Petroleum Basics 101
The word petroleum generally refers to crude oil or the refined products obtained from the
processing of crude oil (gasoline, diesel fuel, heating oil, etc.) We find petroleum products in
every area of our lives. They are easily recognized in the gasoline we use to fuel our cars and the
heating oil we use to warm our homes. However, petroleum-based components are also used in
plastics, medicines, food items, and a host of other products
HOW OIL WAS FORMED
Oil was formed from the remains of animals and plants that lived millions of years ago in a
marine (water) environment before the dinosaurs. Over the years, the remains were covered by
layers of mud. Heat and pressure from these layers helped the remains turn into what we today call crude oil. The word
"petroleum" means "rock oil" or "oil from the earth."
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WHERE WE GET OIL
Crude oil is a smelly, yellow-to-black liquid and is usually found in underground areas called reservoirs. Scientists and
engineers explore a chosen area by studying rock samples from the earth. Measurements are taken, and, if the site seems
promising, drilling begins. Above the hole, a structure called a 'derrick' is built to house the tools and pipes going into the
well. When finished, the drilled well will bring a steady flow of oil to the surface.
The world's top five countries, listed
by known petroleum reserves are:
1.
2.
3.
4.
5.
Products refined from a
single barrel of oil include
Saudi Arabia 264.3
Canada
178.8
Iran
132.5
Iraq
115
Kuwait
101.5
Over one-fourth of the crude oil produced in the United States is produced offshore in the Gulf of Mexico. The top crude oilproducing states are: Texas, Alaska, California, Louisiana, Oklahoma
The amount of crude oil produced (domestically) in the United States has been getting smaller each year. However, the use
of products made from crude oil has been growing, making it necessary to bring more oil from other countries. About 59.5
percent of the crude oil and petroleum products used in the United States comes from other countries.
OIL
The Middle East is central to U.S. interests because of oil. The region produces onethird of the world’s oil, and has 60 percent of the world’s known oil reserves (see
Chart 1). The United States is by far the world’s largest single consumer of oil,
accounting for 26 percent of total world oil consumption (see Chart 2). In 2005, 21
percent of U.S. crude oil imports came from the Middle East. Seventeen percent of
U.S. oil imports during this year came from the
volatile Persian Gulf area.
For decades, the U.S.’s heavy reliance on Middle
Eastern oil has been a concern for U.S. administrations. When Iraq invaded Kuwait in 1990, the
oil reserves under Iraq’s control increased from about 10 percent of the world’s known oil
reserves to about 20 percent. This was a major reason why the United States responded so
forcefully. When the United States went to war against
Iraq a second time in 2003, some again saw oil as a motivating factor.
In mid-2005, instability in the Middle East and sky-high oil prices led to intensified
calls in the United States to reduce the country’s dependency on foreign oil. Instability in the
Middle East not only contributes to high oil
prices, but also causes the United States to
spend billions of dollars for military
deployments designed to protect the free flow
of oil. Critics also argue that oil sales help fund
authoritarian Middle Eastern governments that
give rise to anti-American sentiment and
support terrorism. Environmentalists point to
global warming and stress the need to reduce
consumption and to develop alternative sources
of energy.
OPEC (Organization of the Petroleum
Exporting Countries): An intergovernmental organization whose stated objective is to coordinate and unify petroleum policies among
member countries. OPEC was founded with a goal to unify and manage its members' petroleum resources. The organization sets
production rates, which helps OPEC control world petroleum prices . The largest oil deposits in the world are in the Middle East. Several
members of the 11-member Organization of the Petroleum Exporting Countries (OPEC) are located in the region. In 2000, OPEC's 11
countries produced 40 percent of the world's oil. Of all the proven global crude oil reserves, more than 77 percent of it lies under the soil
of
member nations.
OPEC Member
Location
OPEC Member
Location
Algeria
Africa
Indonesia
Asia
Iran
Middle East
Libya
Africa
Iraq
Middle East
Kuwait
Middle East
Nigeria
Africa
Qatar
Middle East
Saudi Arabia
Middle East
United Arab Emirates
Middle East
Venezuela
South America
1.
What does OPEC stand for?
2.
What is the major purpose of OPEC?
3.
How does OPEC try to accomplish this goal?
OPEC Member
Location