DEFINITION of 'Petroleum'

A naturally occurring liquid found beneath the Earth’s surface that can be refined into fuel. Petroleum is a fossil fuel, meaning that it has been created by the decomposition of organic matter over millions of years. It is formed in sedimentary rock under intense heat and pressure.


The modern world owes its existence to petroleum. Some of the largest companies in the world are involved in the extraction and processing of petroleum, with other companies creating products that either require hydrocarbons to operate or are petroleum-based: plastics, fertilizers, automobiles, and airplanes. Asphalt, which is used to pave highways, is made from petroleum.

Petroleum is most often associated with crude oil and the wells dug into the ground to bring that liquid to the surface. The liquid can vary in color: from relatively transparent to dark brown or black. Heavier oils are often the darkest in color. Petroleum contains various types of hydrocarbons, and natural gas is often found dissolved in the liquid in significant amounts. The hydrocarbons can be processed in refineries into different types of fuels. Hydrocarbon molecules in petroleum include asphalt, paraffin, and naphthene.

Petroleum is comprised of a mixture of various hydrocarbons, and can have different chemical and physical properties depending on where it is found in the world. In general, the more dense the petroleum the more difficult it is to process and the less valuable it is. “Light” crude is the easiest to refine and are generally considered the most valuable, while the viscosity of “heavy” crude makes it more expensive to refine. “Sour” crude contains sulfur and sulfuric compounds, which makes the fuel less valuable.

Global petroleum use has had a negative impact on the environment, as the carbon released into the atmosphere increases temperatures and is associated with global warming. Many products created with petroleum derivatives do not biodegrade quickly, and the overuse of fertilizers can damage water supplies.