Like Oil, Like Water

drinking water, water trade

Just this week, oil prices have reached a record high, exceeding $98.00 a barrel for crude oil on the world market.

But, how does this increase of the price of crude oil measure-up to the price of water on the global market?

A price comparison of water and crude oil is challenging because of the variability of water pricing around the globe. Water is primarily supplied in the following venues:

  • water sold in the commercial marketplace (bottled water)
  • water sold as a market commodity (privatized water)
  • municipalities (public) serve water to the general population, private entities, and public entities
  • water rights are sold and traded through water markets in various parts of the world (virtual water)

Of these four water services, the cost of bottled water has already surpassed the current cost of oil, while the prices of the others are rising steadily.

  •  Oil $2.33 per gallon (11/22/07)

There are 42 gallons in one barrel of crude oil. If we divide the recent price per barrel of oil by 42 gallons, this equates the price of oil at roughly $2.33 cents a gallon on the world market.

  • Bottled Water $16.00 per gallon (estimate)

Consumers often pay exorbitant prices in upwards of $2.00 for just over 16 ounces of bottled water. This would equal approximately $16.00 per gallon for so-called designer water, by a conservative estimate. Of course, prices will vary in the commercial water trade, but generally exceed the global price of oil.

  • Privatized WaterVaries

The cost of privatized water varies greatly depending on water availability, timing, and the cost of transport. Individuals in locations without access with municipal water often have to purchase water from private vendors in large quantities.

Municipal water falls behind world oil prices, primarily because of subsidization of these water water supplies ranging from .66 in the US to $2.50 in Denmark for a cubic meter of water as indicated in a recent study of 14 countries (Earth Policy Institute). There are approximately 264 gallons in one cubic meter of water, so this would amount to approximately ¼ cent to one cent per gallon of water.

  • Water Marketsup to ¼ cent per gallon

In this description by the Earth Policy Institute, water traded in “water markets” has been known exchange for a high of .75 cents a cubic meter in Australia. This equates to approximately ¼ cent per gallon of water. Obviously, well below the current price per gallon of oil.

Photo courtesy, Fábio Pinheiro on flickr.

Although most water prices (besides bottled water) have not yet exceeded world oil prices, according to many, it is thought to be imminent. And, many more tout the promise of water investments. This recent article highlights Norway’s 5-fold increase in bottled water exports over the past seven years and states:

A study on global water import and export trade by the Political Economy Research Center of the Hoover Institution said water has shifted from being a political commodity to a market commodity, by providing innovative solutions to water shortages in different parts of the world. The study said while the water business may not fetch profits as high as oil trading does, more water crises will boost the business in the coming years.