GLOSSARY
October 2010
Bitumen - heaviest, thickest form of petroleum.
Brent – is a light sweet (low sulphur) crude oil sourced from the North Sea. Brent crude oil is the benchmark crude oil for the European Market. Other well known benchmarks include West Texas Intermediate oil and the OPEC basket.
Deregulation - a significant decrease or elimination of government regulation over an industry, market, or economy.
Derivatives - contracts that gamble on the future prices of assets using financial instruments, such as options and futures. The values of derivatives are based on the perceived value of assets, such as commodities and currencies.
Downstream - oil industry term used to refer to all petroleum activities from the processing of refining crude oil into petroleum products to the distribution, marketing, and shipping of the products. The opposite of downstream is upstream .
“Enron Loophole” - Exempts most over-the-counter energy trades and trading on electronic energy commodity markets from government regulation. Named for Enron Corporation who lobbied for the changes to the U.S. Commodity Futures Modernization Act.
Financialization - refers to the growth in financial investment and its affect on the commodities market. In recent years, the “financialization” of the futures market has been mentioned by some as a phenomenon that has driven oil prices.
Futures - financial contracts giving the buyer an obligation to purchase an asset (and the seller an obligation to sell an asset) at a set price at a future point in time.
Glass-Steagall Act - act designed to keep the banks from speculating with the savings of their depositors who were entrusting their money to the banks, separating commercial banking from brokerage/investment banking activities.
Gramm-Leach-Bliley Act – act that repealed the Glass-Steagall act in 1999 and allowed commercial banks, investment banks, securities firms and insurance companies to consolidate.
Non-Commercial traders - classification used by the Commodity Futures Trading Commission to identify traders that use the futures market for speculative purposes.
Oil Reserves - estimated quantities of crude oil that are claimed to be recoverable under existing economic and operating conditions.
Organization of Petroleum Exporting Countries (OPEC) is an intergovernmental organization, formed in 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The five founding members were later joined by nine other members. OPEC’s mandate is to coordinate their oil production policies in order to achieve an acceptable return on their investments, and to help the oil producer’s support their respective economies.
OPEC Basket - the reference price for a variety of crude oils sold by OPEC member countries.
Open interest - the total number of active futures contracts that have not been settled with cash or the delivery of a commodity.
PEMEX - Mexican national oil company.
Petrocurrency – currency of a major oil producing nation which tends to rise in value against other currencies when the price of oil rises (and falls when the price of oil falls).
Petrobas - Brazilian national oil company.
Petroleum – a flammable liquid which occurs naturally in deposits which can be refined into various products, such as gasoline and diesel.
Petroleos de Venezuela - Venezuelan national oil company.
Swaps Loophole – an exemption for investment banks which exempts them from reporting requirements and limits on trading positions under the Commodity Futures Modernization Act.
Unconventional Oil - petroleum produced or extracted using techniques other than the traditional oil well method. Includes oil shales, oil sands-based synthetic crudes and derivative products, coal-based liquid supplies, biomass-based liquid supplies and liquids arising from chemical processing of natural gas.
Unconventional Gas - natural gas that is contained in “difficult to produce” rock formations, which require different or special completion, stimulation, and/or production techniques to retrieve the resource. Examples include coal bed methane, tight sands, shale gas, and gas hydrates.
Upstream – refers to areas and processes of exploring for oil and gas, developing oil and gas fields and producing oil and gas from the fields. The opposite of upstream is downstream.
West Texas Intermediate Oil (WTI) - is a Texas light sweet (low sulphur) crude oil used as a benchmark for oil pricing in the North American Market.
ACRONYMS/ABBREVIATIONS
AOSC – Athabasca Oil Sands Corporation
BP – British Petroleum
CAPP – Canadian Association of Petroleum Producers
CERI – Canadian Energy Research Institute
CFTC – Commodity Futures Trading Commission
EIA – U.S. Energy Information Agency
FSU – Former Soviet Union Countries
GDP – Gross Domestic Product
IEA – International Energy Agency
IMF – International Monetary Fund
M&A – Mergers and Acquisitions
MEND - Movement for the Emancipation of the Niger Delta
NEB – National Energy Board
NOC – National Oil Companies
NYMEX – New York Mercantile Exchange
OECD – Organization for Economic and Co-operative Development
OPEC – Organization of Petroleum Exporting Countries
PEMEX – Petróleos Mexicanos
Petrobas – Brazil’s national oil company
PetroMatrix – Swiss based independent research group specializing in oil markets
PdVSA – Petroleos de Venezuela
RRSP – Registered Retirement Savings Plan
SEC - Securities Exchange Commission
THAI – Toe-to-Heel-Air-Injection
TSX – Toronto Stock Exchange
WTI - West Texas Intermediate Oil
Measurements
Mb/d – million barrels per day
Bcf/day – billion cubic feet per day
Tcf – trillion cubic feet
mpg – miles per gallon
List of Tables and Figures
Tables
Table 1: World’s Top Oil Producers
Table 2: World’s Top Oil Reserves
Table 3: WTI Crude Oil Forecasts for 2010-2011
Table 4: World Oil Supply and Demand (Mb/d)
Table 5: Long-Term Projections of World Oil Prices (2007 dollars per barrel)
Figures
Figure 1: Average Annual WTI Crude Oil Prices Nominal and Real ($2008)
Figure 2: Asian Demand Growth 2000-2009
Figure 3: 2007 Total World Oil Production (Percent)
Figure 4: Declining Value of U.S. Dollar
Figure 5: Oil Prices January 2000 to February 2010
Figure 6: Number of Crude Oil Futures Contracts
Figure 7: Monthly Crude Oil Prices
Figure 8: Qualitative Profile for Long-Term Oil Prices
Figure 9: Crude Oil Price Forecasts