We live in what has been called the Petroleum Age. This hydrocarbon-rich mixture of crude oil and gases runs our factories, our cars, heats some homes and has provided Americans with an unprecedented standard of living since its discovery in America in 1859.

Petroleum is an extremely versatile substance; refining it creates everything from asphalt and gasoline to lighter fluids and natural gas, along with a variety of essential elements such as sulphur and nitrogen. Petroleum products are also vital ingredients (“feedstocks”) in the manufacture of medicines, chemicals and plastics.

Texas consistently has led the nation in petroleum production since the early 20th century.

Crude oil and other petroleum products found under Texas soil have been a major component of the Texas economy, in recent decades accounting for 10 to 25 percent of the Gross State Product. The combined oil and natural gas industry in 2006 employed 3.1 percent of the state’s workforce and paid that workforce $30.6 billion – 6.9 percent of all wages.1

Texas consistently has led the nation in petroleum production since the early 20th century. Currently, Texas also leads the nation in the consumption of petroleum products for many reasons, including the state’s reliance on electricity generated by natural gas, a petroleum product, for air conditioning and for its energy-intensive refineries and petrochemical plants.


People have used petroleum for thousands of years, for a variety of purposes. More than 4,000 years ago, natural seeps of a tar-like asphalt called bitumen were used to fortify walls and towers in ancient Babylon and Jericho. Ancient Persians used petroleum for medicine and light.

Fourth-century Chinese were the first to drill wells to collect oil and use it to fire boilers, evaporate brine and produce salt. In 1543, a Spanish expedition found oil floating on the surface of the water along the Texas coast and used it to caulk their boats.2

Gasoline accounts for roughly 47 percent of all refinery products.

The Petroleum Age began with the 1854 discovery of a new process to make kerosene from heavy crude oil.3 In August 1859 on Oil Creek near Titusville, Pennsylvania, Edwin L. Drake drilled down 69 feet and struck oil, creating the nation’s first oil well.4 Oil quickly proved to be a cheap, abundant and reliable feedstock for the manufacture of kerosene. Its use increased dramatically throughout the country, sparking an economic boom.

While coal continued to fuel industrial expansion in Europe and America, kerosene made from rock oil, the “new light,” rapidly replaced kerosene made from coal as a source of home heating and light. By the time of the introduction of the internal combustion engine in the early 20th century, the petroleum economy was well established.


Because of its chemical structure – long hydrocarbon molecules that can be “cracked” or recombined into shorter molecules with different characteristics – crude oil can be refined into everything from tar, gasoline, diesel and jet fuel to heating oil and natural gas. It is also an ingredient, or feedstock, for the manufacture of chemicals, fertilizer, plastic, synthetic fibers, rubber and even such everyday products such as petroleum jelly, ink, crayons, bubble gum, dishwashing liquids and deodorant.

A 42-gallon barrel of crude oil will yield 44.6 gallons of refined products; the difference is what producers call “refinery gain.” The greatest portion of a refined barrel of crude oil typically becomes fuel for transportation .


Depending on the season and oil quality, refiners adjust the proportion of fuels produced. For instance, refiners generally make more heating oil in the fall to prepare for winter markets, which can mean a slight cutback in gasoline production. In the spring, refiners reverse this allocation to produce more gasoline for the summer driving season.

Common Refined Products

Gasoline accounts for roughly 44 percent of all refinery products. Gasoline is not a single hydrocarbon, but may be a blend of several. In areas with air quality problems, ethanol or other additives may be added to gasoline to reduce emissions. (Ethanol is a biofuel that adds oxygen to gasoline – making it an “oxygenate” – so that it burns with fewer emissions; see Chapter 13 of this volume.) Gasoline also can occur naturally within crude oil, although this product is more unstable and volatile than refined gasoline.

In 2006, more than 312,000 Texans, or 3.1 percent of the state work force, were employed in the oil and natural gas industry.

Diesel fuel and heating oil are “distillates,” fuels distilled in refineries and blended with light oils. They are similar, although diesel has a lower sulphur content. Both fuels are available in three grades depending on the intended use. The highest grade of diesel (with the lightest hydrocarbons) fuels buses; the middle grade fuels railroad locomotives, trucks and automobiles; and the lowest grade fuels off-road vehicles such as agricultural and construction equipment. Diesel and heating oil account for about 23 percent of refinery products. Diesel has more energy per gallon than gasoline and is less volatile, but it also produces more emissions than gasoline.

Heating oil accounts for about 5 percent of refinery products. High-grade heating oil is used in portable outdoor stoves and heaters. Mid-grade heating oil fires medium-capacity residential or commercial burners. Low-grade heating oil is used in industrial and commercial burners.

Jet fuel, also called aviation gasoline, is kerosene blended to specifications for general and military aircraft. These specifications include a low freezing point (to keep fuel flowing at high altitudes), low combustibility (to help make handling safer and airplane crashes more survivable) and high energy content with low weight (to allow planes to gain and hold altitude).7 Jet fuel accounts for 9 percent of refinery products.

Heavy fuel oil, also known as residual fuel oil or “resid,” is used primarily for power, heat and electricity generation. The U.S. military uses resid to run steam-powered vessels. Resid accounts for 4 percent of refinery products.

Liquified petroleum gases (LPGs) are gases refined from crude oil or natural gas, liquefied under pressure for easy transportation. The term includes ethane, ethylene, propane, propylene, butane, butylenes, isobutane and isobutylene. LPGs account for 4 percent of refinery products (see Chapter 6 of this report).

Historically, the oil and natural gas industry have accounted for approximately 10 percent to 25 percent of the state’s GSP, a trend that roughly tracks the price of oil.

The remaining 17 percent of crude oil products are a wide variety of gases, liquids and semi-solids. Among the more common products, still gas, also known as refinery gas, is a generic term for any gas produced by refining crude oil. Still gases include methane, ethane, butane and propane. Although containing the same constituent elements as LPGs, still gas is used to fuel refineries and as a chemical feedstock. Road oil is any heavy petroleum oil used to stabilize paved roads. Asphalt is a thick tar used to pave roads and to make roofing materials and floor coverings.

The heaviest product, petroleum coke, is almost pure carbon and is the product that remains after all other hydrocarbons have been removed. Coke with low sulphur content is used as fuel for industries and power plants. Coke with high sulphur content is used as a catalyst in refineries.

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