Oil Industry

Oil Industry

What is crude oil? It is a mix of hydro-carbons of different lengths, these molecules contain hydrogen and carbon, and come in all kinds of sizes and configurations. It forms naturally from decomposed prehistoric plants and animals. Most of today’s energy needs are fossil fuels: Coal, Oil and Gas. These are non-renewable resources and took years to form. 2 billion years ago marine organism and microscopic animals and planets dies and settled on the ocean floor. Beneath other sediments in the Ocean and in the absence of oxygen, these fossils change into a substance called: Kerogen. Under heat and pressure Kerogen gradually changes into oil & gas. The whole process takes at least a million years. The constant movement and pressures of Earth squeezes oil & gas through the spaces between rocks. Some of the Oil & Gas reaches surface and seeks out naturally into land of water. Oil Reservoirs are formed, which are like vast sponges filled with Oil & Gas. To find deposits, geologists use techniques such as Seismic Surveys, Gravitational Surveys and Geological Mapping. New technologies, such as 4 dimensional projections and sophisticated renderings of rock structures are improving the way to find conventional oil and gas deposits. In today’s world, the challenge is to tap into unconventional Oil & Gas or alternative and renewable sources of energy from Biofuels, or the sun.  Oil has always been known to mankind, and it is surely the most famous and recognized natural resource. Due to their burning characteristics, the Babylonians dipped their torches in Oil and pitch. In drilling wells for water the Chinese came upon oil 600 years ago. Their power facilities remained limited and primitive. The American-Indians used oil as a medicine and ointment. In the 1800s, oil (that was used for lamps), started to become scarce after demand for artificial lamp was increasing. In a 1859 an oil well was built and started operations in Pennsylvania, USA. On August 27th, Edward Drake[46] and his associates began a new era that shown that oil in substantial quantities could be obtained by drilling. The oil boom led to towns and facilities being built in the region. Expertise in oil began to be on high demand. Wagons transported the oil to the nearest shipping points, which was replaced in 1865 for the first oil pipeline. Through refining plants, oil was divided into 2 main products on demand: illumination and heat for homes, and heavy lubricants. Gasoline quickly rose to prime demand with the rise of the automobile with the introduction of the internal combustion engine provided a demand that has largely sustained in the industry to this day. Availability of oil and access to it was introduced in WW1, with the introduction of motor transport, tanks and airplanes. Until the mid-1950s coal was still the world’s foremost fuel, but after this time oil quickly took over. In the 1970s following energy crisis in 1973 and 1979 and due to extensive media coverage, concern was brought that oil was a natural resource that will eventually run out. Today, 90% of vehicle fuels run oil, and petroleum makes up 40% of total energy consumption in the United States. It is used for vehicles and is the base of many industrial chemicals makes it one of the world’s most important commodities. The top three oil producing countries are Saudi Arabia, Russia and United States. About 80% of the world’s accessible reserves are located in the Middle East.    

The Shale Oil Revolution, however, has changed the game in the Oil Industry. Fracking, or horizontal drilling, is leading the US to be energy independent, it’s oil production surpassing Saudi Arabia’s and becoming an Oil Exporter again. Floods of oil in the market means pressure on the offer side, which brings the prices down in the short term (as explained in “Revolution 4.0 and the Man of Tomorrow – Post-industrialism, Inequality and Knowledge Based Economy”), but in the long term even more as the world realizes that Oil is not a scarce but a very abundant resource. What was scarce was cheap oil, but not thanks to Shale there will be abundant cheap oil as well. In the future, fossils fuels will be more and more replaced by alternative energies. According to Elon Musk[47], Owner and CEO of Tesla, fossils fuels will not be the first source of energy in 15 years. Now, there have been talks about alternative energies and the replacement of oil, and much has been done. This time it looks like it is for real, with one of the world’s best entrepreneurs leading the change to fight for a shift in the industry in hopes of improvement as well global climate. Whether the adoption of the electrical vehicle will be fast or not remains to be seen. Consider that vehicles consist not only of cars, but also trucks, busses, transports, etc. Oil is also used in chemical industry and for lubricants. Today, there is a downturn in the oil markets. My view is that in 15 years, the world will still have high demand of oil, but maybe not for the same industries or the same functions. With the Shale Revolution and the oversupply of oil however, the price remains to be seen. But there always be some sort of demand for oil, probably not at the same pace though. Consider though that CO2 emissions are hurting the planet’s ozone layer. If we are smart, like Elon Musk, we the people of Earth will try to transition to an eco-friendly fuel system.  It is the best way to save as all.