If no one nowadays actually buys a barrel of oil and it is usually transported via tankers or pipelines, why do we then talk about oil in terms of barrels? And what, exactly is a barrel of crude?
The origins of the oil barrel go back to the 1860’s and the start of the oil boom in Pennsylvania USA. In those days, oil from the fields was moved by men, wagons and horses to the rail stations and docks, and any liquid products requiring a leak-proof container were stored in wooden barrels.
As the oil industry was booming, the volume of oil being produced from the new wells was so great that early producers were using any watertight containers they could get their hands on, whatever the size. In fact, one of the most common sources came from the whisky industry, which was already transporting whisky in wooden barrels with a standard size of 40 gallons.
But since the variety of different container sizes was misleading and was causing disputes between buyers and sellers, the early oil producers in Pennsylvania decided they, too, needed a standard unit of measure. So they also adopted the idea of the 40 gallon barrel for themselves, but added an extra 2 gallons to cover spillages on route to their destinations and thereby settled on the standard wine tierce which was two gallons larger than the standard whisky barrel.
Barrel makers (coopers) had already been producing watertight 42-gallon wooden barrels since the time of Richard III, who set the size of a tierce of wine at 42 gallons in 1483-1484. A 42-gallon tierce weighed more than 300 pounds when filled with crude oil– which was about as much as a man could reasonably handle. Also twenty barrels fitted on a typical barge or railroad flatcar. Bigger casks were unmanageable and anything smaller was less profitable.
The barrel, or "tierce" was therefore officially adopted by the oil industry in 1866 when a handful of America’s earliest independent oil producers met in Titusville, Pennsylvania, and agreed that henceforth, 42 gallons would constitute a barrel of oil, and released the following circular:"
"Whereas, It is conceded by all producers of crude petroleum on Oil Creek that the present system of selling crude oil by the barrel, without regard to the size, is injurious to the oil trade, alike to the buyer and seller, as buyers, with an ordinary sized barrel cannot compete with those with large ones. We, therefore, mutually agree and bind ourselves that from this date we will sell no crude by the barrel or package, but by the gallon only. An allowance of two gallons will be made on the gauge of each and every 40 gallons in favor of the buyer."
Henceforth purchasers of oil would know exactly how much they were buying at one time and thereby King Richard III's English wine tierce became the American standard oil barrel.
A few years later, in 1872, 42 gallons became the standard for the Petroleum Producers Association, and in 1882, the U.S.G.S. and the U.S. Bureau of Mines adopted the standard as well.
Nowadays, however, pumping crude into 42 gallon vessels would not be efficient or economical so it’s generally pumped straight into tankers or cargo ships, but the concept of the barrel has stuck.
As a result, the 42-gallon oil barrel has become the unit of measure rather than the actual physical container.