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This article presents an ethical issue concerning today's oil prices and give an answer to the question: Is it unethical to have prices around and over $50 a barrel when the production costs are around $8/bl or is it the real cost of risk what makes this price fair?
According to McGrath and Dailey (2004), the cost of one barrel or 42 gallons of Aquafina bottled water is around $416. If we assume that the cost for producing this water is 75% of the final product price (which is improbable), the barrel would cost $104. Fresh water is a renewable resource that can be easily found in the underground by drilling shallow wells without using an advanced technology and also represents 1% of the water in the world. On the other hand, oil is going around $60-$70 per barrel and the tendency shows nothing but rising.

Helman (2004) showed that the production costs for oil in Europe and North America have increased since 1999 from $11 to $18 and from $5 to $11 respectively. This is due to the depletion of the oldest and more accessible reservoirs. If we use September 2004 price, let's say $50/barrel, the cost of producing a barrel of oil in Europe would be 36% and 22% in North America. Is it fair that producers take advantage of the need for oil and earn an average of 365% over the cost of production? Some people will argue that there are transportation costs and pre-refining costs associated, but these costs are not great when compared to the cost of production.
Oil is an essential product for modern life, as a consequence it should be affordable by the majority. The classical utilitarianism theory explain this argument based on the fact that as cheap as the price is, the greater the amount of pleasure it will provide to consumers. Boatright (2003), stated that "in classical utilitarianism, an action is judged to be right by virtue of the consequences of performing that action". If oil prices were at prices easy affordable for people and at the same time profitable to producers it will create a balanced system.

Lets put aside the Iran/Iraq war and the Iranian revolution in late 70's and early 80's. It can be easily seen a mean average between $16-$20 a barrel. Oil companies have worked with these prices during several years without being shut down. Furthermore, in March 2000 the OPEC set a band between $22 and $28 for all their seven products indicating what could be more than a fair price for them. According to this point of view, oil might be seen as a resource

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