Why is oil measured in barrels?

11th March 2015 - Facts
The inspiration for the oil barrel came from the whiskey industry, where the golden liquid was transported and stored in wooden barrels.

Back in the 1860’s, when the first oil was pumped from the oil fields in Pennsylvania, US, it was stored in any type of container, which made it extremely difficult to determine the quantity of oil that was traded. As the oil industry grew during the 19th century, explorers needed to find a way to transport oil conveniently and safely around the country with the possibility to easily determine the amounts that are traded.

The inspiration for the oil barrel came from the whiskey industry, where the golden liquid was transported and stored in wooden barrels with a standard size of 40 US gallons. Instead of re-inventing the wheel, the oil producers adopted the idea. However, two extra gallons were added to cover spillages on route to the destinations, and the traditional 42 US gallon oil barrel was invented.

This was revolutionary since it allowed the purchasers of oil to know exactly what amounts they were buying at a time, which was pivotal to the development of the industry that we know today. However, these days it would neither be efficient nor economical to pump oil into 42-gallon containers. Therefore the oil is generally pumped straight into tankers or cargo ships, but the concept of the barrel has stuck and is still used today!

Source: Forex


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