What Is Petroleum and History of Oil
Petroleum is a fossil
fuel. It is called a fossil fuel because it was formed from the remains of tiny
sea plants and animals that died millions of years ago. When the plants and
animals died, they sank to the bottom of the oceans. Here, they were buried by
thousands of feet of sand and silt. Over time, this organic mixture was
subjected to enormous pressure, and heat as the layers increased. The mixture
changed, breaking down into compounds made of hydrogen and carbon atoms--hydrocarbons.
Finally, an oil-saturated rock-much like a wet household sponge was formed.
All organic material does
not turn into oil. Certain geological conditions must exist within the oil-rich
rocks. There must be a trap of non-porous rock that prevents the oil from
seeping out, and a seal (such as salt or clay) that keeps the oil from rising
to the surface. Under these conditions, only two percent of the organic
material is transformed into oil.
A typical petroleum
reservoir is mostly sandstone or limestone in which oil is trapped. The oil in
it may be as thin as gasoline or as thick as tar.
Petroleum is called a nonrenewable
energy source because it takes millions of years to form. We cannot make
new petroleum reserves.
History of Oil
People have used
petroleum since ancient times. The ancient Chinese and Egyptians burned oil for
Before the 1850s,
Americans often used whale oil to light their homes and shops. When whale oil
became scarce, people began looking for other oil sources. In some places, oil
seeped naturally to the surface of ponds and streams. People skimmed this oil
and made it into kerosene. Kerosene was commonly used to light America's homes
before the arrival of the electric light bulb.
As demand for kerosene
grew, a group of businessmen hired Edwin Drake to drill for oil in Titusville,
Pennsylvania. After much hard work and slow progress, he discovered oil in
1859. Drake's well was 69.5 feet deep, very shallow compared to today's wells.
Drake refined the oil
from his well into kerosene for lighting. Gasoline and other products made
during refining were simply thrown away because people had no use for them. In
1892, the "horseless carriage" solved this problem since it required
gasoline. By 1920 there were nine million motor vehicles in this country and
gas stations were opening everywhere.
Although research has
improved the odds since Edwin Drake's days, petroleum exploration today is
still a gamble. Geologists study underground rock formations to find areas that
might yield oil. Still, even with advanced methods, only about 33 in every 100
exploratory wells have oil. The rest come up "dry."
When oil is found, a
petroleum company brings in a 50 to 100-foot drilling rig and raises a derrick
that houses the tools and pipes that go into the well. Today's oil wells
average 5,000 feet deep and may sink below 20,000 feet.
To safeguard the
environment, oil drilling and oil production are regulated by state and federal
governments. Oil companies must get permission to explore for oil on new lands.
Many experts believe that 85 percent of our remaining oil reserves are on land
owned by the federal government. Oil companies lease the land from the federal
government, which, in return, receives rental payments for the land as well as
percentage payments from each barrel of oil.
Texas produces more oil
than any other state. The other top producing states are Alaska, California,
Louisiana, and Oklahoma--in that order. In all, 31 states produce petroleum.
From Well to Market
We cannot use crude oil
in the state it's in when it comes out of the ground. The process is a little
more complicated than that. So, how does thick, black crude oil come out of the
ground and eventually get into your car as a thin, amber-colored liquid called
gasoline? Let's find out.
Oil's first stop outside
the well is an oil refinery. A refinery is a plant where crude oil is
processed. Sometimes refineries are located near oil wells, but usually the
crude oil has to be delivered to the refinery by ship, barge, pipeline, or
After the crude oil has
reached the refinery, huge round tanks store the oil until it is ready to be
processed. Tank farms are sites with many storage tanks.
An oil refinery cleans
and separates the crude oil into various fuels and byproducts. The most
important one is gasoline. Some other petroleum products are diesel fuel,
heating oil, and jet fuel.
Refineries use many
different methods to make these products. One method is a heating process
called distillation. Since oil products have different boiling points,
the end products can be distilled or separated. For example, asphalts have a
higher boiling point than gasoline's, allowing the two to be separated.
Refineries have another
job. They remove contaminants from the oil. A refinery removes sulfur from
gasoline, for example, to increase its efficiency and to reduce air pollution.
After processing at the
refinery, gasoline and other petroleum products are usually shipped out through
pipelines. There are about 230,000 miles of pipeline in the United States.
Pipelines are the safest and cheapest way to move large quantities of petroleum
across land. Pump stations, which are spaced 20 to 100 miles apart along the
underground pipelines, keep the petroleum products moving at around five miles
per hour. At this rate, it takes 15 days to move a shipment of gasoline from
Houston, Texas to New York City.
"jobbers" handle the wholesale distribution of oil. There are 15,000
jobbers in the U.S., and they sell just about everything that comes out of a
barrel of crude oil. Jobbers fill bulk orders for petroleum products from
gasoline stations, industries, utility companies, farmers, and so on.
The final link in the
chain is the retailer. A retailer may be a gasoline station or a home heating
oil company. The story ends when you pump gasoline into your car's tank, and
the engine converts the gasoline's heat energy into mechanical energy to make your
Demand for Oil and Imported Oil
Since World War II,
petroleum has replaced coal as the United States' leading source of energy.
Petroleum supplies more than 39 percent of the energy used in the United
States. (Coal supplies 22 percent of our energy needs, and natural gas supplies
Americans use almost 17
million barrels of oil (more than 700 million gallons) every day of the year.
And experts say we will be using more and more oil, especially for
transportation, in the coming years. Even now, we use almost 13 percent more
oil for transportation than we did in 1973 when the first oil crisis hit the
United States. This is true even though today's automobiles get more than 1.5
times as many miles to the gallon as their 1970s counterparts. There are 50
percent more vehicles on the road today than in the 1970s. Today we use about
two out of every three barrels of oil to keep us on the move.
To satisfy our appetite
for petroleum, the United States has become increasingly dependent upon other
countries for petroleum. In 1994 we purchased 45 percent of our petroleum from
Americans know this
dependence can be dangerous. We were first alerted to the danger in 1973 when
some Arab countries stopped shipping oil (called an embargo) to the
United States. These countries belonged to an international trade group called
the Organization of Petroleum Exporting Countries or OPEC for short.
OPEC members try to set
production levels for petroleum. As a rule, the less oil they produce, the
higher the price of oil on the world market. The more oil they produce, the
lower the price. The OPEC countries don't always agree with each other. Some
OPEC countries want to produce less oil to raise prices. Other OPEC countries
want to flood the market with petroleum to reap immediate returns.
Americans learned some
lessons from the 1973 oil shock. Gas-guzzling cars became about as wanted as
last week's leftovers, and the nation raced to find ways to conserve energy.
But more oil shocks followed.
The next shock came in
1978-79 when the Iranian Revolution cut off oil production. Again, world oil
prices raced up. Our most recent crisis was the Persian Gulf War. Iraq invaded
Kuwait, and again, Americans worried about oil shortages and skyrocketing oil
The U.S. has taken some
steps to prevent another big oil crisis. For one thing, the U.S. has almost a
three-month supply of oil tucked away in the Strategic Petroleum Reserve
(SPR). Established in 1975, the SPR is only to be tapped during an energy
emergency. The SPR was first used in January 1991, during the Persian Gulf
The United States has
also turned to non-Arab and non-OPEC countries for oil imports. Today, we
import much of our oil from Canada and Mexico. This is good for us because we
have friendly relations with our neighbors, and because the oil doesn't have to
be shipped so far. Still, the amount of oil that we can import from Canada and
Mexico is limited. By law, Mexico can only export half the oil it produces to
the United States.
Even with the SPR and
friends in the right places, the United States is not out of the woods. We
still buy more than half our imported oil from OPEC countries, 11 percent of
which comes from volatile Arab OPEC countries.
Some economists believe
the United States is setting itself up for another oil crisis. Other analysts
say a true oil shock--like those of the 1970s--is unlikely because the
producing nations don't want to drive their customers away or encourage a shift
to other forms Of energy.
Still, there are more
steps we can take to help ensure our energy security. Depending on whom you
talk to--whether an oil company representative or an environmentalist--opinions
vary on the one or more steps we should take. Some experts believe we should decrease
our demand for oil through increased conservation. Others say we should
increase oil production and exploration in the United States, particularly in
the Arctic National Wildlife Refuge (ANWR) in northern Alaska. Still others say
we should use alternative fuels, especially for transportation. Some experts
believe will need to do all three to dodge another big oil crisis.
Oil Prices and the Environment
Most of the world moves
on petroleum--gasoline for cars; jet fuel for planes; diesel fuel for trucks.
Then there is petroleum for running factories or manufacturing goods. That's
why the price of oil is so important. Oil prices have declined for the fourth
straight year in a row. (In 1994, the price of a barrel of oil was $15.50.)
Low oil prices are good
for the consumer and the world economy. Low oil prices act as a check on
But there is another
side--the U.S. oil industry does not prosper during periods of low oil prices.
Oil industry workers lose their jobs, many small wells are permanently sealed,
and the exploration for new oil sources drops off.
Low oil prices have
another side effect. People use more oil when oil products are cheap. This can
create a Catch-22 situation because we may depend more and more on foreign oil
to keep up with demand.
Oil and the
products--gasoline for cars, fertilizers, etc.--have brought untold benefits to
Americans and the rest of the world's people. We depend on these products, and,
as consumers, we demand them.
But there is a flipside--pollution.
Petroleum production and
petroleum products can contribute to air and water pollution. Drilling for oil
may disturb fragile ecosystems whether on land or sea. Transporting oil may
endanger wildlife and the environment if it's spilled on rivers or oceans.
Leaking underground storage tanks may pollute groundwater and create noxious
fumes. Processing oil at the refinery may contribute to air and water
pollution. Burning gasoline to fuel our cars contributes to air pollution. Even
the careless disposal of waste oil drained from the family car can pollute
streams, rivers, and lakes.
The situation is far from
hopeless though, and many improvements have been made since the passage of the
Clean Air Act in 1970. Oil companies have cleaned up their refineries by
reducing air and water emissions. Gasolines have been reformulated to bum
cleaner, dramatically cutting the levels of lead, nitrogen oxide, carbon
monoxide, and hydrocarbons released into the air. And, in response to the oil
tanker spill in Prince William Sound, Alaska, in 1989, oil companies formed the
Marine Spill Response Corporation to ensure fast and effective clean-up of oil
The situation presents a
challenge. The future must balance the growing demand for petroleum products
with protection of the global environment.