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The petroleum industry operates on the petroleum market. Petroleum is vital to nearly all other industries, if not industrialized civilization itself, and thus is 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."International Energy Annual 2004". Energy Information Administration. 14 Jul. 2006. Found at http://www.eia.doe.gov/pub/international/iealf/tablee2.xls The production, distribution, refining, and retailing of petroleum taken as a whole represent the single largest industry in terms of dollar value on earth.
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Oil and natural gas derive from buried organic material. 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.
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Historical references trace oil use in ancient Egypt, Mesopotamia, and Persia through various reports and sacred documents. Oil in general has been used since early human history to keep fires ablaze, and also for warfare. Its importance in the world economy evolved slowly. Wood and coal were used for heating and cooking, while whale oil was used for lighting.
The petroleum industry was established in the 8th century, when the streets of Baghdad were paved with tar, derived from petroleum through destructive distillation. In the 9th century, oil fields were exploited in the area around modern Baku, Azerbaijan, to produce naphtha. These fields were described by al-Masudi in the 10th century, and by Marco Polo in the 13th century, who described the output of those oil wells as hundreds of shiploads.K. Ajram (1992). Miracle of Islamic Science, Appendix B. Knowledge House Publishers. ISBN 0911119434. Petroleum was distilled by al-Razi in the 9th century, producing chemicals such as kerosene in the alembic, which he used to invent kerosene lamps for use in the oil lamp industry.Zayn Bilkadi (University of California, Berkeley), "The Oil Weapons", Saudi Aramco World, January-February 1995, p. 20-27.
The Industrial Revolution generated an increasing need for energy which was fuelled mainly by coal. However, it was discovered that kerosene could be extracted from crude oil and used as a light and heating fuel. Petroleum was in great demand and by the twentieth century had become the most valuable commodity traded on the world market.Halliday, Fred. The Middle East in International Relations: Power, Politics and Ideology. Cambridge University Pres: USA, 270
The petroleum industry can be divided into two broad groups: "upstream" producers (exploration, development and production of crude oil or natural gas) and "downstream" transporters (tanker, Pipeline transport, refiners, retailers, and consumers). Oil companies are generally categorized as "supermajors" (BP, Chevron, ExxonMobil, ConocoPhillips, Shell and Total S.A.), "majors," and "independents" or "jobbers." Most upstream work in the oil field or on an oil well is contracted out to drilling contractors and oil field service companies.
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. BP Global. "Reports and Publications: Oil Reserves." http://www.bp.com/sectiongenericarticle.do?categoryId=9017902&contentId=7033474 Retrieved 26 Feb 2008
The Hubbert peak theory, also known as peak oil, is an influential theory concerning the long-term rate of conventional oil production and depletion.
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