Introduction
Source: https://www.outlookindia.com/business/how-high-crude-oil-prices-affect-the-indian-economy-news-44633
The hottest topic in the tinsel town is the increase in the price of petroleum and gas products.
Crude oil plays a vital role in making petroleum and gas products.
In today’s blog let’s have an overview about crude oil.
What is Crude oil?
Crude oil is a mixture of comparatively volatile liquid hydrocarbons (compounds composed mainly of hydrogen and carbon), though it also contains some nitrogen, sulphur, and oxygen.
Regardless of variations, however, almost all crude oil ranges from 82 to 87 percent carbon by weight and 12 to 15 percent hydrogen by weight.
Source: https://slideplayer.com/amp/9380290/
Source: http://www.passmyexams.co.uk/GCSE/chemistry/what-is-crude-oil.html
History of Crude oil
Source: https://www.eia.gov/energyexplained/oil-and-petroleum-products/
Crude oil is a raw natural resource that is formed from the fossilized remains of dead plants and animals that existed million years ago in a marine environment and therefore it is also called as fossil fuel.
Over millions of years, the remains of these animals and plants were covered by layers of sand, silt, and rock.
Source: https://www.eia.gov/energyexplained/oil-and-petroleum-products/
Heat and pressure from these layers turned the remains into what we now call crude oil or petroleum.
The word petroleum means rock oil or oil from the earth.
It is a non-renewable resource, that is it can’t be replaced naturally at the rate we consume it and is, therefore, a limited resource and carefully used.
Understanding of Crude Oil conversion process
Crude oil is a dark, sticky liquid which can be used only after changing it.
At the first part of the process the crude oil must be heated until it boils.
Then the boiling oil turns into a mixture of gases in the column.
The gases flow up the column which is hottest at the bottom and cooler at the top.
The gases cool down as they go up the column until they condense (turn back into liquid again).
Then the boiling liquid is separated into different liquids and gases in a distillation column
Liquids from refining oil still must be changed to make them more useful.
The heavier liquids are in less demand from customers so are turned into lighter products that are in demand.
One of the processes is called catalytic cracking. It breaks down some of the heavy liquids from the distillation column.
The heavy liquids are changed into simple and more useful liquids and gases. Cracking is just one of many chemical changes in an oil refinery.
The separated liquids and gases, after cleaning and further processing, are used to make many products
These liquids are used to make petrol, paraffin, diesel, fuel, and lubricating oil.
Source: https://www.world-petroleum.org/edu/223-how-is-crude-oil-turned-into-finished-products-
Source: https://www.world-petroleum.org/edu/223-how-is-crude-oil-turned-into-finished-products-
Types of crude oil
Crude oil is divided into four main categories based on three factors: their viscosity, volatility, and toxicity.
Source: https://www.safewater.org/fact-sheets-1/2017/1/23/oil-spills
Viscosity refers to the oil’s ability to flow.
Higher viscosity oils do not flow as easily and therefore take more energy and effort to pump from the ground.
Volatility describes how quickly and easily the oil evaporates into the air.
Higher volatility oils need additional processes to control their environments during extraction to ensure that as little oil as possible is lost.
Toxicity refers to how poisonous and harmful the oil is to the environment, wildlife, and humans during the extraction and refinement process.
When oil spills do occasionally occur, each oil poses different challenges and priorities during the clean-up.
Based on the three factors, the four main types of Crude oil are:
1. Very light oils – Jet Fuel, Gasoline, Kerosene, Petroleum Ether, Petroleum Spirit, and Petroleum Naphtha.
They tend to be very volatile.
2. Light oils – These include Grade 1 and Grade 2 Fuel Oils, Diesel Fuel Oils as well as Most Domestic Fuel Oils.
They are both moderately volatile and toxic.
3. Medium oils – These are the most common types of Crude Oil.
They generally have low volatility and a higher viscosity.
4. Heavy fuel oils – These include the heaviest Grade 3,4,5 and 6 fuel oils along with heavy marine fuels.
These are the most viscous and least volatile crude oils as well as the most toxic.
Top global crude oil producers
Source: https://www.transportenergystrategies.com/2022/03/02/can-wealthy-nations-stop-buying-russian-oil/
Crude oil In India – A snippet
The major oil companies in India are:
- 1.Directorate General of Hydrocarbons
- 2.Oil and Natural Gas Corporation Ltd
- 3.Indian Oil Corporation
- 4.Oil India Ltd
Source: https://www.ibef.org/industry/oil-gas-india/infographic
Factors affecting crude oil prices
Crude oil prices are mostly determined by global supply and demand.
Economic growth is one of the biggest factors affecting petroleum products which in turn affect crude oil demand.
Growing economies increase demand for crude oil for transporting goods and materials from producers to consumers.
The world’s transportation sector is almost totally dependent on petroleum products such as gasoline and diesel fuel.
Many countries also rely heavily on petroleum fuels for heating, cooking, or generating electricity.
Petroleum products made from crude oil and other hydrocarbon liquids account for about a third of total world energy consumption.
Conclusion
Crude oil drives as an important resource which contributes major to the world’s economy even today as until now a proper alternative energy sources are not found properly.
Carbon-based fuels are widely used in transportation, heating, manufacturing, cooking and so on.
While global growth plays a major role in setting oil prices, demand and supply dynamics along with geo-political developments as well as technological innovations in crude oil extraction and selecting an alternative energy source are also important for crude oil.
PS: This blog is about an overview on what crude oil is and how it is refined and used. We can see the crude oil trade market briefly in a later blog.
Hope you guys enjoyed it. See you soon!!!