Conversion factors and oil statistics

World oil statistics, in scope and accuracy, are often far from perfect. They can easily lead to misguided conclusions regarding the state of market fundamentals. Without proper attention directed at statistic caveats, the ensuing interpretation of oil market data opens the door to unnecessary volatility, and can distort perception of market fundamentals. Among the numerous caveats associated with the compilation of oil statistics, conversion factors, used to produce aggregated data, play a significant role. Interestingly enough, little attention is paid to conversion factors, i.e. to the relation between different units of measurement for oil. Additionally, the underlying information regarding the choice of a specific factor when trying to produce measurements of aggregated data remains scant. The aim of this paper is to shed some light on the impact of conversion factors for two commonly encountered issues, mass to volume equivalencies (barrels to tonnes) and for broad energy measures encountered in world oil statistics. This paper will seek to demonstrate how inappropriate and misused conversion factors can yield wildly varying results and ultimately distort oil statistics. Examples will show that while discrepancies in commonly used conversion factors may seem trivial, their impact on the assessment of a world oil balance is far from negligible. A unified and harmonised convention for conversion factors is necessary to achieve accurate comparisons and aggregate oil statistics for the benefit of both end-users and policy makers.