The petroleum industry includes the global processes of exploration, extraction, refining, transportation (often via oil tankers and pipelines), and marketing of petroleum products. The products with the largest volume in the industry are fuels (fuel oil) and gasoline. Petroleum is the raw material for many chemical products including pharmaceuticals, solvents, fertilizers, pesticides and plastics.
The oil industry is typically divided into three phases:
"Upstream": Exploration and production.
"Midstream": Transport, processes and storage.
"Downstream": Refining, sale and distribution. The middle operations are generally included in the final category.
Oil is an essential product for many industries, and is vitally important to the maintenance of industrialized civilization itself, so it is considered a critical industry in most nations. Oil fuels a very high percentage of the world's energy consumption, from 32% in Europe and Asia to 53% in the Middle East. In other geographical regions the energy weight of oil is as follows: South and Central America (44%), Africa (41%) and North America (40%).
The world in general consumes 30 trillion barrels (4.8 km3) of oil per year, and the largest consumers are mostly the most developed group of nations. In fact, 24% of the oil consumed in 2004 was attributed entirely to the United States.
The production, distribution, refining and sale of petroleum, taken together, represent the largest industry in terms of monetary value on Earth.
Natural oil formation
Petroleum is a naturally occurring liquid compound found in rock formations. It consists of a complex mixture of hydrocarbons of various molecular weights, in addition to other organic compounds. It is generally accepted that oil, like other fossil fuels, originated from the carbon-rich remains of plants and animals subjected to temperature and pressure in the Earth's crust over hundreds of millions of years. Over time, the decomposed waste was covered by layers of mud and sediment, collapsed further, and, preserved between hot and pressurized strata, gradually transformed into what we know today as oil fields.
Oil has been used throughout human history as a fuel to keep fire going and for war. Its great importance for the world economy developed, however, very slowly; well into the 19th century, wood and coal were the main fuels used for heating and cooking, and whale oil was preferred for lighting.
An early oil industry appeared in the 8th century when the streets of Baghdad were paved with tar derived from petroleum by means of destructive distillation. In the 9th century, oil fields were exploited in the area near Baku, in Azerbaijan, to produce naphtha. These fields were described by al-Masudi in the tenth century and in the thirteenth by Marco Polo, who compared these oil wells to hundreds of ships. Petroleum was also distilled by ar-Razí in the 9th century, which produced chemical compounds such as kerosene in the still. This product was used for lighting thanks to the parallel invention of kerosene lamps in the oil lamp industry. The Industrial Revolution generated a growing need for energy, which came mainly from coal . On the other hand it was discovered that kerosene could be extracted from crude oil and that it could be used as fuel. Oil began to have a strong demand and in the 20th century it became one of the main raw materials of world trade.