Why petroleum matters

Oil and gas are used in almost every aspect of modern life – in our homes, in businesses, in industry and for travelling. Oil not only fuels the cars and trucks that we drive and aeroplanes that we fly but also provides plastics and chemicals, as well as many lubricants, solvents, waxes, tars and asphalts. Nearly all pesticides and many fertilizers are made from oil or oil by-products. Similarly, gas is one of the most important fuels for generating electricity. It can also be directly burnt for cooking, and for heating houses, buildings and water. It is an important fuel for powering many industrial operations, including iron and steel foundries, aluminium or nickel smelters and many manufacturing industries. Both oil and gas are important petrochemical feedstocks for producing fertilizers and a wide range of industrial and consumer goods, including plastics and polymers, textiles and paints, detergents and perfumes.

Partly because of its wide usage, oil becomes the largest single item in international trade, measured in value terms. It is also the most actively traded commodity in centralized exchanges such as the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE). The significance of oil and gas as energy resources is best demonstrated by their shares in world total primary energy supply (TPES). As shown in Figure 1.1, even with the boost of renewables in recent years, oil and gas together still provided more than 50 per cent of world primary energy supply as of 2016.

For statistical purposes, the use of oil and gas is usually categorized into energy use and non-energy use. When they are burnt to produce energy or transformed as another fuel, it is referred to as energy use. Energy use can be further divided into four sectors: residential, commercial, industry and transportation. Non-energy use includes those used as raw materials in the different sectors – that is, not consumed as a fuel or transformed into another fuel.