see many smaller-scale wind and solar dots appear throughout the appropriate regions.
Here’s a similar look at how the energy mix has changed in the United States over the last 70 years:
Up until the 21st century, power almost always came from fossil fuels, nuclear, or hydro sources. More recently, we can see different streams of renewables making a dent in the mix.
Maps by Source
Now let’s look at how these maps look by individual sources to see regional differences more clearly.
Here’s the map only showing fossil fuels.
The two most prominent sources are coal (black) and natural gas (orange), and they combine to make up about 60% of total annual net generation.
Now here’s just nuclear on the map:
Nuclear is pretty uncommon on the western half of the country, but on the Eastern Seaboard and in the Midwest, it is a major power source. All in all, it makes up about 20% of the annual net generation mix.
Finally, a look at renewable energy:
Hydro (dark blue), wind (light blue), solar (yellow), biomass (brown), and geothermal (green) all appear here.
Aside from a few massive hydro installations – such as the Grand Coulee Dam in Washington State (19 million MWh per year) – most renewable installations are on a smaller scale.
Generally speaking, renewable sources are also more dependent on geography. You can’t put geothermal in an area where there is no thermal energy in the ground, or wind where there is mostly calm weather. For this reason, the dispersion of green sources around the country is also quite interesting to look at.
See all of the above, as well as Hawaii and Alaska, in an interactive map here.
The Periodic Table of Commodity Returns
This unique chart shows the performance of individual commodities over the last decade – see commodity returns in 2018, and how they compared to previous years.
Periodic Table of Commodity Returns (2019 Edition)
Commodities are an interesting asset class to watch.
In certain years, all commodities will move in price together in an obvious and correlated fashion. This is a representation of the cyclical characteristics of commodity markets, in which macroeconomic factors align to create a tide that lifts or sinks all boats.
At the same time, however, each individual commodity is incredibly unique with its own specific set of supply and demand circumstances. In the years when these supply or demand crunches materialize, a certain commodity can surge or crash in price, separating itself from the rest of the pack.
A Decade of Commodity Returns
Today’s visualization comes to us from our friends at U.S. Global Investors, and it tracks commodity returns over the last decade.
More specifically, it takes a closer look at individual commodities (i.e. corn, gold, oil, zinc) to show how performance can vary over time. With a quick examination of the graphic, you can see years where commodities moved together – and some years where individual commodities stole the show unexpectedly.
Palladium: A Perennial Winner
The best performing commodity in 2018 was palladium, which found itself up 18.6% – just enough to edge out corn, which jumped up 17.9% in price last year.
Interestingly, palladium has also been the best performing commodity over the 10-year period as well:
Palladium has finished in first place in four of the last 10 years, including in 2017 and 2018 – it’s also impressive to note that palladium has only had negative returns twice in the last decade (2011, 2015).
A Crude Awakening
The worst performing commodity in 2018 was crude oil, which fell -24.8% in price.
Like palladium, this wasn’t a unique occurrence: crude has actually been the worst performing commodity investment over the last decade:
As you can see, crude oil has been the worst (or second worst) commodity in three of the last five years.
Further, as our chart on how all assets performed in 2018 shows, crude oil was outperformed by every other asset class, and the energy sector had the poorest performance out of all S&P 500 sectors last year.
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