Oil and Gas What’s the Difference Between Upstream and Downstream?
The oil and gas industry is one of the largest in the world, and in many ways, it’s literally powers the world economy. In the U.S. alone, various segments of the industry employ nearly 10 million people. Not only that, but the oil and gas industry includes a massive global infrastructure, an intricate, inter-connected web of pipelines, rail roads, refineries, trucking routes, and gas stations. The roots of that network were laid down in the 19th century, with oil barons like John D. Rockefeller. But the industry actually dates back to 600 B.C. That’s when the Chinese discovered oil, which was transported in crude bamboo pipes.
We’ve obviously come a long way since those first bamboo pipelines. When you consider how essential the oil industry is to our daily lives, it’s strange how many Americans are in need of Oil 101 education.
For instance, most Americans don’t know the difference between downstream oil activity and upstream oil and gas companies. In part, the industry itself could do more to educate the public, but millions of Americans are only interested in the industry so long as their smartphone stays charged.
So what is upstream?
Think of the upstream oil industry as the “Exploration and Production” portion of the supply chain. The EandP sector involves searching for gas and oil fields, drilling and recovering those deposits, and producing crude oil and natural gas.
So what is downstream?
At the opposite end of the supply chain, you have companies that process, transport, and sell consumers refined oil products. Downstream oil companies are probably the ones you are most familiar with in your daily life.
Why is the upstream oil industry so important?
Oil and natural gas products are used in virtually every aspect of modern life, from powering your car to turning on a light switch. Without a steady supply of oil and gas, prices would go up and the gears of our economy would grind to a halt. Plus, millions of Americans can support their families because of the jobs created by the upstream oil industry.