What is Crude Oil?

What Is Crude Oil

Crude oil (a type of fossil fuel) is a natural petroleum product from the earth’s crust, made of plant and animal matter from millions of years ago. Since the 1880s, this energy source has helped produce many things, from heat to electricity. Today it remains a crucial, albeit controversial, driver of economic growth.

Most crude oil extraction from the earth happens via drilling or pumping methods. It is then sent to refineries and transformed into the final products we use daily, such as gasoline and certain plastics. In addition, petroleum products continue to serve as a valuable energy source to power engines and electrical equipment.

Despite a global dependence on crude oil for various industries, its use is increasingly becoming a topic of scrutiny in politics. To better understand the impact crude oil has on the world, it’s crucial to learn about its history, uses, and surrounding controversies.

Composition and Types of Crude Oil

Ancient aquatic lifeforms predating dinosaurs became fossilized over millennia. These biological remnants were gradually transformed into an oil, first by being crushed, and then heated under the earth’s many layers. The resulting hydro-carbon oil pools are what we call crude oil or petroleum.

Some reports estimate that there are more than 150 types of crude oil. These oils are rated by their densities according to the American Petroleum Institute. A higher gravity number indicates that an oil is lighter, while a lower number indicates that it is more dense. Additionally, these oils can all be divided up into four general categories: light, heavy, sweet, and sour.

Crude oil classifications refer to the sulfur content present. For example, crude oil with less than 1% sulfur content falls into the sweet classification. Meanwhile, crude oil with over 1% of sulfur falls under the sour one. The light and heavy categories refer to weight and density.

Early Industry Origins of Crude Oil

Though there is evidence of ancient civilizations using crude oil since the 4th century BC, the oil industry as we know it today began in Pennsylvania in 1859. In that year, Colonel Edwin L. Drake demonstrated that drilling was an efficient way to extract large quantities of oil from the ground. After enlisting a crew to help him, Drake used a steam engine, a drill, and a stationary boiler to drill the earth.

Soon after beginning the project, it became apparent that flooding would impede progress. Drake’s solution was to introduce a cast iron pipe deep into the earth and insert a drill bit inside to prevent further flooding. On August 27th, 1859, Drake’s hypothesis proved correct: drilling could provide efficient oil extraction.

Despite his monumental discovery, Drake never profited directly from it. He failed to produce a patent for his drilling method and thus later died not having earned a penny. Notwithstanding, his drilling mechanism became the catalyst for the modern oil industry.

Growth and Expansion of Crude Oil

While the Pennsylvania Rock Oil Company (where Drake was employed) was the first to tap into oil extraction profits, other companies soon followed. The first of these was The Standard Oil Company, formed by John D. Rockefeller. Over the years, the company acquired several competitors and merged with others. By 1970, they were the dominant oil company.

As The Standard Oil Company grew, so did threats of out-of-state taxation. These threats ultimately led to the forming of The Standard Oil Trust of 1882.

Through the trust, several member corporations were controlled under one parent company via stock ownership. By 1909, the United States was the largest producer of oil products, with The Standard Oil Company dominating the market.

A key Supreme Court decision in 1911 declared that the company attempted to monopolize the oil industry. As a result, the trust dissolved into multiple separate but coordinated companies. This event set the stage for the current petroleum market: one made up of subsidized oligopolies.

Economic Impacts of Crude Oil

The modern world relies on oil for mass production and energy. As new inventions such as the automobile emerged, oil demand grew exponentially.

Oil is one of the most important fossil fuels and is used across industries to make several products. These include:

• Gasoline
• Diesel fuel
• Jet fuel
• Asphalt
• Plastics
• Lubricant Oil
• Petrochemical feedstocks

Because it is a scarce and non-renewable resource, petroleum is vital to technological advancement and international trade. Changes to its supply thus cause several other markets to fluctuate. In particular, the transportation industry is deeply affected by the price of oil.

Climate Controversies

The burning of fossil fuels results in carbon dioxide emissions. These emissions become trapped in the atmosphere, resulting in the greenhouse effect, which contributes to the rise of the earth’s temperature. Initial theories of climate change due to carbon emissions emerged in the 1970s and have continued to grow in prevalence today.

Climate change due to fossil fuels remains a controversial subject. Much of the debate centers on whether this scientific consensus is the result of political motives. The debate has only grown in recent decades. Because crude oil is such a large component of the global economy, the controversy is unlikely to cease any time soon.

Final Thoughts on Crude Oil

Hopefully you are now better informed about crude oil and why it is so important. Several aspects of our modern-day lives depend on crude oil and the products it helps create. This type of fossil fuel was crucial to innovation even in ancient times but has become even more embedded in society today. Since the discovery of drilling mechanisms, oil extraction has become increasingly commonplace.

Though crude oil is a natural resource, it is also non-renewable, as it stems from the remains of ancient organisms. This limited supply combined with a high demand ensures that pricing remains generally high. However, its pricing is also affected by fluctuations in markets that depend on it as a resource, as well as changes in international trade policies.

The scientific debate over the burning of fossil fuels is likely to continue. As the global economy’s heavy reliance on crude oil increases, the future of this valuable resource remains uncertain.