Crude oil is extracted from the earth by use of oil wells and rigs. Some of the earliest examples of oil wells were found in 347 A.D. in ancient China, where workers used bamboo poles to help them remove the oil from the ground. This oil was used as a fuel for the then thriving Chinese salt industry. During the 1950s crude oil replaced whale oil to become the global choice for fuel.
People who work in the industry are familiar with the different names of oil such as West Texas Intermediate (WTI), Brent Light, Dubai Crude, and Bonny Light. There are also different grades or types of crude: light, heavy, sweet, and sour. Low-density viscosity characterizes light oil, conversely heavy oil has a higher density. Sweet oil has lower sulfur content when compared to sour oil. As a general rule of thumb, globally light sweet crude oil is highest in demand because it requires the least amount of refinement for use as a fuel.
The gasoline that you pump into your vehicle is an almost clear liquid, and it is derived from a very viscous black liquid that is extracted from the ground. In addition to gasoline, the raw crude is used to produce other products such as plastics, jet fuel, kerosene, heating oil, and even crayons!
While the particulars vary according to which region of the world from which the crude oil was extracted, as a guideline, crude is comprised of the following elements and compounds:
Oxygen: Less than 1%
Metals: Less than 1%
Salts: Less than 1%
Nitrogen: Less than 1%
While a full chemistry lesson and explanation of the extraction and refining process is beyond the scope of this article, we can mention that the most common means of separating out the components from crude oil is through a method called fractional distillation, and this works by heating the oil to extreme temperatures. This works because each component has a different boiling point, so it makes it possible to isolate what is needed. Modern techniques can refine this further by breaking up the hydrocarbons so that diesel fuels can be processed into gasoline if there is an increased demand in the market. Impurities are removed, and the fuel is stored locally on site until it is eventually shipped to market for consumption. In recent history an alternative source for crude oil has been increasing in popularity, shale and tar sand. Read this book to learn more about crude oil, and how to profit from the price fluctuations of this important commodity.
Ashbee A. Bakht is an international best-selling author who holds a degree in psychology from Brock University, Canada and he attained his postgraduate education in minerals and mining at the prestigious Norman B. Keevil Institute of Mining Engineering, at the University of British Columbia, Canada. As a professional commodities trader and arbitrage specialist, Ashbee’s strength can be found in taking positions based on economic forecasts of trends and seeking out arbitrage opportunities. Ashbee specializes in trading crude oil, gold, silver, and other base metals.