BREAKING DOWN ‘Crude Oil’
Crude oil is typically obtained through oil drilling, where it is usually found alongside other resources, such as natural gas (which is lighter, and therefore sits above the crude oil) and saline water (which is denser, and sinks below). It is then refined and processed into a variety of forms, such as gasoline, kerosene, and asphalt, and sold to consumers.
Although it is often called “black gold,” crude oil has ranging viscosity and can vary in color to various shades of black and yellow depending on its hydrocarbon composition. Distillation, the process by which oil is heated and separated in different components, is the the first stage in refining.
History of Crude Oil Usage
Although fossil fuels like coal have been harvested in one way or another for centuries, crude oil was first discovered and developed during the Industrial Revolution, and it’s industrial uses were first developed in the 19th century. Newly invented machines revolutionized the way we do work, and they depended on these resources to run. Today, the world’s economy is largely dependent on fossil fuels such as crude oil, and the demand for these resources often spark political unrest, since a small number of countries control the largest reservoirs. Like any industry, supply and demand heavily affects the prices and profitability of crude oil. The United States, Saudi Arabia, and Russia are the leading producers of oil in the world.
The Organization of Petroleum Exporting Countries (OPEC), which consists of the worlds largest producers of crude oil by volume, used to be the most influential oil producers in the world, and as such, they had a lot of economic leverage in determining supply and therefore oil prices. In the late 19th and early 20th centuries, however, the United States was one of the world’s leading oil producers, and U.S. companies developed the technology to make oil into useful products like gasoline. During the middle and last decades of the century, U.S. oil production fell dramatically, and the U.S. became an energy importer. In the early 21st century, the development of new technology, particularly hydro-fracturing, has created a second U.S. energy boom, largely decreasing the importance and influence of OPEC. (For more, see How Does Crude Oil Affect Gas Prices?)
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