| With all the publicity nowadays surrounding the price of | | | | Petroleum products are priced like most commodities: |
| Crude Oil, I resolved to write an enlightening article on | | | | supply and demand. While this may sound simple, the |
| the backdrop of the so-called "Black Gold." I'll briefly go | | | | actual start to finish process can be a lot more |
| over history, environmental effects, pricing and the | | | | complex subject. References to oil prices are generally |
| future of the thick black sludge that is coveted by | | | | related to the spot price of either WTI/Light Crude as |
| every major economy in the world. Hopefully you can | | | | traded on New York Mercantile Exchange (NYMEX). |
| reach a better point of view on the subject. | | | | Priced by the barrel, Crude Oil is rapidly becoming the |
| The history of Crude Oil is too immense to discuss in | | | | most costly commodity on the market (second only to |
| this brief editorial so I will limit it to a general overview. | | | | Gold). |
| The first oil wells were drilled in China in the 4th | | | | Oil pricing is extremely reliant on both its grade and |
| century. They where as much as 243 meters deep | | | | location. The vast majority of oil will not be traded on |
| and were drilled utilizing drill bits attached to bamboo | | | | an exchange but on an over-the-counter basis, |
| poles. The contemporary history of crude began in | | | | typically with reference to a standard crude oil grade |
| 1846, with the breakthrough of the process of refining | | | | that is quoted via a pricing agency such as Argus |
| kerosene from coal by Atlantic Canada's Abraham | | | | Media Ltd or Platts. It is often claimed that OPEC |
| Pineo Gesner. The first rock oil mine was built in | | | | arranges the oil price and the real monetary value of a |
| Bobrka, Poland the following year. These | | | | barrel of oil is in the area of $2, which is equivalent to |
| breakthroughs rapidly spread around the world, and | | | | the cost of extraction of a barrel in the Middle East. |
| Meerzoeff built the first Russian refinery in the mature | | | | These appraisals of costs disregard the cost of finding |
| oil fields at Baku in 1861. | | | | and developing oil reserves. |
| James Miller Williams in Oil Springs, Ontario, Canada in | | | | You can't talk about the future of oil without talking |
| 1858, excavated the first commercial oil well drilled in | | | | about the "Hubbert Peak" oil theory. This hypothesis |
| North America. The American petroleum industry | | | | depicts the long-term rate of production of |
| commenced with Edwin Drake's discovery of oil in | | | | conventional oil and other fuels. It assumes that oil |
| 1859, near Titusville, Pennsylvania. The industry matured | | | | reserves are not replenishable. It also predicts that |
| slowly in the 1800s, driven by the demand for | | | | future world oil production must unavoidably reach a |
| kerosene and oil lamps. It became a major national | | | | crest and then decline as these reserves are |
| business in the early part of the 20th century. With the | | | | exhausted. Like every other theory of any importance |
| introduction of the internal combustion engine came a | | | | it is highly controversial. "When will the Oil actually start |
| need that has largely sustained the industry to this day. | | | | to run out?" is the big question. |
| While we all need to get to work in some way or | | | | No matter how you look at it, our society needs to |
| another, rarely does anyone consider the | | | | concentrate more efforts on either alternative fuels or |
| environmental effects of the fuel that powers our | | | | more fuel-efficient modes of transportation. While I'm |
| mode of transportation. Yes we know that the | | | | sure that the oil won't peter out in my life time I would |
| emissions from are cars, buses and trains have a | | | | like to think we can leave this world a better place for |
| green house effect on our delicate environment; but | | | | future generations. |
| what about the rest of our ecology? | | | | In closing, I hope this article has given you a better |
| Oil extraction is costly and occasionally environmentally | | | | understanding of the topic and made you a more |
| detrimental, although Dr. John Hunt from the Woods | | | | informed consumer. So the next time your grumbling at |
| Hole Oceanographic Institution revealed in a 1981 paper | | | | the price of gas, at least you'll understand what you're |
| that over 70% of the reserves in the world are | | | | complaining about. If you would like to read more on |
| associated with visible macroseepages, and numerous | | | | the topic of Crude Oil, you can vistit or read one of the |
| oil fields are found due to natural leaks. Offshore | | | | books listed at the end of this article. |
| exploration and extraction of oil agitates the | | | | Books about the petroleum industry: |
| encompassing marine environment. Exploration could | | | | James Howard Kunstler (2005). The Long Emergency: |
| call for dredging, which stirs up the sea bottom, | | | | Surviving the Converging Catastrophes of the |
| stamping out the ocean plants that nautical creatures | | | | Twenty-first Century. Atlantic Monthly Press. |
| need to survive. Not to mention the typical Crude Oil | | | | C.J. Campbell (2004). The Coming Oil Crisis. |
| and refined fuel spills from tanker ship accidents. All of | | | | Peter Odell (2004). Why Carbon Fuels Will Dominate |
| these factors have tainted frail ecosystems all over | | | | the 21st Century's Global Energy Economy. Multi |
| the world. | | | | Science. |