Oil is measured in barrels, a volume of 42 US gallons or 35 imperial gallons.

The notation for a barrel, used in all industry documents and upstream agreements, is bbl. This dates from the very early days of the industry in the United States.

It would be easy to understand if the notation was just bl, but the extra b is curious. There is no accepted account of how it came to be included. The likeliest explanation is that bbl originally stood for blue barrel.

By the 1890s John D Rockefeller and his company Standard Oil owned more than ninety percent of the oil industry in the United States, and thus the world. They distinguished their standard oil by transporting it in blue barrels.

This was more than just a branding exercise. It had a commercial purpose.

As the largest oil producer in the United States, Standard Oil made sure its barrels took priority, and paid the railroads less to transport a barrel than any other producer. That was inevitable. 

But Standard Oil went one step further. They demanded that the railroads pay them for every barrel transported for competitors. These payments were known as drawbacks.

It seems bbl originated on rail documents to identify the priority barrels and to distinguish them from those on which drawbacks were payable. Usually there were a lot more blue ones, so bbl was very much more common than bl, and bbl became universal.

When the commercial behavior of Standard Oil came under judicial scrutiny, the drawbacks were a smoking gun. In 1911 the Supreme Court ordered the break-up of Standard Oil for this and other anti-competitive practices.

So it seems that bbl is a relic of one of history’s great monopolies, and the monopoly behaviour that brought it down. 


See also:  Over a Barrel




Chris Thorpe

Chris Thorpe is a respected independent lawyer in the upstream oil and gas industry, and an established lecturer and author. Chris has a LLB in law from Magdalene College, Cambridge and trained as a barrister in London. He worked for eight years' as an in-house lawyer for BP and Marathon. Since 1991, Chris has run his own upstream legal practice, CPTL, which has acted for many upstream clients. He has extensive experience of international upstream transactions, principally in the North Sea, the FSU, Africa and the Middle East. Chris has spoken at many UK and International Conferences and Seminars, both public and in-house. His most popular current lecture is Fundamental of Upstream Petroleum Agreements, a two-day course with accompanying book.