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In the final phase, the downstream phase basically refers to
refining and distribution, is what I would think of it.
So there's really two types of transformation
of the crude petroleum into usable products.
We, when we say refining, we're generally
talking about transformation of crude petroleum into a
form of petroleum that is usable with
whatever the technology is that consumers want to use.
If I want to fly a jet airplane, then I need jet fuel.
If want to go drive a car, I need gasoline.
You know, if I want to heat my home, I need fuel oil.
Things like that.
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Some fraction, as we saw when we discussed the petroleum, the market for petroleum,
some fraction of oil is actually used to produce goods
that are consumed for whatever services we get out of those goods,
not necessarily for the energy that's
embodied in the goods produced from petroleum.
So for instance, the paint, the thing we value is the color
or the protective aspect that it provides to the things that we paint.
There are plastics and fibers and all kinds of
other things that we can make out of petroleum.
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Where the end use of that petroleum is
not necessarily consuming the energy embodied in the petroleum.
And then, after whatever good is made out of it, whether it's a refined
product or some petrochemical, then there's going to
be a whole, wholesale and retail distribution
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dimension to the downstream part of the business.
So let's recall our discussion of the
global distribution of production and consumption last week.
We'll just do a, a little bit of brief review.
We'll recall on the production side that the major producer here is
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the Middle East, and importantly, this is also where a lot of the growth over the
last, say, 25 years or so, has been in production.
Also, significantly, we see a good amount of growth here, I would say, in, in
the South and Central America region, although
that was starting from a much smaller base.
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Now on the consumption side, the bulk of the
consumption is coming, of course, from North America and Europe.
But importantly, over the last 25 years, the bulk of
the growth in petroleum consumption has actually come from Asia.
In fact, that growth, to some degree, explain
some of these upticks we've seen, you know, here
in North America, for instance, a bit of
growth in the last several years in petroleum production.
Okay, so basically, consumption dominated by Europe and the Americas
still, but the greatest growth here in the Asia region.
And actually, we see a good amount of growth here in the
Middle East, even though it is growing from a relatively small base.
But basically, emerging, you know, emerging economies is, is how we
think of those places where we're seeing all of the growth.
Now here in the U.S., if we ask where's
the oil produced, you know, we see some familiar names.
We've got the southwest region here, Oklahoma and
Texas, where a lot of oil has been produced.
Actually, the Gulf of Mexico would be second
after Texas if that were considered its own state.
So the gulf region in general of these areas, we
might think of as producing a lot of the nation's oil.
We've got a few other stories to tell among these leading states.
Here, California has a very long history of petroleum production around
Bakersfield, and a heavy oil, off shore oil Ventura, California, places like that.
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is is, had no good 50 plus year of production history, but really
the bulk of it was since the late 70s when the North Slope in Alaska came online.
And right now, number 2, which would be number 3 after the Gulf of Mexico,
but is a relative newcomer, at least to large producing states.
And that's North Dakota, and that's really in last just few years with the shale oil
revolution that's taken off, that we're, we're seeing
huge growth in production out of North Dakota.
So that's where a lot of the production around the U.S. is coming from.
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Michael J. OrlandoLecturer
