Reserves to Production Ratio

  

Categories: Metrics, Accounting

Time keeps on ticking. The reserves to production ratio tells us just how fast time is ticking, in terms of a natural resource.

Most of the time, the reserves to production ratio (RPR) is applied to oil and natural gas. It’s the amount of resources that you have (reserves) divided by how much you use per year, leaving you with how many years you have before it’s all gone.

Say a country has 2 million barrels of oil reserves, and they sell about 100,000 of them per year. If they are using 100k barrels per year, they’ll run out of the 2-million-barrel reserve in 20 years. 20 years is the RPR.

If we could nail down reserves to production ratio, we could tell when peak oil will happen (or if it’s happened already). The thing is, technology has made finding and extracting natural resources easier. That means our reserves are increasing as we’re finding more oil and natural gas, so the RPR keeps on changing.

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Finance: What is the 1913 Federal Reserv...3 Views

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Finance Allah Shmoop What is the nineteen thirteen Federal Reserve

00:06

Act Well for starters it created the Federal Reserve Thank

00:13

you Woody Wou okay So the Federal Reserve Act think

00:16

reserve of cash and or gold and or other securities

00:20

and assets that would serve to buffer volatile financial times

00:23

is the US grew to become a dominant global power

00:26

Will the Federal Reserve is essentially the mothership of banks

00:30

or central bank as it is called in other countries

00:33

which is kind of the water spigot in the price

00:35

and velocity at which it loans money to sub distributors

00:39

of loans A US banking system Will the act divvied

00:44

up the country into twelve regions right here twelve each

00:49

with its own board of directors And then the Federal

00:51

Reserve itself has seven board members purposely an odd number

00:55

two Both reflect the personalities of the people and the

00:58

need for tiebreaking facility Well they are the FOMC or

01:02

funk or Federal Reserve's Open Market Committee who live under

01:05

strict rules regarding meetings held discussions had And what kind

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of bagels tohave on the conference room table for Friday

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morning meetings Remember that the country only fifty years ago

01:15

before this act was almost split in half with the

01:19

you know their existing a Yankee currency more or less

01:22

And a Confederate currency and then other regional currencies kind

01:25

of popped up around the edges and there was gold

01:28

and there was always that nerdy whole wanted to pay

01:31

in bitcoin So the Federal Reserve act unified the country's

01:34

currencies into one common currency the US dollar And under

01:38

that massive scale tons of efficiency in managing and leveraging

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that money could be had And in doing so the

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US dollar became almighty It was the global standard currency

01:48

of choice And it also let banks catalyzed the American

01:51

dream at least in America by virtue of their ability

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to grant mortgages right like most of the wealth in

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this country is stored in homes people own So yeah

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it's all powerful stuff in a world where the common

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man you know for Millennia before had never dreamed of

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actually owning his own castle no matter how small it

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wass Well one tool that the Fed then used was

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to basically say to banks We literally give you a

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license to print money and it's okay Hey that you

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make a profit but you have to live by our

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rules But if you do you you know make bank

02:28

Yeah well that's probably where the term came from Well

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it was that ability to print money that became the

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central weapon the U S government then used to manage

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the economy I'ii stimulate her giggity when she was cold

02:39

and cool her off when she was you know inflation

02:42

e Well the Fed created what is called a discount

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window where banks line up to buy discounted money or

02:48

credit They mark it up and then resell it Tio

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cash thirsty Joe six packs all around the country so

02:54

inside of each of the twelve regions of a bank

02:56

wanted to be a federal bank I live under the

02:59

rules of the Fed so that they got cheap U

03:01

S dollar backed loans from the Fed which they would

03:04

then mark up and sell Joe Consumer who wanted to

03:06

buy a home or a mule or a butter churn

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or two thousand Well then they had to have skin

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in the game That is the regional banks had to

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go raise their own capital like you know asking grandmama

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for money or raising it from a consortium of shareholders

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who would then buy in or invest that capital as

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part of their commitment to the long from establishment of

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credible banks in the region That investment wasn't sellable or

03:29

transferable and the cash they invested well paid no interest

03:33

That quote gift unquote of no interest was kind of

03:36

a sign that well of their you know financial commitment

03:40

to the partnership would grow and do well is an

03:43

asset Our investors would lose everything and note the word

03:46

incredible Here It means believable trustworthy honest Well it doesn't

03:51

take much letter tweaking to make that word credit Credit

03:55

tha bull and yeah that's where all these turns to

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write So who made all this happen Who made it

03:59

up Who implemented Well if you ever get a chance

04:02

to see Hamilton Hamilton the stage play not the TV

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commercial for bulk pig meat see it You may have

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to take out a bank loan You know just buying

04:11

but cheap tickets here That's what we're hoping for Yeah

Find other enlightening terms in Shmoop Finance Genius Bar(f)