Oil has been used for lighting many years ago but

 Oil has been used for lighting purposes for many thousands of years. In
areas where oil is found in shallow reservoirs, seeps of crude oil or gas may
naturally develop, and some oil could simply be collected from seepage or
tar ponds.
Historically, we know the tales of eternal fires where oil and gas seeps
ignited and burned. One example is the site where the famous oracle of
Delphi was built around 1,000 B.C. Written sources from 500 B.C. describe
how the Chinese used natural gas to boil water.
It was not until 1859 that "Colonel" Edwin Drake drilled the first successful oil
well, with the sole purpose of finding oil. The Drake Well was located in the
middle of quiet farm country in northwestern Pennsylvania, and sparked the
international search for an industrial use for petroleum.
Photo: Drake Well Museum Collection, Titusville, 

These wells were shallow by modern standards, often less than 50 meters
deep, but they produced large quantities of oil. In this picture of the Tarr
Farm, Oil Creek Valley, the Phillips well on the right initially produced 4,000
barrels per day in October, 1861, and the Woodford well on the left came in
at 1,500 barrels per day in July, 1862.
The oil was collected in the wooden tank pictured in the foreground. As you
will no doubt notice, there are many different-sized barrels in the
background. At this time, barrel size had not been standardized, which made
statements like "oil is selling at $5 per barrel" very confusing (today a barrel
is 159 liters (see units on p. 141). But even in those days, overproduction
was something to be avoided. When the "Empire well" was completed in
September 1861, it produced 3,000 barrels per day, flooding the market, and
the price of oil plummeted to 10 cents a barrel. In some ways, we see the
same effect today. When new shale gas fields in the US are constrained by
the capacity of the existing oil and gas pipeline network, it results in
bottlenecks and low prices at the production site.
Soon, oil had replaced most other fuels for motorized transport. The
automobile industry developed at the end of the 19th century, and quickly
adopted oil as fuel. Gasoline engines were essential for designing successful
aircraft. Ships driven by oil could move up to twice as fast as their coalpowered counterparts, a vital military advantage. Gas was burned off or left
in the ground.
Despite attempts at gas transportation as far back as 1821, it was not until
after World War II that welding techniques, pipe rolling, and metallurgical
advances allowed for the construction of reliable long distance pipelines,
creating a natural gas industry boom. At the same time, the petrochemical
industry with its new plastic materials quickly increased production. Even
now, gas production is gaining market share as liquefied natural gas (LNG)
provides an economical way of transporting gas from even the remotest
With the appearance of automobiles and more advanced consumers, it was
necessary to improve and standardize the marketable products. Refining
was necessary to divide the crude in fractions that could be blended to
precise specifications. As value shifted from refining to upstream production,
it became even more essential for refineries to increase high-value fuel yield
from a variety of crudes. From 10-40% gasoline for crude a century ago, a
modern refinery can get up to 70% gasoline from the same quality crude
through a variety of advanced reforming and cracking processes.

 Chemicals derived from petroleum or natural gas – petrochemicals – are an
essential part of the chemical industry today. Petrochemistry is a fairly young
industry; it only started to grow in the 1940s, more than 80 years after the
drilling of the first commercial oil well.
During World War II, the demand for synthetic materials to replace costly
and sometimes less efficient products caused the petrochemical industry to
develop into a major player in modern economy and society.
Before then, it was a tentative, experimental sector, starting with basic
• Synthetic rubbers in the 1900s
• Bakelite, the first petrochemical-derived plastic, in 1907
• First petrochemical solvents in the 1920s
• Polystyrene in the 1930s
And it then moved to an incredible variety of areas:
• Household goods (kitchen appliances, textiles, furniture)
• Medicine (heart pacemakers, transfusion bags) 

• Leisure (running shoes, computers...)
• Highly specialized fields like archaeology and crime detection
With oil prices of $100 a barrel or more, even more difficult-to-access
sources have become economically viable. Such sources include tar sands
in Venezuela and Canada, shale oil and gas in the US (and developing
elsewhere), coal bed methane and synthetic diesel (syndiesel) from natural
gas, and biodiesel and bioethanol from biological sources have seen a
dramatic increase over the last ten years. These sources may eventually
more than triple the potential reserves of hydrocarbon fuels. Beyond that,
there are even more exotic sources, such as methane hydrates, that some
experts claim can double available resources once more.
With increasing consumption and ever-increasing conventional and
unconventional resources, the challenge becomes not one of availability, but
of sustainable use of fossil fuels in the face of rising environmental impacts,
that range from local pollution to global climate effects.

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