Introduction Oil is a fossil fuel which is formed from the remains of plants and animals when they are fossilized. This takes place beneath the earth’s crust due to heat and pressure exerted by the earth. Over several years, the product is found below the earth’s surface between hot and pressurized layer. This makes the oil reservoirs. The product is often covered with silt and mud. This forces the miners to spent large sums of money for its preparation to a final product. Oil industry is the place where crude oil is refined into final consumable products. The products which come from refining crude oil are gasoline, kerosene, perfumes, insecticides and naphtha (Working in the US oil company, 1999). Positive externalities in the oil industry   * Transport: Most of the transportation is based on oil consumption. Road transport, railway transport and air transport constantly benefit from this. Though, electricity is now opted for, this will be very expensive. Gasoline is the mostly used product in this case.   * Electricity generation: Many generators of electricity use oil. This is used to run machines which generate this electricity. The oil also lubricates the movable parts of the machines.   * Farming: Tractors and combine harvesters all use oil to perform tier work. This so far has assisted farmers for they have to spend little time in harvesting and cultivation.   * Plastics: Most of the plastics used domestically are made from electricity use. Negative externalities of oil industry Some oil industry operations are key pollutants to air,water and land. This is through byproducts and oil spills. When the fossil fuel burns, it emits greenhouse gases and also other air pollutants. These pollutants include sulfur dioxides, heavy metals and nitrogen oxide. Oil can have both long term effect and short term effects on the environment. Death of fisheries, wildlife and water supply contamination are short term effects. When oil products accumulate to a high level in the sea and on the land’s surface, it causes harm to the food chain and to the ecosystem as a whole. This usually happens when oil spills from tankers while on transport, when there is leakage in the oil pipes, when there is an incident during road or railway transportation. Often, there is deliberate spilling or when the oil containers are wrongly handled. There are also some cases of seepage from the oil deposits. When this is not controlled it will cause the following effects:   * Contamination of drinking water: This occurs when there is a mixture of oil spills with water. This may lead to death of human beings. Water of 150,000 gallons, can be polluted by only one quart of oil (Air and Waste Management Association, 2001).   * Death off fish and wildlife poisoning: Shellfish, waterfowl and other types of marine animals are harmed by oil when it spills. Once oil has spilled, it becomes expensive in cleaning and also the spills are not pleasant in its look. Fisheries places are damaged making it a hardship to those who take fishing as their economic activity. Oil disperses quickly in water and if not removed within a short period, it will accumulate forming tar balls which sinks in water and start releasing hydrocarbons