Terminology & Glossary

Barrel — a standard unit of measurement for crude oil, equal to 42 US gallons (approximately 159 liters). When you see '$93/bbl', it means oil costs $93 per barrel.

Million barrels per day — the standard unit for measuring oil production and consumption at a national or global scale. The Strait of Hormuz handles approximately 20 mb/d.

Basis points — a unit equal to one hundredth of a percentage point (0.01%). Used to express small changes in financial metrics. For example, 351 bps = 3.51 percentage points.

Percentage points — the arithmetic difference between two percentages. If revenue growth drops from 6% to 4%, that is a 2 pp decline (not a 2% decline).

Earnings Before Interest, Taxes, Depreciation, and Amortization — a measure of a company's core operating profitability before accounting for financing decisions, tax environments, and non-cash charges. It shows how much money the business actually makes from its day-to-day operations.

EBITDA divided by total revenue, expressed as a percentage. If a company earns $5 million in revenue and has $700,000 in EBITDA, its EBITDA margin is 14%. A higher margin means the business keeps more of each dollar earned.

Revenue minus the direct cost of goods and services sold, divided by revenue. It measures how efficiently a company produces its services before overhead costs. For home service providers, this includes labor and materials but not office rent or marketing.

Operating Expenditure — the ongoing costs of running a business day-to-day, including fuel, wages, rent, insurance, marketing, and supplies. This is distinct from capital expenditure (buying trucks or equipment).

Weighted Average Cost of Capital — the blended rate a company pays to finance its operations, combining the cost of debt (loans, credit lines) and equity (investor returns). A higher WACC means it costs more for the business to borrow money or attract investment.

Customer Acquisition Cost — the total cost of marketing and sales efforts needed to win one new customer. If a company spends $50,000 on marketing and gains 200 new customers, the CAC is $250 per customer.

Key Performance Indicator — a measurable value that shows how effectively a company is achieving its business objectives. Examples include revenue growth rate, profit margin, and customer retention rate.

Debt-to-Equity Ratio — a measure of how much a company relies on borrowed money versus owner investment. A D/E of 0.8 means the company has $0.80 in debt for every $1.00 in equity. Higher ratios mean more financial risk.

The international benchmark price for crude oil, based on oil extracted from the North Sea. It is the reference price used for approximately two-thirds of the world's internationally traded crude oil. When news reports 'oil prices,' they usually mean Brent crude.

West Texas Intermediate — the US benchmark for crude oil prices, typically trading a few dollars below Brent. It is the reference price for oil delivered to Cushing, Oklahoma.

Strategic Petroleum Reserve — the US government's emergency stockpile of crude oil stored in underground salt caverns along the Gulf Coast. It holds approximately 400 million barrels and can be released to stabilize markets during supply disruptions.

Organization of the Petroleum Exporting Countries — a group of 13 oil-producing nations (including Saudi Arabia, Iran, Iraq, UAE) that coordinate production levels to influence global oil prices.

An expanded alliance that includes OPEC's 13 members plus 10 additional oil-producing countries (including Russia). Together they control approximately 40% of global oil production and have significant influence over prices.

A narrow geographic passage through which a large volume of oil must transit. The Strait of Hormuz is the world's most critical chokepoint, handling 20% of global oil supply. A blockage or disruption at a chokepoint can cause immediate global price spikes.

The exploration and production segment of the oil industry — companies that find and extract crude oil from the ground. In the supply chain context, 'upstream' refers to suppliers and manufacturers earlier in the production chain.

Producer Price Index — a government statistic that measures the average change in prices received by domestic producers for their output. The energy sub-index of PPI tracks how energy costs flow through to producer prices.

A distinct pathway through which an energy price shock affects a business. The GESA model identifies four channels: direct cost, supply chain, demand, and financial conditions. Each has different timing and magnitude.

The percentage of a cost increase that is eventually reflected in downstream prices. A 65% pass-through rate on crude-to-diesel means a $10/bbl crude increase leads to roughly a $6.50 increase in diesel costs per barrel equivalent.

Input-Output Multiplier — a factor from economic modeling that captures how a price change in one sector ripples through interconnected industries. A 1.4x multiplier means a $1 direct cost increase causes $1.40 in total cost increases across the supply chain.

A measure of how sensitive one variable is to changes in another. Price elasticity of demand measures how much demand changes when prices change. An elasticity of -0.3 means a 10% price increase leads to a 3% demand decrease.

A range around a projected value that represents the uncertainty in the estimate. A wider band means more uncertainty. The charts show 80% confidence bands, meaning the actual value is expected to fall within the band 80% of the time.

One of three predefined levels of disruption severity used in the model: Baseline (no disruption), Moderate (partial disruption, +40% oil), and Severe (major disruption, +100% oil). Each tier produces different impact estimates.

A reduction in profit margins caused by costs rising faster than revenue. If a company's EBITDA margin drops from 14% to 10.5%, it has experienced 350 basis points of margin compression.

A technique that tests how changes in input assumptions affect the model's output. By varying parameters like oil price magnitude and disruption duration, users can see which factors have the greatest impact on results.

A color-coded table where cell colors represent the magnitude of values. In the GESA dashboard, green cells indicate low impact, amber indicates moderate impact, and red indicates severe impact.

Islamic Revolutionary Guard Corps — Iran's elite military force responsible for defending the Islamic Republic's political system. The IRGC Navy controls Iran's naval operations in the Persian Gulf and Strait of Hormuz.

Energy Information Administration — the statistical and analytical agency within the US Department of Energy. It provides official energy statistics, analysis, and forecasts, including the Short-Term Energy Outlook used in this model.

International Energy Agency — an intergovernmental organization that advises countries on energy policy, publishes the monthly Oil Market Report, and coordinates emergency oil stock releases among member nations.

Bureau of Economic Analysis — a US government agency that produces economic statistics including GDP, input-output tables, and industry accounts used to model supply chain relationships.

The central bank of the United States, responsible for setting interest rates and monetary policy. When oil prices cause inflation, the Fed may raise interest rates, which increases borrowing costs for businesses.

Bureau of Labor Statistics — a US government agency that produces economic data including the Consumer Price Index (CPI), Producer Price Index (PPI), and employment statistics.