--- title: What Is Crude Oil? | How to Divest & Why It Is Important description: Learn about crude oil, what it is, and where it comes from. Understand its extraction process and find out how you can divest responsibly. image: https://www.carboncollectiveinvesting.com/hubfs/What_Is_Crude_Oil.png --- [![Carbon collective](https://www.carboncollectiveinvesting.com/hubfs/raw_assets/public/CarbonCollective_August2021%20copy/images/carbon-collective-green-investing-logo-white.4f6047d4.svg "Carbon collective")](https://www.carboncollectiveinvesting.com/) - About - Employers - [Sustainable 401(k)](https://www.carboncollectiveinvesting.com/401k) - [401(k) Comparison Tool](https://www.carboncollectiveinvesting.com/401k/plan-comparison-tool) - Individuals - [FAQ](https://www.carboncollective.co/en/knowledge/faqs) - [ETF](https://www.carboncollectivefunds.com/) - Learn - [Sustainable Investing](https://www.carboncollective.co/sustainable-investing) - [Investing Basics](https://www.carboncollective.co/sustainable-investing/investing-basics) - [Blog](https://blog.carboncollective.co/) - [Tools](https://tools.carboncollective.co/calculator/) - Log in - [Carbon Collective](https://app.carboncollective.co) - [Altruist](https://app.altruist.com) [Talk to a human](https://ask.carboncollective.co/f4o5dylkg) [Sign up](https://app.carboncollective.co/sign-up) [Log In](http://app.carboncollective.co/) [![Carbon collective](https://www.carboncollectiveinvesting.com/hubfs/raw_assets/public/CarbonCollective_August2021%20copy/images/carbon-collective-green-investing-logo.53b28bee.svg "Carbon collective")](https://www.carboncollectiveinvesting.com/) - About - Employers - [Sustainable 401(k)](https://www.carboncollectiveinvesting.com/401k) - [401(k) Comparison Tool](https://www.carboncollectiveinvesting.com/401k/plan-comparison-tool) - Individuals - [FAQ](https://www.carboncollective.co/en/knowledge/faqs) - [ETF](https://www.carboncollectivefunds.com/) - Learn - [Sustainable Investing](https://www.carboncollective.co/sustainable-investing) - [Investing Basics](https://www.carboncollective.co/sustainable-investing/investing-basics) - [Blog](https://blog.carboncollective.co/) - [Tools](https://tools.carboncollective.co/calculator/) - Log in - [Carbon Collective](https://app.carboncollective.co) - [Altruist](https://app.altruist.com) [Talk to a human](https://ask.carboncollective.co/f4o5dylkg) [Sign up](https://app.carboncollective.co/sign-up) [Log In](http://app.carboncollective.co/) **[Home](https://www.carboncollectiveinvesting.com/) > [Sustainable Investing](https://www.carboncollectiveinvesting.com/sustainable-investing) >** Crude Oil # Crude Oil ![](https://www.carboncollectiveinvesting.com/hubfs/zach-stein.jpeg) Written by Zach Stein | Reviewed by [Subject Matter Experts](https://www.carboncollectiveinvesting.com/subject-matter-experts) Updated on October 1, 2024 Fact Checked Why Trust Carbon Collective? ### Table of Contents ## **What Is Crude Oil?** Crude oil is a naturally occurring mixture of hydrocarbons- hydrogen and carbon atoms found in underground reservoirs or on the near-surface of oil sands. Crude oil remains liquid at atmospheric pressure after passing through separating facilities. The crude oil color ranges from light yellow to dark brown or black. The crude oil types include Light Volatile Oils, Non-Sticky Oils, Heavy Stick Oils, and Non-fluid Oils. ## **Where Does Crude Oil Come From?** Crude oil is formed from the remnants of dead organisms like algae and zooplankton that existed millions of years ago. As these organisms lived, they absorbed energy from the sun and stored it as carbon molecules within their bodies.  Once they died, the remnants of these organisms sank to riverbeds or the bottom of the oceans and were buried in layers of rock, sand, and mud. The immense pressure, high temperatures, and lack of oxygen changed the organic matter into a waxy substance known as kerogen.  With even more heat, high temperatures, and time the kerogen goes through a process called catagenesis, which transforms the kerogen into hydrocarbons. After which, the hydrocarbons formed a crude oil. ## **How is it Extracted?** Crude oil extraction mostly depends on geology while also using different methods.  Crude oil is classified as light, medium, heavy, or extra heavy. Generally, light and medium crude oil are extracted from the ground using [vertical drilling](https://www.investopedia.com/terms/v/verticalwell.asp#:~:text=A%20vertical%20well%20is%20a,more%20modern%20counterpart%2C%20directional%20drilling.) and pumping.  However, extracting heavy oil often requires advanced technology since it has a thick consistency that does not flow easily. ## **What are its Uses?** Crude oil can be used in a wide range of products in their production.  Thus, crude oil is commonly used to create fuel for vehicles, generators, heaters, and other equipment.   Other uses of crude oil that go beyond fuels include: ### **Plastics** The production of plastics typically uses crude oil, and this resource is in high demand since so many [products use plastic](https://www.epa.gov/facts-and-figures-about-materials-waste-and-recycling/plastics-material-specific-data). ### **Clothing Materials** Petroleum is necessary for the creation of clothing. It aids in the creation of clothing that is non-flammable and colorful. Polyester, nylon, rayon, and some fake furs also utilize crude oil. ### **Products in your Home** Numerous appliances found in the home or kitchen are created using crude oil, such as a couch or other furniture with a cushion, flooring, and refrigerator. ### **Food Production** Crude Oil is also used for producing food items, fertilizers to grow food, transportation for delivering food, and packaging food. ### **Transportation** Cars also use crude oil for their manufacturing. The car’s interior, bumper, and engine block components are created with high-performance plastics.  ## **Disadvantages of Crude Oil** ### **Crude Oil is a Finite Resource** Crude oil is a non-renewable resource, meaning it has a limited supply and cannot be used sustainably. It is costly and will eventually be scarce. ### **Crude Oil Impacts the Environment** Once the [oil is spilled](https://www.noaa.gov/education/resource-collections/ocean-coasts/oil-spills), it can pollute streams and rivers and soaks through the rock, soil, and groundwater.   When it spills on the ground and soil, it kills the organisms essential to maintaining the balance of the environment. Thus, the water will also be contaminated, affecting humans' health. The impacts of crude oil on the environment include oil pollution, which disrupts the food chain, prevents photosynthesis in plants, and harms animals and insects. ### **Crude Oil is a Volatile Investment** Trading crude oil can be risky because of the volatile nature of oil prices. Thus, when traders can predict the correct direction of oil volatility, oil prices are a good opportunity. ## **How to Divest in Crude Oil** There are several ways to divest from Crude oil. ### **![How_to_Divest_in_Crude_Oil](https://www.carboncollectiveinvesting.com/hs-fs/hubfs/How_to_Divest_in_Crude_Oil.png?width=1920&name=How_to_Divest_in_Crude_Oil.png)** ### **1) Invest in Clean Energy & Fossil Fuel-Free Products** One way to divest is to invest in clean energy and products that don't use fossil fuels. This includes renewable energy sources like solar, wind, and electric vehicles. ### **2) Invest in Clean Energy for Your Home & Community** This includes installing solar panels and wind turbines and investing in energy efficiency measures. ### **3) Support Environmentally-Friendly Initiatives to Divest from Fossil Fuels** Supporting initiatives to transition away from fossil fuels is another way to divest. This includes investing in renewable energy, transitioning to a circular economy, and more. ### **4) Investing in Companies that are Working on Alternative Fuels** Choose to invest in companies that are working towards alternative fuels. This includes companies researching and developing biofuels, hydrogen fuel cells, and more. ## **The Bottom Line** Crude oil is a naturally occurring mixture of hydrocarbons- hydrogen and carbon atoms found in underground reservoirs or on the near surface of oil sands.  Crude oil's chief extraction methods depend on geology. It has a lot of use, including producing different products.  Crude oil has brought advantages in different aspects. However, it also leads to various disadvantages. Thus, learning how to divest from crude oil is very important. ## **FAQs ** ### **1. What is Crude oil?** Crude oil is a naturally occurring mixture of hydrocarbons- hydrogen and carbon atoms found in underground reservoirs or on the near-surface of oil sands. ### **2. What are the main types of crude oil?** The types of crude oil include Light Volatile Oils, Non-Sticky Oils, Heavy Stick Oils, and Non-fluid Oils. ### **3. What are the uses of crude oil?** Crude oil is mainly used for energy carriers combined with gasoline, diesel jet fuel, and heating oils. ### **4. What are the products that crude oil is used to produce?** The crude oil products are gasoline, petrochemical feedstocks, waxes, asphalt, and lubricating oils. ### **5. What are the disadvantages of Crude Oil?** Crude Oil's disadvantages include harmful environmental impacts, volatile investment, and finite resources. ### Related Topics - [Sustainable Investing](https://www.carboncollective.co/sustainable-investing/) - [Carbon Footprint](https://www.carboncollective.co/sustainable-investing/carbon-footprint) - [Energy Efficiency](https://www.carboncollective.co/sustainable-investing/energy-efficiency) - [Greenhouse Gases](https://www.carboncollective.co/sustainable-investing/greenhouse-gases) - [Net Zero](https://www.carboncollective.co/sustainable-investing/net-zero) - [Renewable Energy Sources](https://www.carboncollective.co/sustainable-investing/renewable-energy-sources) - [Sustainable Development Goals (SDGs)](https://www.carboncollective.co/sustainable-investing/sustainable-development-goals-sdgs) ![Attend Our Next Webinar](https://www.carboncollectiveinvesting.com/hubfs/carbon-collective-green-investing-icon-webinar.12af7b6e.svg) ### Attend Our Next Webinar Join our next Sustainable Investing 101 webinar, get our favorite DIY options, and walk through how we build our portfolios. 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