Oil is the world’s most widely used energy resource. Products refined from crude oil such as gasoline, diesel fuel and heating oil account for nearly 40 percent of global energy supply. Products from oil also are used in a wide variety of non-energy products including plastics, asphalt, lubricants and paints.

The United States is the world’s largest oil consumer, using almost 21 million barrels of oil each day. (One barrel is the equivalent of 42 gallons.) About 70 percent of the oil used in the U.S. goes into the transportation sector of the economy, where it fuels cars, trucks, planes and trains. The remainder goes into industrial uses, electric power generation and residential and commercial applications.

Some of the leading energy products from oil are:
• Gasoline
• Heating oil and diesel fuel
• Propane

The United States is the world’s third largest crude oil producer behind Russia and Saudi Arabia. Domestic oil production peaked in the early 1970s and has been in a gradual decline ever since. In 2006 domestic oil wells produced about 7 million barrels a day of oil and natural gas liquids, the basic raw materials for the nation’s approximately 150 refineries. To meet demand, about 60 percent of the country’s supply of oil and petroleum products is imported from Canada, Mexico, Venezuela, Persian Gulf nations and several other countries.

The price of crude oil has risen dramatically over the last several years, in part because of the increasing costs of developing resources in more remote areas and under more complex operating circumstances. Tighter global supplies have also driven up oil prices. When adjusted for inflation, oil prices reached a peak of more than $75 a barrel in 1981.

Advantages
Oil is a tremendously versatile raw material that can be transformed through refining processes into highly efficient fuels as well as essential ingredients for thousands of everyday products. Although oil development requires some disturbance to the natural environment, it requires much less space than energy mining operations such as surface coal mining. Huge amounts of energy can be produced through openings just a few inches in diameter in the earth’s surface.

As a liquid, oil can be moved great distances economically through pipelines and ocean-going tankers. Produced oil also is relatively easily to store either above ground in tanks or in underground salt caverns. To help ease the impact of a major supply disruption in oil imports, the federal government stores about 700 million barrels of oil in the Strategic Petroleum Reserve, located in five locations along the Gulf Coast.

Oil is discovered and produced throughout the world, but the largest known reserves are located in the Middle East, Russia and Africa. Although the United States is considered a “mature” oil-producing region, modest discoveries continue to be made regularly and advanced technologies are helping recover more oil from older fields. Among world oil producers, the United States ranks 11th in terms of proved petroleum reserves (not including oil sands).

Issues
Drilling for oil requires great care to avoid disturbing land and ocean habitats. Thanks to technologies developed over the last two decades, it is now possible to find and develop oil resources with fewer wells and with much smaller well sites or “footprints.”

Oil spills are another important concern in both the development and transportation of oil. The increasing use of double-hulled oil tankers, combined with advanced navigation technologies, have greatly reduced the dangers of oil spills on the seas and in harbors. Oil spills from offshore drilling activities also have been largely eliminated in the United States as a result of improved drilling and production techniques. The last major oil spill from oil development in the United States occurred in 1969. 

For More Information
Oil Market Basics, a comprehensive Web site by the federal Energy Information Administration, furnishing an overview of oil markets and how they function.
This Week in Petroleum, a weekly overview of factors influencing the price and supply of gasoline, diesel (distillates), propane and crude oil, compiled by the U.S. Energy Information Administration.
United States Energy Analysis Brief - Oil, a report by the U.S. Energy Information Administration that provides an overview of the nation's oil and petroleum products demand and supply.
Refining Overview, a general section by the American Petroleum Institute (API) covering recent developments in capacity, efficiency and safety.
U.S. Imports by Country of Origin provides a list of the monthly quantities of crude oil and petroleum products imported to the United States compiled by the U.S. Energy Information Administration.
Petroleum Products Overview capsules the major factors influencing the market for oil-based products in the United States, as prepared by the U.S. Energy Information Administration.