RARE Old Stock Certificate Document. For offer, a nice old piece of ephemera. Fresh from a prominent estate in Upstate, NY. Never offered on the market until now. Vintage, Old, Original, Antique. A Reproduction – Guaranteed! With documentary revenue stamps at top. Sealer at lower left. Signed by President W. Wallingford and Treasurer P. I could not find anything on this company, so perhaps it did not last very long. “Void reissued” written in ink manuscript across center. Signatures on other side as well, from Chicago. Owned and signed by Henry Hettinger. In good condition overall. Creases at right side edge, normal fold marks, light wear at edge. P lease see photos for all details. NOTE – can be sent folded up or flat. If you collect 19th century American history, Americana petroliana, gas / oil, etc. This is nice one for your image or paper / ephemera collection. Petroleum (/ptrolim/) is a naturally occurring, yellowish-black liquid found in geological formations beneath the Earth’s surface. It is commonly refined into various types of fuels. Components of petroleum are separated using a technique called fractional distillation, i. Separation of a liquid mixture into fractions differing in boiling point by means of distillation, typically using a fractionating column. It consists of hydrocarbons of various molecular weights and other organic compounds. [1] The name petroleum covers both naturally occurring unprocessed crude oil and petroleum products that are made up of refined crude oil. A fossil fuel, petroleum is formed when large quantities of dead organisms, mostly zooplankton and algae, are buried underneath sedimentary rock and subjected to both intense heat and pressure. Petroleum has mostly been recovered by oil drilling (natural petroleum springs are rare). Drilling is carried out after studies of structural geology (at the reservoir scale), sedimentary basin analysis, and reservoir characterisation (mainly in terms of the porosity and permeability of geologic reservoir structures) have been completed. [2][3] It is refined and separated, most easily by distillation, into a large number of consumer products, from gasoline (petrol) and kerosene to asphalt and chemical reagents used to make plastics and pharmaceuticals. [4] Petroleum is used in manufacturing a wide variety of materials, [5] and it is estimated that the world consumes about 95 million barrels each day. Concern over the depletion of the earth’s finite reserves of oil, and the effect this would have on a society dependent on it, is a concept known as peak oil. The use of fossil fuels, such as petroleum, has a negative impact on Earth’s biosphere, damaging ecosystems through events such as oil spills and releasing a range of pollutants into the air including ground-level ozone and sulfur dioxide from sulfur impurities in fossil fuels. The burning of fossil fuels plays a major role in the current episode of global warming. The word petroleum comes from Ancient Greek: , translit. Petra, “rock” and Latin oleum, “oil” from Ancient Greek: , translit. [6][7][8][9][10]. The term was used in the treatise De Natura Fossilium, published in 1546 by the German mineralogist Georg Bauer, also known as Georgius Agricola. [11] In the 19th century, the term petroleum was often used to refer to mineral oils produced by distillation from mined organic solids such as cannel coal (and later oil shale), and refined oils produced from them; in the United Kingdom, storage (and later transport) of these oils were regulated by a series of Petroleum Acts, from the Petroleum Act 1863 onwards. Main article: History of the petroleum industry. Oil derrick in Okemah, Oklahoma, 1922. Petroleum, in one form or another, has been used since ancient times, and is now important across society, including in economy, politics and technology. The rise in importance was due to the invention of the internal combustion engine, the rise in commercial aviation, and the importance of petroleum to industrial organic chemistry, particularly the synthesis of plastics, fertilisers, solvents, adhesives and pesticides. More than 4000 years ago, according to Herodotus and Diodorus Siculus, asphalt was used in the construction of the walls and towers of Babylon; there were oil pits near Ardericca (near Babylon), and a pitch spring on Zacynthus. [12] Great quantities of it were found on the banks of the river Issus, one of the tributaries of the Euphrates. Ancient Persian tablets indicate the medicinal and lighting uses of petroleum in the upper levels of their society. The use of petroleum in ancient China dates back to more than 2000 years ago. In I Ching, one of the earliest Chinese writings cites that oil in its raw state, without refining, was first discovered, extracted, and used in China in the first century BCE. In addition, the Chinese were the first to use petroleum as fuel as early as the fourth century BCE. By 347 AD, oil was produced from bamboo-drilled wells in China. [16][17] Early British explorers to Myanmar documented a flourishing oil extraction industry based in Yenangyaung that, in 1795, had hundreds of hand-dug wells under production. Pechelbronn (Pitch fountain) is said to be the first European site where petroleum has been explored and used. The still active Erdpechquelle, a spring where petroleum appears mixed with water has been used since 1498, notably for medical purposes. Oil sands have been mined since the 18th century. In Wietze in lower Saxony, natural asphalt/bitumen has been explored since the 18th century. [20] Both in Pechelbronn as in Wietze, the coal industry dominated the petroleum technologies. Proven world oil reserves, 2013. Unconventional reservoirs such as natural heavy oil and oil sands are included. Chemist James Young noticed a natural petroleum seepage in the Riddings colliery at Alfreton, Derbyshire from which he distilled a light thin oil suitable for use as lamp oil, at the same time obtaining a more viscous oil suitable for lubricating machinery. In 1848 Young set up a small business refining the crude oil. Young eventually succeeded, by distilling cannel coal at a low heat, in creating a fluid resembling petroleum, which when treated in the same way as the seep oil gave similar products. Young found that by slow distillation he could obtain a number of useful liquids from it, one of which he named “paraffine oil” because at low temperatures it congealed into a substance resembling paraffin wax. The production of these oils and solid paraffin wax from coal formed the subject of his patent dated 17 October 1850. In 1850 Young & Meldrum and Edward William Binney entered into partnership under the title of E. At Bathgate in West Lothian and E. At Glasgow; their works at Bathgate were completed in 1851 and became the first truly commercial oil-works in the world with the first modern oil refinery. Shale bings near Broxburn, 3 of a total of 19 in West Lothian. The world’s first oil refinery was built in 1856 by Ignacy ukasiewicz. [24] His achievements also included the discovery of how to distill kerosene from seep oil, the invention of the modern kerosene lamp (1853), the introduction of the first modern street lamp in Europe (1853), and the construction of the world’s first modern oil well (1854). The demand for petroleum as a fuel for lighting in North America and around the world quickly grew. [26] Edwin Drake’s 1859 well near Titusville, Pennsylvania, is popularly considered the first modern well. Already 1858 Georg Christian Konrad Hunäus had found a significant amount of petroleum while drilling for lignite 1858 in Wietze, Germany. Wietze later provided about 80% of the German consumption in the Wilhelminian Era. [27] The production stopped in 1963, but Wietze has hosted a Petroleum Museum since 1970. Drake’s well is probably singled out because it was drilled, not dug; because it used a steam engine; because there was a company associated with it; and because it touched off a major boom. [29] However, there was considerable activity before Drake in various parts of the world in the mid-19th century. A group directed by Major Alexeyev of the Bakinskii Corps of Mining Engineers hand-drilled a well in the Baku region in 1848. [30] There were engine-drilled wells in West Virginia in the same year as Drake’s well. [31] An early commercial well was hand dug in Poland in 1853, and another in nearby Romania in 1857. At around the same time the world’s first, small, oil refinery was opened at Jaso in Poland, with a larger one opened at Ploieti in Romania shortly after. Romania is the first country in the world to have had its annual crude oil output officially recorded in international statistics: 275 tonnes for 1857. The first commercial oil well in Canada became operational in 1858 at Oil Springs, Ontario (then Canada West). [34] Businessman James Miller Williams dug several wells between 1855 and 1858 before discovering a rich reserve of oil four metres below ground. [35][specify] Williams extracted 1.5 million litres of crude oil by 1860, refining much of it into kerosene lamp oil. Williams’s well became commercially viable a year before Drake’s Pennsylvania operation and could be argued to be the first commercial oil well in North America. [36] The discovery at Oil Springs touched off an oil boom which brought hundreds of speculators and workers to the area. Advances in drilling continued into 1862 when local driller Shaw reached a depth of 62 metres using the spring-pole drilling method. [37] On January 16, 1862, after an explosion of natural gas Canada’s first oil gusher came into production, shooting into the air at a recorded rate of 3,000 barrels per day. [38] By the end of the 19th century the Russian Empire, particularly the Branobel company in Azerbaijan, had taken the lead in production. A poster used to promote carpooling as a way to ration gasoline during World War II. Access to oil was and still is a major factor in several military conflicts of the twentieth century, including World War II, during which oil facilities were a major strategic asset and were extensively bombed. [40] The German invasion of the Soviet Union included the goal to capture the Baku oilfields, as it would provide much needed oil-supplies for the German military which was suffering from blockades. [41] Oil exploration in North America during the early 20th century later led to the US becoming the leading producer by mid-century. As petroleum production in the US peaked during the 1960s, however, the United States was surpassed by Saudi Arabia and the Soviet Union. Today, about 90 percent of vehicular fuel needs are met by oil. Petroleum also makes up 40 percent of total energy consumption in the United States, but is responsible for only 1 percent of electricity generation. [42] Petroleum’s worth as a portable, dense energy source powering the vast majority of vehicles and as the base of many industrial chemicals makes it one of the world’s most important commodities. Viability of the oil commodity is controlled by several key parameters, number of vehicles in the world competing for fuel, quantity of oil exported to the world market (Export Land Model), net energy gain (economically useful energy provided minus energy consumed), political stability of oil exporting nations and ability to defend oil supply lines. Ci[citation needed]. The top three oil producing countries are Russia, Saudi Arabia and the United States. [43] In 2018, due in part to developments in hydraulic fracturing and horizonal drilling, the United States became the world’s largest producer. [44][45] About 80 percent of the world’s readily accessible reserves are located in the Middle East, with 62.5 percent coming from the Arab 5: Saudi Arabia, United Arab Emirates, Iraq, Qatar and Kuwait. A large portion of the world’s total oil exists as unconventional sources, such as bitumen in Athabasca oil sands and extra heavy oil in the Orinoco Belt. While significant volumes of oil are extracted from oil sands, particularly in Canada, logistical and technical hurdles remain, as oil extraction requires large amounts of heat and water, making its net energy content quite low relative to conventional crude oil. Thus, Canada’s oil sands are not expected to provide more than a few million barrels per day in the foreseeable future. In its strictest sense, petroleum includes only crude oil, but in common usage it includes all liquid, gaseous and solid hydrocarbons. Under surface pressure and temperature conditions, lighter hydrocarbons methane, ethane, propane and butane exist as gases, while pentane and heavier hydrocarbons are in the form of liquids or solids. However, in an underground oil reservoir the proportions of gas, liquid, and solid depend on subsurface conditions and on the phase diagram of the petroleum mixture. An oil well produces predominantly crude oil, with some natural gas dissolved in it. Because the pressure is lower at the surface than underground, some of the gas will come out of solution and be recovered (or burned) as associated gas or solution gas. A gas well produces predominantly natural gas. However, because the underground temperature and pressure are higher than at the surface, the gas may contain heavier hydrocarbons such as pentane, hexane, and heptane in the gaseous state. At surface conditions these will condense out of the gas to form “natural gas condensate”, often shortened to condensate. Condensate resembles gasoline in appearance and is similar in composition to some volatile light crude oils. The proportion of light hydrocarbons in the petroleum mixture varies greatly among different oil fields, ranging from as much as 97 percent by weight in the lighter oils to as little as 50 percent in the heavier oils and bitumens. The hydrocarbons in crude oil are mostly alkanes, cycloalkanes and various aromatic hydrocarbons, while the other organic compounds contain nitrogen, oxygen and sulfur, and trace amounts of metals such as iron, nickel, copper and vanadium. Many oil reservoirs contain live bacteria. [47] The exact molecular composition of crude oil varies widely from formation to formation but the proportion of chemical elements varies over fairly narrow limits as follows:[48]. 0.1 to 2%. 0.05 to 1.5%. 0.05 to 6.0%. Four different types of hydrocarbon molecules appear in crude oil. The relative percentage of each varies from oil to oil, determining the properties of each oil. Unconventional resources are much larger than conventional ones. Crude oil varies greatly in appearance depending on its composition. It is usually black or dark brown (although it may be yellowish, reddish, or even greenish). In the reservoir it is usually found in association with natural gas, which being lighter forms a “gas cap” over the petroleum, and saline water which, being heavier than most forms of crude oil, generally sinks beneath it. Crude oil may also be found in a semi-solid form mixed with sand and water, as in the Athabasca oil sands in Canada, where it is usually referred to as crude bitumen. In Canada, bitumen is considered a sticky, black, tar-like form of crude oil which is so thick and heavy that it must be heated or diluted before it will flow. [50] Venezuela also has large amounts of oil in the Orinoco oil sands, although the hydrocarbons trapped in them are more fluid than in Canada and are usually called extra heavy oil. These oil sands resources are called unconventional oil to distinguish them from oil which can be extracted using traditional oil well methods. Between them, Canada and Venezuela contain an estimated 3.6 trillion barrels (570×109 m3) of bitumen and extra-heavy oil, about twice the volume of the world’s reserves of conventional oil. Petroleum is used mostly, by volume, for refining into fuel oil and gasoline, both important “primary energy” sources. 84 percent by volume of the hydrocarbons present in petroleum is converted into energy-rich fuels (petroleum-based fuels), including gasoline, diesel, jet, heating, and other fuel oils, and liquefied petroleum gas. [52] The lighter grades of crude oil produce the best yields of these products, but as the world’s reserves of light and medium oil are depleted, oil refineries are increasingly having to process heavy oil and bitumen, and use more complex and expensive methods to produce the products required. Because heavier crude oils have too much carbon and not enough hydrogen, these processes generally involve removing carbon from or adding hydrogen to the molecules, and using fluid catalytic cracking to convert the longer, more complex molecules in the oil to the shorter, simpler ones in the fuels. Due to its high energy density, easy transportability and relative abundance, oil has become the world’s most important source of energy since the mid-1950s. Petroleum is also the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, and plastics; the 16 percent not used for energy production is converted into these other materials. Petroleum is found in porous rock formations in the upper strata of some areas of the Earth’s crust. There is also petroleum in oil sands (tar sands). Known oil reserves are typically estimated at around 190 km3 1.2 trillion (short scale) barrels without oil sands, [53] or 595 km3 (3.74 trillion barrels) with oil sands. [54] Consumption is currently around 84 million barrels (13.4×106 m3) per day, or 4.9 km3 per year, yielding a remaining oil supply of only about 120 years, if current demand remains static. Octane, a hydrocarbon found in petroleum. Lines represent single bonds; black spheres represent carbon; white spheres represent hydrogen. Petroleum is a mixture of a very large number of different hydrocarbons; the most commonly found molecules are alkanes (paraffins), cycloalkanes (naphthenes), aromatic hydrocarbons, or more complicated chemicals like asphaltenes. Each petroleum variety has a unique mix of molecules, which define its physical and chemical properties, like color and viscosity. The alkanes, also known as paraffins, are saturated hydrocarbons with straight or branched chains which contain only carbon and hydrogen and have the general formula CnH2n+2. They generally have from 5 to 40 carbon atoms per molecule, although trace amounts of shorter or longer molecules may be present in the mixture. The alkanes from pentane (C5H12) to octane (C8H18) are refined into gasoline, the ones from nonane (C9H20) to hexadecane (C16H34) into diesel fuel, kerosene and jet fuel. Alkanes with more than 16 carbon atoms can be refined into fuel oil and lubricating oil. At the heavier end of the range, paraffin wax is an alkane with approximately 25 carbon atoms, while asphalt has 35 and up, although these are usually cracked by modern refineries into more valuable products. The shortest molecules, those with four or fewer carbon atoms, are in a gaseous state at room temperature. They are the petroleum gases. During the winter, butane (C4H10), is blended into the gasoline pool at high rates, because its high vapor pressure assists with cold starts. Liquified under pressure slightly above atmospheric, it is best known for powering cigarette lighters, but it is also a main fuel source for many developing countries. Propane can be liquified under modest pressure, and is consumed for just about every application relying on petroleum for energy, from cooking to heating to transportation. The cycloalkanes, also known as naphthenes, are saturated hydrocarbons which have one or more carbon rings to which hydrogen atoms are attached according to the formula CnH2n. Cycloalkanes have similar properties to alkanes but have higher boiling points. The aromatic hydrocarbons are unsaturated hydrocarbons which have one or more planar six-carbon rings called benzene rings, to which hydrogen atoms are attached with the formula CnH2n-6. They tend to burn with a sooty flame, and many have a sweet aroma. These different molecules are separated by fractional distillation at an oil refinery to produce gasoline, jet fuel, kerosene, and other hydrocarbons. For example, 2,2,4-trimethylpentane (isooctane), widely used in gasoline, has a chemical formula of C8H18 and it reacts with oxygen exothermically:[55]. 18(l) + 25 O. 2(g) 16 CO. 2(g) + 18 H. 2O(g) (H = 5.51 MJ/mol of octane). The number of various molecules in an oil sample can be determined by laboratory analysis. The molecules are typically extracted in a solvent, then separated in a gas chromatograph, and finally determined with a suitable detector, such as a flame ionization detector or a mass spectrometer. [56] Due to the large number of co-eluted hydrocarbons within oil, many cannot be resolved by traditional gas chromatography and typically appear as a hump in the chromatogram. This unresolved complex mixture (UCM) of hydrocarbons is particularly apparent when analysing weathered oils and extracts from tissues of organisms exposed to oil. Some of the component of oil will mix with water: the water associated fraction of the oil. Incomplete combustion of petroleum or gasoline results in production of toxic byproducts. Too little oxygen during combustion results in the formation of carbon monoxide. Due to the high temperatures and high pressures involved, exhaust gases from gasoline combustion in car engines usually include nitrogen oxides which are responsible for creation of photochemical smog. Empirical equations for thermal properties. At a constant volume, the heat of combustion of a petroleum product can be approximated as follows. \displaystyle Q_{v}=12{,}400-2{,}100d^{2} \displaystyle Q_{v}=12{,}400-2{,}100d^{2}. Where \displaystyle Q_{v} Q_{v} is measured in calories per gram and {\displaystyle d} d is the specific gravity at 60 °F (16 °C). The thermal conductivity of petroleum based liquids can be modeled as follows:[57]. \displaystyle K=\frac {1.62}{API}[1-0.0003(t-32)] K=\frac {1.62}{API}[1-0.0003(t-32)]. Where {\displaystyle K} K is measured in BTU · °F1hr1ft1 , {\displaystyle t} t is measured in °F and {\displaystyle API} {\displaystyle API} is degrees API gravity. The specific heat of petroleum oils can be modeled as follows:[58]. \displaystyle c=\frac {1}{d}[0.388+0.00046t] c=\frac {1}{d}[0.388+0.00046t]. Where {\displaystyle c} c is measured in BTU/(lb °F), {\displaystyle t} t is the temperature in Fahrenheit and {\displaystyle d} d is the specific gravity at 60 °F (16 °C). In units of kcal/(kg·°C), the formula is. \displaystyle c=\frac {1}{d}[0.4024+0.00081t] c=\frac {1}{d}[0.4024+0.00081t]. Where the temperature {\displaystyle t} t is in Celsius and {\displaystyle d} d is the specific gravity at 15 °C. Latent heat of vaporization. The latent heat of vaporization can be modeled under atmospheric conditions as follows. \displaystyle L=\frac {1}{d}[110.9-0.09t] L=\frac {1}{d}[110.9-0.09t]. Where {\displaystyle L} L is measured in BTU/lb, {\displaystyle t} t is measured in °F and {\displaystyle d} d is the specific gravity at 60 °F (16 °C). In units of kcal/kg, the formula is. \displaystyle L=\frac {1}{d}[194.4-0.162t] L=\frac {1}{d}[194.4-0.162t]. Structure of a vanadium porphyrin compound (left) extracted from petroleum by Alfred E. Treibs, father of organic geochemistry. Treibs noted the close structural similarity of this molecule and chlorophyll a (right). Petroleum is a fossil fuel derived from ancient fossilized organic materials, such as zooplankton and algae. [62][63] Vast amounts of these remains settled to sea or lake bottoms where they were covered in stagnant water (water with no dissolved oxygen) or sediments such as mud and silt faster than they could decompose aerobically. Approximately 1 m below this sediment or water oxygen concentration was low, below 0.1 mg/l, and anoxic conditions existed. Temperatures also remained constant. As further layers settled to the sea or lake bed, intense heat and pressure built up in the lower regions. This process caused the organic matter to change, first into a waxy material known as kerogen, found in various oil shales around the world, and then with more heat into liquid and gaseous hydrocarbons via a process known as catagenesis. Formation of petroleum occurs from hydrocarbon pyrolysis in a variety of mainly endothermic reactions at high temperature or pressure, or both. [63][64] These phases are described in detail below. Anaerobic decay or 1. In the absence of plentiful oxygen, aerobic bacteria were prevented from decaying the organic matter after it was buried under a layer of sediment or water. However, anaerobic bacteria were able to reduce sulfates and nitrates among the matter to H2S and N2 respectively by using the matter as a source for other reactants. Due to such anaerobic bacteria, at first this matter began to break apart mostly via hydrolysis: polysaccharides and proteins were hydrolyzed to simple sugars and amino acids respectively. These were further anaerobically oxidized at an accelerated rate by the enzymes of the bacteria: e. Amino acids went through oxidative deamination to imino acids, which in turn reacted further to ammonia and -keto acids. Monosaccharides in turn ultimately decayed to CO2 and methane. The anaerobic decay products of amino acids, monosaccharides, phenols and aldehydes combined to fulvic acids. Fats and waxes were not extensively hydrolyzed under these mild conditions. Kerogen formation or 2. Some phenolic compounds produced from previous reactions worked as bactericides and actinomycetales order of bacteria produced antibiotic compounds e. Thus the action of anaerobic bacteria ceased at about 10 m below the water or sediment. The mixture at this depth contained fulvic acids, unreacted and partially reacted fats and waxes, slightly modified lignin, resins and other hydrocarbons. [63] As more layers of organic matter settled to the sea or lake bed, intense heat and pressure built up in the lower regions. [64] As a consequence, compounds of this mixture the began to combine in poorly understood ways to kerogen. Combination happened in a similar fashion as phenol and formaldehyde molecules react to urea-formaldehyde resins, but kerogen formation occurred in a more complex manner due to a bigger variety of reactants. The total process of kerogen formation from the beginning of anaerobic decay is called diagenesis, a word that means a transformation of materials by dissolution and recombination of their constituents. Kerogen to fossil fuels or catagenesis. Kerogen formation continued to the depth of about 1 km from the Earth’s surface where temperatures may reach around 50 °C. Kerogen formation represents a halfway point between organic matter and fossil fuels: kerogen can be exposed to oxygen, oxidize and thus be lost or it could be buried deeper inside the Earth’s crust and be subjected to conditions which allow it to slowly transform into fossil fuels like petroleum. The latter happened through catagenesis in which the reactions were mostly radical rearrangements of kerogen. These reactions took thousands to millions of years and no external reactants were involved. Due to radical nature of these reactions, kerogen reacted towards two classes of products: those with low H/C ratio (anthracene or products similar to it) and those with high H/C ratio (methane or products similar to it); i. Carbon-rich or hydrogen-rich products. Because catagenesis was closed off from external reactants, the resulting composition of the fuel mixture was dependent on the composition of the kerogen via reaction stoichiometry. 3 main types of kerogen exist: type I (algal), II (liptinic) and III (humic), which were formed mainly from algae, plankton and woody plants (this term includes trees, shrubs and lianas) respectively. Catagenesis was pyrolytic despite of the fact that it happened at relatively low temperatures (when compared to commercial pyrolysis plants) of 60 to several hundred °C. Pyrolysis was possible because of the long reaction times involved. Heat for catagenesis came from the decomposition of radioactive materials of the crust, especially 40K, 232Th, 235U and 238U. The heat varied with geothermal gradient and was typically 10-30 °C per km of depth from the Earth’s surface. Unusual magma intrusions, however, could have created greater localized heating. Geologists often refer to the temperature range in which oil forms as an “oil window”. [65][63] Below the minimum temperature oil remains trapped in the form of kerogen. Above the maximum temperature the oil is converted to natural gas through the process of thermal cracking. Sometimes, oil formed at extreme depths may migrate and become trapped at a much shallower level. The Athabasca Oil Sands are one example of this. An alternative mechanism to the one described above was proposed by Russian scientists in the mid-1850s, the hypothesis of abiogenic petroleum origin (petroleum formed by inorganic means), but this is contradicted by geological and geochemical evidence. [66] Abiogenic sources of oil have been found, but never in commercially profitable amounts. “The controversy isn’t over whether abiogenic oil reserves exist, ” said Larry Nation of the American Association of Petroleum Geologists. The controversy is over how much they contribute to Earth’s overall reserves and how much time and effort geologists should devote to seeking them out. This section needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (October 2016) (Learn how and when to remove this template message). Three conditions must be present for oil reservoirs to form. A source rock rich in hydrocarbon material buried deeply enough for subterranean heat to cook it into oil. A porous and permeable reservoir rock where it can accumulate. A caprock (seal) or other mechanism to prevent the oil from escaping to the surface. Within these reservoirs, fluids will typically organize themselves like a three-layer cake with a layer of water below the oil layer and a layer of gas above it, although the different layers vary in size between reservoirs. Because most hydrocarbons are less dense than rock or water, they often migrate upward through adjacent rock layers until either reaching the surface or becoming trapped within porous rocks (known as reservoirs) by impermeable rocks above. However, the process is influenced by underground water flows, causing oil to migrate hundreds of kilometres horizontally or even short distances downward before becoming trapped in a reservoir. When hydrocarbons are concentrated in a trap, an oil field forms, from which the liquid can be extracted by drilling and pumping. The reactions that produce oil and natural gas are often modeled as first order breakdown reactions, where hydrocarbons are broken down to oil and natural gas by a set of parallel reactions, and oil eventually breaks down to natural gas by another set of reactions. The latter set is regularly used in petrochemical plants and oil refineries. Wells are drilled into oil reservoirs to extract the crude oil. “Natural lift” production methods that rely on the natural reservoir pressure to force the oil to the surface are usually sufficient for a while after reservoirs are first tapped. In some reservoirs, such as in the Middle East, the natural pressure is sufficient over a long time. The natural pressure in most reservoirs, however, eventually dissipates. Then the oil must be extracted using “artificial lift” means. Over time, these “primary” methods become less effective and “secondary” production methods may be used. A common secondary method is “waterflood” or injection of water into the reservoir to increase pressure and force the oil to the drilled shaft or wellbore. ” Eventually “tertiary” or “enhanced oil recovery methods may be used to increase the oil’s flow characteristics by injecting steam, carbon dioxide and other gases or chemicals into the reservoir. In the United States, primary production methods account for less than 40 percent of the oil produced on a daily basis, secondary methods account for about half, and tertiary recovery the remaining 10 percent. Extracting oil (or “bitumen”) from oil/tar sand and oil shale deposits requires mining the sand or shale and heating it in a vessel or retort, or using “in-situ” methods of injecting heated liquids into the deposit and then pumping the liquid back out saturated with oil. See also: Unconventional oil, Oil sands, and Oil shale reserves. Oil-eating bacteria biodegrade oil that has escaped to the surface. Oil sands are reservoirs of partially biodegraded oil still in the process of escaping and being biodegraded, but they contain so much migrating oil that, although most of it has escaped, vast amounts are still presentmore than can be found in conventional oil reservoirs. The lighter fractions of the crude oil are destroyed first, resulting in reservoirs containing an extremely heavy form of crude oil, called crude bitumen in Canada, or extra-heavy crude oil in Venezuela. These two countries have the world’s largest deposits of oil sands. On the other hand, oil shales are source rocks that have not been exposed to heat or pressure long enough to convert their trapped hydrocarbons into crude oil. Technically speaking, oil shales are not always shales and do not contain oil, but are fined-grain sedimentary rocks containing an insoluble organic solid called kerogen. The kerogen in the rock can be converted into crude oil using heat and pressure to simulate natural processes. The method has been known for centuries and was patented in 1694 under British Crown Patent No. 330 covering, A way to extract and make great quantities of pitch, tar, and oil out of a sort of stone. Although oil shales are found in many countries, the United States has the world’s largest deposits. Some marker crudes with their sulfur content (horizontal) and API gravity (vertical) and relative production quantity. See also: Benchmark (crude oil). The petroleum industry generally classifies crude oil by the geographic location it is produced in e. West Texas Intermediate, Brent, or Oman, its API gravity (an oil industry measure of density), and its sulfur content. Crude oil may be considered light if it has low density or heavy if it has high density; and it may be referred to as sweet if it contains relatively little sulfur or sour if it contains substantial amounts of sulfur. The geographic location is important because it affects transportation costs to the refinery. Light crude oil is more desirable than heavy oil since it produces a higher yield of gasoline, while sweet oil commands a higher price than sour oil because it has fewer environmental problems and requires less refining to meet sulfur standards imposed on fuels in consuming countries. Each crude oil has unique molecular characteristics which are revealed by the use of Crude oil assay analysis in petroleum laboratories. Barrels from an area in which the crude oil’s molecular characteristics have been determined and the oil has been classified are used as pricing references throughout the world. Some of the common reference crudes are:[citation needed]. West Texas Intermediate (WTI), a very high-quality, sweet, light oil delivered at Cushing, Oklahoma for North American oil. Brent Blend, consisting of 15 oils from fields in the Brent and Ninian systems in the East Shetland Basin of the North Sea. The oil is landed at Sullom Voe terminal in Shetland. Oil production from Europe, Africa and Middle Eastern oil flowing West tends to be priced off this oil, which forms a benchmark. Dubai-Oman, used as benchmark for Middle East sour crude oil flowing to the Asia-Pacific region. Tapis (from Malaysia, used as a reference for light Far East oil). Minas (from Indonesia, used as a reference for heavy Far East oil). The OPEC Reference Basket, a weighted average of oil blends from various OPEC (The Organization of the Petroleum Exporting Countries) countries. Midway Sunset Heavy, by which heavy oil in California is priced[69][not in citations given]. Western Canadian Select the benchmark crude oil for emerging heavy, high TAN (acidic) crudes. There are declining amounts of these benchmark oils being produced each year, so other oils are more commonly what is actually delivered. While the reference price may be for West Texas Intermediate delivered at Cushing, the actual oil being traded may be a discounted Canadian heavy oilWestern Canadian Select delivered at Hardisty, Alberta, and for a Brent Blend delivered at Shetland, it may be a discounted Russian Export Blend delivered at the port of Primorsk. This article needs to be updated. Please update this article to reflect recent events or newly available information. Main article: Petroleum industry. Crude oil export treemap (2012) from Harvard Atlas of Economic Complexity. The petroleum industry is involved in the global processes of exploration, extraction, refining, transporting (often with oil tankers and pipelines), and marketing petroleum products. The largest volume products of the industry are fuel oil and gasoline. Petroleum is also the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, and plastics. The industry is usually divided into three major components: upstream, midstream and downstream. Midstream operations are usually included in the downstream category. Petroleum is vital to many industries, and is of importance to the maintenance of industrialized civilization itself, and thus is a critical concern to many nations. Oil accounts for a large percentage of the world’s energy consumption, ranging from a low of 32 percent for Europe and Asia, up to a high of 53 percent for the Middle East, South and Central America (44%), Africa (41%), and North America (40%). The world at large consumes 30 billion barrels (4.8 km³) of oil per year, and the top oil consumers largely consist of developed nations. In fact, 24 percent of the oil consumed in 2004 went to the United States alone, [73] though by 2007 this had dropped to 21 percent of world oil consumed. This non-profit trade association was founded in 1907, and is the oldest petroleum trade association in the United States. Nominal and inflation-adjusted US dollar price of crude oil, 18612015. Main article: Price of oil. After the collapse of the OPEC-administered pricing system in 1985, and a short-lived experiment with netback pricing, oil-exporting countries adopted a market-linked pricing mechanism. First adopted by PEMEX in 1986, market-linked pricing was widely accepted, and by 1988 became and still is the main method for pricing crude oil in international trade. The current reference, or pricing markers, are Brent, WTI, and Dubai/Oman. Further information: Petroleum product. The chemical structure of petroleum is heterogeneous, composed of hydrocarbon chains of different lengths. Because of this, petroleum may be taken to oil refineries and the hydrocarbon chemicals separated by distillation and treated by other chemical processes, to be used for a variety of purposes. The total cost per plant is about 9 billion dollars. The most common distillation fractions of petroleum are fuels. Fuels include (by increasing boiling temperature range):[48]. Main article: Environmental impact of the petroleum industry. Diesel fuel spill on a road. Because petroleum is a naturally occurring substance, its presence in the environment need not be the result of human causes such as accidents and routine activities (seismic exploration, drilling, extraction, refining and combustion). Phenomena such as seeps[86] and tar pits are examples of areas that petroleum affects without man’s involvement. Regardless of source, petroleum’s effects when released into the environment are similar. Ocean acidification is the increase in the acidity of the Earth’s oceans caused by the uptake of carbon dioxide (CO2) from the atmosphere. This increase in acidity inhibits all marine life having a greater impact on smaller organisms as well as shelled organisms (see scallops). When burned, petroleum releases carbon dioxide, a greenhouse gas. Along with the burning of coal, petroleum combustion may be the largest contributor to the increase in atmospheric CO2. [citation needed] Atmospheric CO2 has risen over the last 150 years to current levels of over 390 ppmv, from the 180 300 ppmv of the prior 800 thousand years[88][89][90] This rise in temperature may have reduced the Arctic ice cap to 1,100,000 sq mi (2,800,000 km2), [citation needed] smaller than ever recorded. [91] Because of this melt, more oil reserves have been revealed. About 13 percent of the world’s undiscovered oil resides in the Arctic. Oil extraction is simply the removal of oil from the reservoir (oil pool). Oil is often recovered as a water-in-oil emulsion, and specialty chemicals called demulsifiers are used to separate the oil from water. Oil extraction is costly and sometimes environmentally damaging. Offshore exploration and extraction of oil disturbs the surrounding marine environment. Further information: Oil spill and List of oil spills. Kelp after an oil spill. Oil slick from the Montara oil spill in the Timor Sea, September, 2009. Volunteers cleaning up the aftermath of the Prestige oil spill. The quantity of oil spilled during accidents has ranged from a few hundred tons to several hundred thousand tons e. Deepwater Horizon oil spill, SS Atlantic Empress, Amoco Cadiz. Smaller spills have already proven to have a great impact on ecosystems, such as the Exxon Valdez oil spill. Oil spills at sea are generally much more damaging than those on land, since they can spread for hundreds of nautical miles in a thin oil slick which can cover beaches with a thin coating of oil. This can kill sea birds, mammals, shellfish and other organisms it coats. Oil spills on land are more readily containable if a makeshift earth dam can be rapidly bulldozed around the spill site before most of the oil escapes, and land animals can avoid the oil more easily. Control of oil spills is difficult, requires ad hoc methods, and often a large amount of manpower. The dropping of bombs and incendiary devices from aircraft on the SS Torrey Canyon wreck produced poor results;[94] modern techniques would include pumping the oil from the wreck, like in the Prestige oil spill or the Erika oil spill. Though crude oil is predominantly composed of various hydrocarbons, certain nitrogen heterocylic compounds, such as pyridine, picoline, and quinoline are reported as contaminants associated with crude oil, as well as facilities processing oil shale or coal, and have also been found at legacy wood treatment sites. These compounds have a very high water solubility, and thus tend to dissolve and move with water. Certain naturally occurring bacteria, such as Micrococcus, Arthrobacter, and Rhodococcus have been shown to degrade these contaminants. A tarball is a blob of crude oil (not to be confused with tar, which is a man-made product derived from pine trees or refined from petroleum) which has been weathered after floating in the ocean. Tarballs are an aquatic pollutant in most environments, although they can occur naturally, for example in the Santa Barbara Channel of California[97][98] or in the Gulf of Mexico off Texas. [99] Their concentration and features have been used to assess the extent of oil spills. Their composition can be used to identify their sources of origin, [100][101] and tarballs themselves may be dispersed over long distances by deep sea currents. [98] They are slowly decomposed by bacteria, including Chromobacterium violaceum, Cladosporium resinae, Bacillus submarinus, Micrococcus varians, Pseudomonas aeruginosa, Candida marina and Saccharomyces estuari. Robbins has argued that the advent of petroleum-refined kerosene saved some species of great whales from extinction by providing an inexpensive substitute for whale oil, thus eliminating the economic imperative for open-boat whaling. Further information: Renewable energy. In the United States in 2007 about 70 percent of petroleum was used for transportation e. Gasoline, diesel, jet fuel, 24 percent by industry e. Production of plastics, 5 percent for residential and commercial uses, and 2 percent for electricity production. [103] Outside of the US, a higher proportion of petroleum tends to be used for electricity. Alternatives to petroleum-based vehicle fuels. Main articles: Alternative fuel vehicle, Hydrogen economy, and Green vehicle. Brazilian fuel station with four alternative fuels for sale: diesel (B3), gasohol (E25), neat ethanol (E100), and compressed natural gas (CNG). Alternative fuel vehicles refers to both. Vehicles that use alternative fuels used in standard or modified internal combustion engines such as natural gas vehicles, neat ethanol vehicles, flexible-fuel vehicles, biodiesel-powered vehicles, propane autogas, and hydrogen vehicles. Vehicles with advanced propulsion systems that reduce or substitute petroleum use such as battery electric vehicles, plug-in hybrid electric vehicles, hybrid electric vehicles, and hydrogen fuel cell vehicles. Alternatives to using oil in industry. Biological feedstocks do exist for industrial uses such as Bioplastic production. Alternatives to burning petroleum for electricity. Main articles: Alternative energy, Nuclear power, and Renewable energy. In oil producing countries with little refinery capacity, oil is sometimes burned to produce electricity. Renewable energy technologies such as solar power, wind power, micro hydro, biomass and biofuels are used, but the primary alternatives remain large-scale hydroelectricity, nuclear and coal-fired generation. Future of petroleum production. Consumption in the twentieth and twenty-first centuries has been abundantly pushed by automobile sector growth. The 19852003 oil glut even fueled the sales of low fuel economy vehicles in OECD countries. The 2008 economic crisis seems to have had some impact on the sales of such vehicles; still, in 2008 oil consumption showed a small increase. In 2016 Goldman Sachs predicted lower demand for oil due to emerging economies concerns, especially China. [106] The BRICS (Brasil, Russia, India, China, South Africa) countries might also kick in, as China briefly was the first automobile market in December 2009. [107] The immediate outlook still hints upwards. In the long term, uncertainties linger; the OPEC believes that the OECD countries will push low consumption policies at some point in the future; when that happens, it will definitely curb oil sales, and both OPEC and the Energy Information Administration (EIA) kept lowering their 2020 consumption estimates during the past five years. [108] A detailed review of International Energy Agency oil projections have revealed that revisions of world oil production, price and investments have been motivated by a combination of demand and supply factors. [109] All together, Non-OPEC conventional projections have been fairly stable the last 15 years, while downward revisions were mainly allocated to OPEC. Recent upward revisions are primarily a result of US tight oil. Production will also face an increasingly complex situation; while OPEC countries still have large reserves at low production prices, newly found reservoirs often lead to higher prices; offshore giants such as Tupi, Guara and Tiber demand high investments and ever-increasing technological abilities. Subsalt reservoirs such as Tupi were unknown in the twentieth century, mainly because the industry was unable to probe them. Enhanced Oil Recovery (EOR) techniques (example: DaQing, China[110]) will continue to play a major role in increasing the world’s recoverable oil. The expected availability of petroleum resources has always been around 35 years or even less since the start of the modern exploration. The oil constant, an insider pun in the German industry, refers to that effect. Main article: Peak oil. Global peak oil forecast. Peak oil is a term applied to the projection that future petroleum production (whether for individual oil wells, entire oil fields, whole countries, or worldwide production) will eventually peak and then decline at a similar rate to the rate of increase before the peak as these reserves are exhausted. The peak of oil discoveries was in 1965, and oil production per year has surpassed oil discoveries every year since 1980. [112] However, this does not mean that potential oil production has surpassed oil demand. Hubbert applied his theory to accurately predict the peak of U. Conventional oil production at a date between 1966 and 1970. This prediction was based on data available at the time of his publication in 1956. In the same paper, Hubbert predicts world peak oil in “half a century” after his publication, which would be 2006. It is difficult to predict the oil peak in any given region, due to the lack of knowledge and/or transparency in accounting of global oil reserves. [114] Based on available production data, proponents have previously predicted the peak for the world to be in years 1989, 1995, or 19952000. Some of these predictions date from before the recession of the early 1980s, and the consequent reduction in global consumption, the effect of which was to delay the date of any peak by several years. Just as the 1971 U. Peak in oil production was only clearly recognized after the fact, a peak in world production will be difficult to discern until production clearly drops off. [115] The peak is also a moving target as it is now measured as “liquids”, which includes synthetic fuels, instead of just conventional oil. The International Energy Agency (IEA) said in 2010 that production of conventional crude oil had peaked in 2006 at 70 MBBL/d, then flattened at 68 or 69 thereafter. [117][118] Since virtually all economic sectors rely heavily on petroleum, peak oil, if it were to occur, could lead to a “partial or complete failure of markets”. [119] In the mid-2000s, widespread fears of an imminent peak led to the “peak oil movement, ” in which over one hundred thousand Americans prepared, individually and collectively, for the “post-carbon” future. Unconventional oil is petroleum produced or extracted using techniques other than the conventional methods. [121] [122] The calculus for peak oil has changed with the introduction of unconventional production methods. In particular, the combination of horizontal drilling and hydraulic fracturing has resulted in a significant increase in production from previously uneconomic plays. The large increase in tight oil production is one of the reasons behind the price drop in late 2014. [124] Certain rock strata contain hydrocarbons but have low permeability and are not thick from a vertical perspective. Conventional vertical wells would be unable to economically retrieve these hydrocarbons. Horizontal drilling, extending horizontally through the strata, permits the well to access a much greater volume of the strata. Hydraulic fracturing creates greater permeability and increases hydrocarbon flow to the wellbore. Barrel of oil equivalent. List of oil exploration and production companies. List of oil fields. Manure-derived synthetic crude oil. The stock (also capital stock) of a corporation is all of the shares into which ownership of the corporation is divided. [1] In American English, the shares are commonly called stocks. [1] A single share of the stock represents fractional ownership of the corporation in proportion to the total number of shares. In liquidation, the stock represents the residual assets of the company that is due to stockholders after discharge of all senior claims such as secured and unsecured debt. [2] Stockholders’ equity cannot be withdrawn from the company in a way that is intended to be detrimental to the company’s creditors. The shares together form stock. The stock of a corporation is partitioned into shares, the total of which are stated at the time of business formation. Additional shares may subsequently be authorized by the existing shareholders and issued by the company. In some jurisdictions, each share of stock has a certain declared par value, which is a nominal accounting value used to represent the equity on the balance sheet of the corporation. In other jurisdictions, however, shares of stock may be issued without associated par value. Shares represent a fraction of ownership in a business. A business may declare different types (or classes) of shares, each having distinctive ownership rules, privileges, or share values. Ownership of shares may be documented by issuance of a stock certificate. A stock certificate is a legal document that specifies the number of shares owned by the shareholder, and other specifics of the shares, such as the par value, if any, or the class of the shares. In the United Kingdom, Republic of Ireland, South Africa, and Australia, stock can also refer to completely different financial instruments such as government bonds or, less commonly, to all kinds of marketable securities. Stock typically takes the form of shares of either common stock or preferred stock. As a unit of ownership, common stock typically carries voting rights that can be exercised in corporate decisions. Preferred stock differs from common stock in that it typically does not carry voting rights but is legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders. [4][5][page needed] Convertible preferred stock is preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually any time after a predetermined date. Shares of such stock are called “convertible preferred shares” (or “convertible preference shares” in the UK). New equity issue may have specific legal clauses attached that differentiate them from previous issues of the issuer. Some shares of common stock may be issued without the typical voting rights, for instance, or some shares may have special rights unique to them and issued only to certain parties. Often, new issues that have not been registered with a securities governing body may be restricted from resale for certain periods of time. They have other features of accumulation in dividend. In addition, preferred stock usually comes with a letter designation at the end of the security; for example, Berkshire-Hathaway Class “B” shares sell under stock ticker BRK. B, whereas Class “A” shares of ORION DHC, Inc will sell under ticker OODHA until the company drops the “A” creating ticker OODH for its “Common” shares only designation. This extra letter does not mean that any exclusive rights exist for the shareholders but it does let investors know that the shares are considered for such, however, these rights or privileges may change based on the decisions made by the underlying company. [6] Under Rule 144, restricted and controlled securities are acquired in unregistered form. These individuals will only be allowed to liquidate their securities after meeting the specific conditions set forth by SEC Rule 144. Rule 144 allows public re-sale of restricted securities if a number of different conditions are met. Further information: equity derivative. A stock derivative is any financial instrument for which the underlying asset is the price of an equity. Futures and options are the main types of derivatives on stocks. The underlying security may be a stock index or an individual firm’s stock, e. Takes on the obligation to sell. Stock index futures are generally delivered by cash settlement. A stock option is a class of option. Thus, the value of a stock option changes in reaction to the underlying stock of which it is a derivative. The most popular method of valuing stock options is the Black Scholes model. [7] Apart from call options granted to employees, most stock options are transferable. One of the earliest stock by the Dutch East India Company. During the Roman Republic, the state contracted (leased) out many of its services to private companies. These government contractors were called publicani, or societas publicanorum as individual companies. [8] These companies were similar to modern corporations, or joint-stock companies more specifically, in a couple of aspects. They issued shares called partes (for large cooperatives) and particulae which were small shares that acted like today’s over-the-counter shares. [9] Polybius mentions that almost every citizen participated in the government leases. [10] There is also an evidence that the price of stocks fluctuated. The Roman orator Cicero speaks of partes illo tempore carissimae, which means shares that had a very high price at that time. [11] This implies a fluctuation of price and stock market behavior in Rome. Around 1250 in France at Toulouse, 96 shares of the Société des Moulins du Bazacle, or Bazacle Milling Company were traded at a value that depended on the profitability of the mills the society owned. The earliest recognized joint-stock company in modern times was the English (later British) East India Company, one of the most famous joint-stock companies. It was granted an English Royal Charter by Elizabeth I on December 31, 1600, with the intention of favouring trade privileges in India. The Royal Charter effectively gave the newly created Honourable East India Company (HEIC) a 15-year monopoly on all trade in the East Indies. [13] The company transformed from a commercial trading venture to one that virtually ruled India as it acquired auxiliary governmental and military functions, until its dissolution. The East India Company’s flag initially had the flag of England, St. George’s Cross, in the corner. [15] The Dutch East India Company became the first multinational corporation and the first megacorporation. Between 1602 and 1796 it traded 2.5 million tons of cargo with Asia on 4,785 ships and sent a million Europeans to work in Asia, surpassing all other rivals. The innovation of joint ownership made a great deal of Europe’s economic growth possible following the Middle Ages. The technique of pooling capital to finance the building of ships, for example, made the Netherlands a maritime superpower. This is unusual because it shows individual parties fulfilling contracts that were not legally enforceable and where the parties involved could incur a loss. Stringham argues that this shows that contracts can be created and enforced without state sanction or, in this case, in spite of laws to the contrary. Stock certificate for ten shares of the Baltimore and Ohio Railroad Company. A shareholder (or stockholder) is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. Both private and public traded companies have shareholders. However, shareholder’s rights to a company’s assets are subordinate to the rights of the company’s creditors. Shareholders are one type of stakeholders, who may include anyone who has a direct or indirect equity interest in the business entity or someone with a non-equity interest in a non-profit organization. Thus it might be common to call volunteer contributors to an association stakeholders, even though they are not shareholders. However, in a few unusual cases, some courts have been willing to imply such a duty between shareholders. For example, in California, USA, majority shareholders of closely held corporations have a duty not to destroy the value of the shares held by minority shareholders. The owners of a private company may want additional capital to invest in new projects within the company. They may also simply wish to reduce their holding, freeing up capital for their own private use. This process is called an initial public offering, or IPO. The owner may also inherit debt and even litigation. In the common case of a publicly traded corporation, where there may be thousands of shareholders, it is impractical to have all of them making the daily decisions required to run a company. Thus, the shareholders will use their shares as votes in the election of members of the board of directors of the company. In a typical case, each share constitutes one vote. Corporations may, however, issue different classes of shares, which may have different voting rights. Owning the majority of the shares allows other shareholders to be out-voted effective control rests with the majority shareholder (or shareholders acting in concert). In this way the original owners of the company often still have control of the company. Although ownership of 50% of shares does result in 50% ownership of a company, it does not give the shareholder the right to use a company’s building, equipment, materials, or other property. This is because the company is considered a legal person, thus it owns all its assets itself. In most countries, boards of directors and company managers have a fiduciary responsibility to run the company in the interests of its stockholders. Nonetheless, as Martin Whitman writes. It can safely be stated that there does not exist any publicly traded company where management works exclusively in the best interests of OPMI [Outside Passive Minority Investor] stockholders. Instead, there are both “communities of interest” and “conflicts of interest” between stockholders (principal) and management (agent). This conflict is referred to as the principalagent problem. It would be naive to think that any management would forego management compensation, and management entrenchment, just because some of these management privileges might be perceived as giving rise to a conflict of interest with OPMIs. Even though the board of directors runs the company, the shareholder has some impact on the company’s policy, as the shareholders elect the board of directors. Each shareholder typically has a percentage of votes equal to the percentage of shares he or she owns. So as long as the shareholders agree that the management (agent) are performing poorly they can select a new board of directors which can then hire a new management team. In practice, however, genuinely contested board elections are rare. Board candidates are usually nominated by insiders or by the board of the directors themselves, and a considerable amount of stock is held or voted by insiders. Owning shares does not mean responsibility for liabilities. If a company goes broke and has to default on loans, the shareholders are not liable in any way. Financing a company through the sale of stock in a company is known as equity financing. Alternatively, debt financing (for example issuing bonds) can be done to avoid giving up shares of ownership of the company. Unofficial financing known as trade financing usually provides the major part of a company’s working capital (day-to-day operational needs). Main article: Stock trader. A stockbroker using multiple screens to stay up to date on trading. In general, the shares of a company may be transferred from shareholders to other parties by sale or other mechanisms, unless prohibited. Most jurisdictions have established laws and regulations governing such transfers, particularly if the issuer is a publicly traded entity. The desire of stockholders to trade their shares has led to the establishment of stock exchanges, organizations which provide marketplaces for trading shares and other derivatives and financial products. Today, stock traders are usually represented by a stockbroker who buys and sells shares of a wide range of companies on such exchanges. S companies choose to list on a U. These companies must maintain a block of shares at a bank in the US, typically a certain percentage of their capital. On this basis, the holding bank establishes American depositary shares and issues an American depositary receipt (ADR) for each share a trader acquires. Likewise, many large U. Companies list their shares at foreign exchanges to raise capital abroad. The major OTC markets in the United States are the electronic quotation systems OTC Bulletin Board (OTCBB) and OTC Markets Group formerly known as Pink OTC Markets Inc. [23] where individual retail investors are also represented by a brokerage firm and the quotation service’s requirements for a company to be listed are minimal. There are many different brokerage firms from which to choose, such as full service brokers or discount brokers. The full service brokers usually charge more per trade, but give investment advice or more personal service; the discount brokers offer little or no investment advice but charge less for trades. Another type of broker would be a bank or credit union that may have a deal set up with either a full-service or discount broker. One way is directly from the company itself. However, the initial share of stock in the company will have to be obtained through a regular stock broker. He can sell if the share price drops below the margin requirement, at least 50% of the value of the stocks in the account. Moreover, borrowing is not free; the broker usually charges 810% interest. To avoid further loss. The price of a stock fluctuates fundamentally due to the theory of supply and demand. Like all commodities in the market, the price of a stock is sensitive to demand. However, there are many factors that influence the demand for a particular stock. The fields of fundamental analysis and technical analysis attempt to understand market conditions that lead to price changes, or even predict future price levels. [24] Stock price may be influenced by analysts’ business forecast for the company and outlooks for the company’s general market segment. Stocks can also fluctuate greatly due to pump and dump scams. At any given moment, an equity’s price is strictly a result of supply and demand. The supply, commonly referred to as the float, is the number of shares offered for sale at any one moment. The price of the stock moves in order to achieve and maintain equilibrium. The product of this instantaneous price and the float at any one time is the market capitalization of the entity offering the equity at that point in time. When prospective buyers outnumber sellers, the price rises. When sellers outnumber buyers, the price falls. Eventually buyers enter and/or sellers leave, again achieving equilibrium. If more investors want a stock and are willing to pay more, the price will go up. In professional investment circles the efficient market hypothesis (EMH) continues to be popular, although this theory is widely discredited in academic and professional circles. Briefly, EMH says that investing is overall (weighted by the standard deviation) rational; that the price of a stock at any given moment represents a rational evaluation of the known information that might bear on the future value of the company; and that share prices of equities are priced efficiently, which is to say that they represent accurately the expected value of the stock, as best it can be known at a given moment. In other words, prices are the result of discounting expected future cash flows. The EMH model, if true, has at least two interesting consequences. First, because financial risk is presumed to require at least a small premium on expected value, the return on equity can be expected to be slightly greater than that available from non-equity investments: if not, the same rational calculations would lead equity investors to shift to these safer non-equity investments that could be expected to give the same or better return at lower risk. Second, because the price of a share at every given moment is an “efficient” reflection of expected value, thenrelative to the curve of expected returnprices will tend to follow a random walk, determined by the emergence of information (randomly) over time. Professional equity investors therefore immerse themselves in the flow of fundamental information, seeking to gain an advantage over their competitors (mainly other professional investors) by more intelligently interpreting the emerging flow of information (news). The EMH model does not seem to give a complete description of the process of equity price determination. For example, stock markets are more volatile than EMH would imply. In recent years it has come to be accepted that the share markets are not perfectly efficient, perhaps especially in emerging markets or other markets that are not dominated by well-informed professional investors. Another theory of share price determination comes from the field of Behavioral Finance. The irrational trading of securities can often create securities prices which vary from rational, fundamental price valuations. Thus, even a rational investor may bank on others’ irrationality. A keen investor with access to information about such discrepancies may invest in expectation of their eventual convergence, known as arbitrage trading. Electronic trading has resulted in extensive price transparency (efficient-market hypothesis) and these discrepancies, if they exist, are short-lived and quickly equilibrated. Traditional and alternative investments. The item “RARE Stock Certificate Signed Brazos Oil Company South Dakota 1901 w stamps” is in sale since Tuesday, November 27, 2018. This item is in the category “Coins & Paper Money\Stocks & Bonds, Scripophily\Oil & Gas”. The seller is “dalebooks” and is located in Rochester, New York. This item can be shipped worldwide.

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