Petroleum industry

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The petroleum industry operates on the petroleum market. Petroleum is vital to nearly all other industries, if not industrialized civilization itself, and thus is critical concern to many nations. Oil accounts for a large percentage of the world’s energy consumption, ranging from a low of 32% for Europe and Asia, up to a high of 53% for the Middle East. Other geographic regions’ consumption patterns are as follows: South and Central America (44%), Africa (41%), and North America (40%). The world at large consumes 30 billion barrels (4.8 km³) of oil per year, and the top oil consumers largely consist of developed nations. In fact, 24% of the oil consumed in 2004 went to the United States alone.[1] The production, distribution, refining, and retailing of petroleum taken as a whole represent the single largest industry in terms of dollar value on earth.

Contents

[edit] History

[edit] Natural history

Ninety-five percent[citation needed] of oil and gas formations derive from the decayed plants and bacteria which sank to the bottom of seas, sheltered lakes and other moist areas. Over time the decayed residue was covered by layers of mud and silt, sinking further down into the Earth’s crust and preserved there between hot and pressured layers, gradually transforming into oil reservoirs.

Please see: http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/full_contents.htm for more information.

[edit] Human history

Historical references trace oil use in ancient Egypt, Mesopotamia, and Persia through various reports and sacred documents. Oil in general has been used since early human history to keep fires ablaze, and also for warfare. Its importance in the world economy evolved slowly. Wood and coal were used for heating and cooking, while whale oil was used for lighting. Whale oil however, burned to produce a black, smelly, thick residue known as tar or rock oil[citation needed].

The petroleum industry was established in the 8th century, when the streets of Baghdad were paved with tar, derived from petroleum through destructive distillation. In the 9th century, oil fields were exploited in the area around modern Baku, Azerbaijan, to produce naphtha. These fields were described by al-Masudi in the 10th century, and by Marco Polo in the 13th century, who described the output of those oil wells as hundreds of shiploads.[2] Petroleum was distilled by al-Razi in the 9th century, producing chemicals such as kerosene in the alembic, which he used to invent kerosene lamps for use in the oil lamp industry.[3]

The Industrial Revolution generated an increasing need for energy which was fuelled mainly by coal. However, it was discovered that kerosene could be extracted from crude oil and used as a light and heating fuel. Petroleum was in great demand and by the twentieth century had become the most valuable commodity traded on the world market.[4]

[edit] Infrastructure

The petroleum industry can be divided into two broad groups: "upstream" producers (exploration, development and production of crude oil or natural gas) and "downstream" transporters (tanker, Pipeline transport, refiners, retailers, and consumers). Oil companies are generally categorized as "supermajors" (BP, Chevron, ExxonMobil, ConocoPhillips, Shell and Total S.A.), "majors," and "independents" or "jobbers." Most upstream work in the oil field or on an oil well is contracted out to drilling contractors and oil field service companies.

[edit] Environmental impact and future shortages

As petroleum is a non-renewable natural resource the industry is faced with an inevitable eventual depletion of the world's oil supply. The BP Statistical Review of World Energy 2007 predicted the reserve/production ratio for proven resources worldwide. The study placed the prospective life span of reserves in the Middle East at 79.5 years, Latin America at 41.2 years and North America at only 12 years.[4] Oil exploration alone will not prevent future shortages of the resource. Resource economists argue that oil prices will rise as demand increases relative to supply, and that this will spur further exploration and development.[citation needed] However, this process will not increase the amount of oil in the ground, but will rather temporarily prolong production as higher prices to make it economical to extract oil that was previously not economically recoverable. The Hubbert peak theory, also known as peak oil, is an influential theory concerning the long-term rate of conventional oil production and depletion.

[edit] References

  1. ^ "International Energy Annual 2004". Energy Information Administration. 14 Jul. 2006. Found at http://www.eia.doe.gov/pub/international/iealf/tablee2.xls
  2. ^ K. Ajram (1992). Miracle of Islamic Science, Appendix B. Knowledge House Publishers. ISBN 0911119434.
  3. ^ Zayn Bilkadi (University of California, Berkeley), "The Oil Weapons", Saudi Aramco World, January-February 1995, p. 20-27.
  4. ^ a b Halliday, Fred. The Middle East in International Relations: Power, Politics and Ideology. Cambridge University Pres: USA, 270

[edit] External links

[edit] See also

Energy Portal

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