Wow, only 10¢ a cup! I'll have some of that - in fact gallons and gallons of it!

Yes put like that oil does seem cheap, in fact way cheaper than bottled water, or soda or pretty much anything else you buy by the cup. But oil is way more expensive than that... right? Actually no. A barrel contains 42 gallons which is 336 pints or 672 cups. So when oil at $67.2 dollars a barrel (which is actually more than it is right now) that's just 10¢ per cup! Of that about 50% is refinable to gasoline for your vehicles, but even so, you can see why in many respects oil could be condsidered cheap, real cheap at current prices. Even a US pump price of $3 a gallon of gas is still only 18.75¢ a cup which considering that 50% figure for gas per barrel means really Americans are actually getting a very reasonable deal.

So when pundits like Matthew Simmons start on about peak oil and tell you "Oil will be $200 a gallon by 2010" you should actually stop and think what that is per cup - still less than 30¢ a cup, or 59¢ per pint. Never mind that by that time your gas at the pump will most likely be $9.50 a gallon, considering the utility of gasoline you're still getting a fantastic deal.

However there's part of the story that even Simmons usually ommits - the intagible costs of our current oil habit, all those externalities that the oil companies force on us and our government. To name a few:

• the subsidy of a road infrastructure
• the direct subsidies to oil companies in the form of tax breaks
• the cost of fighting wars to defend our oil and our oil producing friends
• the cost of over 40,000 dead in car wrecks (a million per year worldwide)
• the cost of pollution and CO2 emissions caused by burning oil
• the intangible cost of irrevocable plunding of resources that once gone are gone forever (or at least until we all rot down to oil - if you believe oil is produced that way).

I haven't seen a figure for these but my guess is that even conservatively they at least double the actual price of oil. But you know its still cheap at twice the price.

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