What Is Petroleum?

Petroleum is 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. Petroleum is formed when large quantities of dead organisms–primarily zooplankton and algae–underneath sedimentary rock are subjected to intense heat and pressure.

Petroleum is used as fuel to power vehicles, heating units, and machines, as well as being converted into plastics and other materials. Because the majority of the world relies on petroleum for many goods and services, the petroleum industry is extremely powerful and is a major influence on world politics and the global economy.

Key Takeaways

  • Petroleum is a naturally occurring liquid found beneath the earth’s surface that can be refined into fuel.
  • Petroleum is used as fuel to power vehicles, heating units, and machines, and can be converted into plastics and other materials.
  • The extraction and processing of petroleum, and thus, its availability, is a major driver of the world's economy and global politics.
  • Petroleum is a finite product that was created over millions of years. Once it is used up there will be no way to replace it.
  • Due to the harmful effects and limited supply of petroleum, other energy sources are becoming prominent, such as solar and wind.

Understanding Petroleum

The extraction and processing of petroleum, and thus, its availability, is a major driver of the world's economy and geopolitics. Some of the largest companies in the world are involved in the extraction and processing of petroleum, and many other companies create products that are petroleum-based, including plastics, fertilizers, automobiles, and airplanes, for example.

Asphalt, which is used to pave highways, is made from petroleum. Vehicles that drive on highways are made of materials derived from petroleum and run on fuels that are derived from petroleum.

Petroleum is recovered by oil drilling. After it has been recovered, it is refined and separated. It is most commonly refined into different types of fuels. Petroleum contains hydrocarbons of different molecular weights. In general, the denser the petroleum the more difficult it is to process and the less valuable it is.

Investing in petroleum means investing in oil, which can be done in a variety of ways, such as direct investing, which includes the purchase of oil futures or options, or indirect investing, which includes the purchase of exchanged traded funds (ETFs) that invest in companies in the energy sector.

In the petroleum industry, petroleum companies are divided into upstream, midstream, and downstream. This refers to an oil and gas company's position in the supply chain. Upstream oil and gas companies identify, extract, or produce raw materials. Downstream oil companies engage in business related to the post-production of crude oil and natural gas.

Midstream oil and gas companies connect downstream and upstream companies, typically by participating in the storage and transportation of oil and other refined products.

Types of Petroleum

Petroleum is a versatile fossil fuel that can be refined into many different products. Common examples include gasoline, kerosene, fuel oil, and lubricating oil. Gasoline is primarily used to power vehicles. It is used in cars, motorcycles, and other vehicles, as well as to power small engines, such as lawnmowers.

Kerosene oil is primarily used for light, such as burning in kerosene lamps, as well as for some heaters, and to make rocket fuel and jet fuel. Fuel oil is used in heaters and furnaces to heat interior spaces. Lubricating oil has many uses, primarily that of a lubricant, which is meant to reduce friction.

Advantages and Disadvantages of Petroleum


Most of our world is powered by petroleum. Without it, the world would look very different and many of our products would not exist. It provides transportation, heat, light, plastics, and an abundance of other uses.

As a fossil fuel, it is easy to extract. The process is not difficult and, therefore, makes the products affordable to many. As a fuel, it is an efficient power source. It has a high power ratio, meaning that a small amount of petroleum provides a large amount of energy.

As of 2019, the total proved reserves of oil on the planet was 1,733 billion barrels, while annual global consumption was about 36 billion barrels, meaning that if nothing changes, the supply of the world's oil will only last another 48 years.

Petroleum is also easy to transport, making its journey from extraction to refinement safe and simple. It can be moved across pipelines, trucks, and tankers without any issue. It is a stable energy source that can be used in many different ways. When compared to solar power or wind power, which are not as reliable or diverse in their uses, petroleum is far superior.


Petroleum is a part of our everyday lives; however, the extraction process and the byproducts of the use of petroleum are toxic to the environment.

Underwater drilling causes leaks, extraction from oil sands strips the earth and uses precious water, and fracking destroys the water table if done poorly or improperly.

Transporting petroleum through pipelines has the potential to destroy the local environment and shipping petroleum risks spills and uses energy.

Global petroleum use has had a negative impact on the wider environment because 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 has damaged water supplies.

  • Stable energy source

  • Easily extracted

  • Variety of uses

  • High power ratio

  • Easily transportable

  • Carbon emissions are toxic to the environment.

  • Transportation can damage the environment.

  • Extraction process is harmful to the environment.

How Is Petroleum Formed?

Petroleum is a fossil fuel that was formed over millions of years through the transformation of dead organisms, such as algae, plants, and bacteria, that experienced high heat and pressure when trapped inside rock formations.

What Is Petroleum Used For?

The uses of petroleum are many, including gasoline, fuel oil, kerosene oil, lubricating oil, plastics, which in turn are used for transportation, heating, light, lubricants, clothing, industrials, and more.

Is Petroleum Toxic to Humans?

Yes, petroleum is toxic to humans. The amount of toxicity depends on the specific form of petroleum exposed to as well as the amount and length of time. Exposure to petroleum can cause irritation to the skin, eyes, lungs, causing shortness of breath, nausea, dizziness, and extreme exposure can cause damage to the organs and cancer.

Is Petroleum Renewable?

Petroleum is not a renewable energy source. It is a fossil fuel that took millions of years to form and there is a finite amount of petroleum available. Once all the petroleum is used in the world it will be gone for good.

What Are Alternatives to Petroleum?

As society has advanced, and because of the harmful effects of petroleum and that it is a finite resource, society has come up with alternatives to petroleum. These alternatives include wind, solar, and biofuels. Wind power uses wind turbines to harness the power of the wind to create energy. Solar power uses the sun as an energy source, and biofuels use vegetable oils and animal fat as a power source.

The Bottom Line

Petroleum is a fossil fuel that is used widely in our day-to-day lives. In its refined state, it can be turned into gasoline, kerosene, fuel, and other uses, which as a society we use in transportation, lighting, heat, and more.

Petroleum is a finite material that once used up will not be able to be replaced. Its use is also harmful to the environment, as well as its extraction process. It is for these reasons that the use of alternative energy sources is being explored and implemented, such as solar and wind energy.

Article Sources
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  1. Discover. "Is the World Running Out of Oil?" Accessed Oct. 7, 2021.

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