The petroleum industry includes the global processes of exploration, extraction, refining, transporting (often by oil tankers and pipelines), and marketing petroleum products. The largest volume products of the industry are fuel oil and gasoline (petrol). Petroleum is also the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, and plastics. The industry is usually divided into three major components: upstream, midstream and downstream. Midstream operations are usually included in the downstream category.
Petroleum is vital to many industries, and is of importance to the maintenance of industrialized civilization itself, and thus is a 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. The production, distribution, refining, and retailing of petroleum taken as a whole represent the single largest industry in terms of dollar value on earth.
Petroleum is a naturally occurring liquid found in rock formations. It consists of a complex mixture of hydrocarbons of various molecular weights, plus other organic compounds. It is generally accepted that oil, like other fossil fuels, formed from the fossilized remains of dead plants and animals by exposure to heat and pressure in the Earth's crust over hundreds of millions of years. 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.
During the 1960s, multinationals such as Mobil, BP, and Shell had access to more than 80 percent of global oil and natural gas reserves. Western multinationals control just 10 percent of the world's oil, while state-run firms exercise exclusive control over roughly 77 percent, according to a November 2007 paper by Doug Young at Rice University's James Baker Institute.
Some petroleum industry operations have been responsible for water pollution, through by-products of refining, and oil spills.
The combustion of fossil fuels produces greenhouse gases and other air pollutants as by-products. Pollutants include nitrogen oxides, sulphur dioxide, volatile organic compounds and heavy metals.
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. The global reserve/production ratio estimates that at current production levels, the world's oil reserves will be depleted in 40.5 years.
The Hubbert peak theory, also known as peak oil, is an influential theory concerning the long-term rate of conventional oil production and depletion.
According to research by IBISWorld, Biofuels (primarily ethanol, but also biodiesel) will continue to supplement petroleum, however output levels are low and these fuels will not displace local oil production. Ethanol is viewed as offering a lower environmental impact, and will play a small role in reducing dependence on imported crude oil. Most of the ethanol used in the US (over 90%) is blended with gasoline to produce fuel containing 10% ethanol in order to lift the oxygen content of the fuel.
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