Petroleum, or crude oil is a fossil fuel. It is the result of organic matter transforming
into hydrocarbons over millions of years. Generally buried in the form of a deposit,
crude oil sometimes appears on the surface of the earth, which is why it has been known
to man since ancient times. Around the world, oil was used as sealing
material in construction and for medical purposes. But it is only in the middle of the 19th century
that its consumption would explode. Europe and North America, in the midst of
industrial revolution, have rapidly increasing energy requirements that are mainly met by coal. Interest in oil intensifies throughout the
world. From the Russian Empire, to Europe, to North America, the first modern drilling location. In the United States, this causes a rush of
black gold and the country became the largest oil producer in the world. Initially, distilled oil replaces the burning
of whale oil in lamps. It offers a better calorific value than coal
and is easier to transport than gas. Oil consumption rises in the early 20th century,
especially in the field of transport, with the development of the automobile, the reconversion of ship engines, and the aviation boom during the World War I. Crude oil, once extracted, is distilled in
a refinery to separate the hydrocarbons as needed. The lighter molecules evaporate to the top
of the distillation column where the temperature is around 20 degrees Celsius. Liquefied Petroleum Gases are harvested and
used, among other things in lighters and in kitchens. Between 30 and 105 degrees Celsius, gasoline
for cars is produced. Between 105 and 160 degrees Celsius, naphtha
is created, used in petrochemicals in order to create plastics, synthetic textiles, drugs
and cosmetics. Between 160 and 230 degrees Celsius, kerosene
is obtained for aviation. Between 230 and 425 degrees Celsius, diesel is created for cars and heating oil for domestic purposes. Finally, the thick, high-sulfur residue is
heated to above 450 degrees Celsius to form heavy fuel oil used by ships, and to obtain
bitumen used for road construction and roofing. Crude oil was transported in barrels with
a capacity of 42 US gallons, or slightly less than 159 liters. The barrel thus became the unit for setting
oil prices. More and more oil deposit discoveries are
made worldwide, including in Venezuela which becomes the second largest global producer. In the Middle East, where Britain is present,
Western companies seize the new market, giving a portion of their profits to the local country
through royalties. During World War II, demand for oil skyrockets
and the resource becomes a major international issue. At the end of the war, the United States signs
an alliance with Saudi Arabia, guaranteeing security of the country in return for privileged access to its oil. Western companies dominating oil markets contribute
to nationalist movements in producer countries. In Saudi Arabia, an agreement is signed allowing
the country to receive 50% of oil profits. In Iran, negotiations with the Anglo-Persian
Oil Company fail, following which the prime minister nationalizes the country's oil. In response, the US and the UK secretly organize
a coup to overthrow the prime minister. The Shah of Iran remains in power and then
allows the exploitation of oil in the country by a consortium of Western companies. In the USSR, the discovery of oil fields in Western Siberia pushes the country to invest in its exploitation. Plentiful and cheap oil overtakes coal to
become the primary source of energy in the world. So far, its price remains below 3 dollars
a barrel. Five major oil-producing countries decide
to unite to derive more benefits. They create OPEC, the Organization of Petroleum
Exporting Countries. Together, they want to counter the dominance
of Western companies, to increase oil prices and to have a common policy. The organization would gradually be joined
by new nations. In 1972, the United States reaches peak production
and is forced to import oil to meet its increasing needs. As the United Kingdom withdraws from the Middle
East, security in the region is provided by Iran and Saudi Arabia which are armed by the
West. After the Yom Kippur War between Israel and
the Arab states of Egypt, Syria and Jordan, OPEC for the first time uses oil as a political
weapon. An oil embargo is imposed on Israel's allies
and production slows to inflate the price of oil. This is the first oil crisis which hits industrialized countries whose economies now depend on the black gold. Countries try to reduce their oil consumption
and invest in alternatives such as nuclear and hydro power, or reinvest in coal. Oil companies in turn explore the world in
search of new deposits. Sources at sea, called offshore sites, are
discovered and exploited, particularly in the North Sea. The Soviet Union becomes the largest producer
of oil in the world, while in the United States, production increases with the exploitation
of Alaskan oil. In 1979, the Iranian revolution takes place. The Shah's regime is overthrown and replaced by an Islamic republic that sets up an anti-Western policy. Oil production in the country falls, causing
the second oil crisis. Following border disputes, tensions between
Iran and Iraq lead to 8 years of war. Globally, non-OPEC oil production rises and
exceeds production by OPEC countries. Henceforth, supply and demand sets the price
of a barrel rather than OPEC. However, for industrialized countries, the
stability of the Middle East still remains a priority. Thus when Iran and Iraq begin to target oil
facilities in the Persian Gulf, hundreds of Western military vessels step in to ensure
the supply of oil. At the end of the war, Iraq is weakened and
indebted to Saudi Arabia and Kuwait. But having received large amounts of military equipment, the country has the most powerful army in the region. Iraq takes advantage of this situation to
invade Kuwait following a border dispute. An international coalition is formed under
the UN, and led by the United States, to intervene and neutralize the Iraqi army. This time the United States establishes a
permanent presence in the region by installing military bases and signing defense agreements
with Gulf monarchies. The country imposes a series of embargoes
against Iran and Iraq, which it considers rogue states. Saudi Arabia, for its part, wants to once
again become a major producer of oil. The country has the largest known oil reserves
in the world and floods the market to become the largest producer of crude. In Russia, new investment revives the oil
industry. But as the price of oil is low, and offshore
operations unprofitable, oil companies find themselves in difficulty. In 1998, they begin to merge together and
combine forces. 6 giant oil companies are born that would
become the richest and most influential in the world. In the Middle East, the military presence
of the United States begins to raise concern. On one hand, radical Islamists do not want
the presence of an Israeli ally on their soil. On the other, some consider the sanctions
imposed on Iraq and Iran as too heavy. On September 11, 2001, the United States becomes
the target of a major terrorist attack on its territory. 15 of the 19 terrorists were Saudis, raising
grave concerns. The US actively seeks new sources to reduce
oil dependency on the Saudis. In Africa, production accelerates after the
discovery of large offshore fields off the Gulf of Guinea. In the Middle East, the United States invades
Iraq under the pretext of its war against weapons of mass destruction. A few years later, the country's oil would
be back on the international market. Iran for its part opens its market to new
rising Asian powers, such as China and India. The abundant supply of oil in the world stimulates
the economy. Growth skyrockets, mainly in emerging countries. In addition, Wall Street traders speculating
on black gold, pushes prices further upward. But the financial crisis of 2008 would cause
a sharp drop in prices. Venezuela, over a few years, discovers
it holds the largest known oil reserves in the world, putting it ahead of Saudi Arabia. With more global demand for oil, its price
rise again. The "unconventional" exploitation of petroleum
becomes profitable despite the difficulty in its pumping and treatment. Thus in Canada and Venezuela, oil companies
rely on the exploitation of huge oil sand deposits. As this thick bitumen is found near the earth’s
surface, forests are razed to extract the oil. It is then transformed with more expensive,
highly polluting techniques. While offshore now provides 30% of global production, oil companies try exploiting deeper deposits. In the Gulf of Mexico, an attempt to make
the deepest borehole in the world fails, causing one of the world’s worst known oil spills. In the United States, improved technologies, such as fracking, now make it possible to pump shale oil, the reserves of which seem
enormous. This oil is wedged between different layers
of solid rock. A fluid is injected at high pressure to break the rock and release the black gold which is then pumped. Numerous such reserves discovered in the United
States cause to the country's production to explode. The fact that the biggest oil consumer in
the world becomes a bigger producer does not please its Saudi ally. Saudi Arabia then wants to make the production
of unconventional oil unprofitable by dropping prices. To achieve this, Saudi Arabia persuades OPEC
to flood the oil market. The price of the barrel drops, making oil
production barely or sometimes not at all profitable. But the oil industry of the United States
resists and continues to increase its production. With oil abundant and cheap, world consumption
continues to rise and approaches 100 million barrels per day. Two-thirds of the oil used in transportation
industry is the main emitter of CO2. In the maritime sector, heavy fuel oil used
by ships emits 3,500 times more sulfur than diesel fuel, causing severe air pollution. The United States and Europe react by creating
zones where heavy fuel consumption is prohibited. Since the beginning of the modern era of oil,
many oil spills cause major environmental damage, with the Niger Delta probably being the most affected region with 60 years of oil spills largely ignored. Saudi Arabia undergoes its own policy changes,
being faced in recent years with a large fiscal deficit. OPEC countries are forced to appeal to other
producing countries to together try boosting the price of oil. This inlude Russia, the second largest crude exporter in the world. The United States, in contrast, continues
to increase production to keep prices low and to support growth and the economy. The country eventually becomes the largest
oil producer in the world. While IPCC experts are sounding the alarm
and call for drastically reducing CO2 emissions to limit global warming, we have currently
found enough oil to carry on for at least another 50 years at current rates. Saudi Arabia now speaks of diversifying its
investments to prepare for the post-oil era. Iran, which has the 3rd largest oil reserves
in the world, suffers since 2018 from sanctions imposed by the United States aimed at choking
its oil sales. In Venezuela, the countryy is hurt by the low
oil prices and the country never really benefits from its huge reserves. Political instability could potentially impact exports, which currently mainly benefits China and Russia. Meanwhile, oil companies remain among the
most powerful entities in the world. In 2017, five of them figure in the list of
global top 10 companies with the highest turnover. The International Maritime Organization imposes
drastically reduced sulfur emissions goals for vessels by 2020. This could force the industry to abandon heavy
fuel oil in favor of other hydrocarbons, which may push up its demand and price. If the price of a barrel increases, the exploitation
of unconventional oils could restart with renewed vigor. This includes areas such as the Arctic, which
shows promise of holding vast deposits. And with polar ice caps melting, it makes
it possible to explore new areas potentially rich in oil.
