# Understanding Hydrocarbons: Definition, Types, Companies & Uses

![Hydrocarbon](https://www.investopedia.com/thmb/5KQ2I1zWsyFGouBEjD0F1xDcq3Q=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/hydrocarbon.asp_final-4a8fcbfb937c4784bd629adb0449077f.png)

*— Investopedia / Ellen Lindner*

## What Is a Hydrocarbon?

Hydrocarbons, organic compounds made of hydrogen and carbon, are fundamental to global energy, forming the backbone of [crude oil](https://www.investopedia.com/terms/c/crude-oil.asp), [natural gas](https://www.investopedia.com/articles/fundamental-analysis/12/natural-gas-primer.asp), and [coal](https://www.investopedia.com/news/how-many-people-work-coal-industry/). They play a vital role in energy production, which is central to powering modern economies. Beyond fuels, they are foundational in manufacturing plastics, solvents, and other materials. Their extraction and use, however, come with significant environmental impacts, driving a shift towards cleaner alternatives. Understanding hydrocarbons and their uses highlights both their critical role in global energy and the urgent need for sustainable solutions.

### Key Takeaways

*   Hydrocarbons, consisting of hydrogen and carbon, form the basis of vital energy sources like crude oil, natural gas, and coal, which account for over 80% of global energy consumption.
*   The extraction and use of hydrocarbons are a major economic driver but have significant negative environmental impacts due to greenhouse gas emissions.
*   Some of the largest global companies are hydrocarbon-based, with firms like Saudi Aramco and Exxon Mobil leading the industry.
*   Alternatives such as solar, wind, and geothermal energy are gaining momentum as clean and renewable sources, offering potential solutions to the climatic challenges posed by hydrocarbons.

## Exploring the Significance of Hydrocarbons

Hydrocarbons occur naturally. They originate from plant and animal fossils that were formed by the forces of temperature and weight over millennia. They are mostly found deep underground, in porous rock formations, such as sandstone, limestone, and shale.

Porous rock formations are often found in large bodies of water, so there is an immense quantity of hydrocarbons trapped deep beneath the oceans. [Oil and natural gas exploration companies](https://www.investopedia.com/investing/oil-gas-industry-overview/) use advanced engineering techniques to identify these potential reservoirs and pull their resources to the surface for human use. Examples of such technologies include [offshore oil platforms](https://www.investopedia.com/history-of-oil-prices-4842834), [directional drilling](https://www.investopedia.com/terms/d/directional-drilling.asp), and [enhanced oil recovery](https://www.investopedia.com/terms/e/enhanced-oil-recovery.asp) (EOR) techniques.

Hydrocarbons are crucial to the modern economy, making up over 80% of global energy consumption. They are also used in producing materials like plastics, solvents, and lubricants, highlighting their broader economic role.

Various methods extract hydrocarbons based on their type and location. [Fracking](https://www.investopedia.com/terms/f/fracking.asp) uses pressurized fluid to release natural gas from shale, while mining accesses oil sands mixed with sand and sandstone. Mining is used to access oil sands, which are [unconventional](https://www.investopedia.com/terms/u/uncoventional-oil.asp) deposits of crude oil that are heavily intermixed with sand and sandstone.

## Major Players in the Hydrocarbon Industry

Because hydrocarbons are the largest energy source in the globe, some of the largest companies in the world are hydrocarbon companies. These primarily include [oil and gas companies](https://www.investopedia.com/articles/personal-finance/010715/worlds-top-10-oil-companies.asp) that mine hydrocarbons and convert them into the energy sources that the world uses to power almost everything.

Out of the top 10 companies in the world, six of them are state-owned. [Saudi Aramco](https://www.investopedia.com/what-is-saudi-aramco-4682590) is the world's largest oil and gas company while Exxon Mobil ([XOM](https://www.investopedia.com/markets/quote?tvwidgetsymbol=XOM)), which is based in the United States, is the world's largest [public company](https://www.investopedia.com/terms/p/publiccompany.asp). Other names in this space include:

*   Chevron ([CVX](https://www.tradingview.com/symbols/NYSE-CVX/))
*   Royal Dutch Shell ([SHEL](https://www.tradingview.com/symbols/NYSE-SHEL/))
*   PetroChina (PTR)
*   National Iranian Oil Company
*   Gazprom ([GZPM](https://www.tradingview.com/symbols/MOEX-GAZP/))
*   British Petroleum ([BP](https://www.tradingview.com/symbols/NYSE-BP/))

The efficiency and affordability of these companies significantly influence global financial markets and economies.

Changes in oil prices greatly affect gasoline, [jet fuel for airlines](https://www.investopedia.com/articles/investing/081415/4-ways-airlines-hedge-against-oil.asp), and heating costs, influencing consumer spending and impacting the global economy.  

## Environmental and Economic Impacts of Hydrocarbons

### Environmental

There is a serious environmental cost to using hydrocarbons as a primary source of energy. Fossil fuel sources like crude oil, natural gas, and coal contain hydrogen and carbon. When they're burned, they release greenhouse gasses into the air, mainly carbon dioxide. Releasing them into the air contributes to [climate change](https://www.investopedia.com/articles/investing/051514/preparing-your-portfolio-climate-change.asp).

Oil and gas extraction harms surface environments and groundwater due to pollutants. Spills pose significant threats to marine and aquatic life.

### Economic

Not only does the use of hydrocarbons have an environmental impact but it also has economic implications. Proponents say that this sector is a major economic driver because of how vital it is in terms of the number of jobs it creates. And let's not forget how useful hydrocarbons are to society. After all, consumers need energy sources to fuel their cars, heat their homes, and light up their rooms.

But there's a clear downside. Many economists argue that hydrocarbon energy production involves substantial [negative externalities](https://www.investopedia.com/terms/e/externality.asp) that are not sufficiently represented in the market price of oil and gas. In fact, considering the mounting cost of climate-change-related phenomena, many argue that these externalities significantly outweigh any cost savings associated with hydrocarbons.

## Transitioning to Alternative Energy Sources

To address the negative impact of hydrocarbon energy, there is a growing movement toward the use of [renewable energy sources](https://www.investopedia.com/terms/r/renewable_resource.asp), such as solar, wind, and geothermal power. Along with innovations in battery technology and smart grid infrastructure, these new energy alternatives may play a significantly larger role in global energy production in the years and decades ahead.

### Solar

Solar power comes from the sun. The process transforms [solar energy](https://www.investopedia.com/articles/investing/053015/pros-and-cons-solar-energy.asp) into thermal or electrical energy that is used in powering homes, heating water for commercial and industrial use, and providing electricity. Solar energy is considered to be the most abundant and cleanest energy source in the world.

Solar power has gained prominence in the use of homes and office buildings. It functions via solar panels that are placed on these structures that convert solar energy into electricity and other uses. Solar panel companies are more common and a new part of the energy industry.

> **Fast Fact**
>
> The top five solar power-producing countries are China, the United States, Japan, Germany, and India.

### Wind

[Wind energy](https://www.investopedia.com/wind-investments-how-to-invest-in-wind-energy-5220593) utilizes the wind to create power or electricity. Wind turbines are created to convert the energy in wind to mechanical power, which is then used for a variety of industrial tasks as well as in creating electricity through the use of a generator. Wind turbines can be found on both land and water.

### Geothermal

Geothermal energy taps into the heat that exists under the surface of the earth. The sources of heat are trapped inside rocks and liquids under the surface as well as far down towards the earth's core. Geothermal energy is created by digging wells into the earth's surface to access the steam and hot water, which are used to power generators that create electricity.  

## What Is a Hydrocarbon and Its Uses?

A hydrocarbon is an organic compound consisting of hydrogen and carbon found in crude oil, natural gas, and coal. Hydrocarbons are highly combustible and the main energy source of the world. Its uses consist of gasoline, jet fuel, propane, kerosene, and diesel, to name just a few.

## What Are the Types of Hydrocarbons?

There are two types of hydrocarbons: aliphatic and aromatic. The three types of aliphatic hydrocarbons are alkanes, alkenes, and alkynes. Aromatic hydrocarbons include benzene. Overall, examples of hydrocarbons are methane, ethane, propane, and butane.

## What Is Hydrocarbon Fuel?

Hydrocarbon fuel is fuel that is derived from a hydrocarbon, which includes gasoline and jet fuel, both of which have significant uses in the modern world, from powering cars to planes to lawnmowers.

## How Do You Identify a Hydrocarbon?

Hydrocarbons are identified by studying their molecular structure. Hydrocarbons only consist of carbon and hydrogen, in many different formats, but that is their identifying feature.

## Are Hydrocarbons Harmful to Humans?

Yes, hydrocarbons are dangerous to humans. Gases emitted from hydrocarbons have shown to damage respiratory systems and harm the environment through climate change and the greenhouse effect. Oil spills damage ecosystems. While hydrocarbons are natural occurrences, it is their manipulation into energy sources that are harmful to humans.

## The Bottom Line

Hydrocarbons, organic compounds composed of hydrogen and carbon, are foundational to global energy production, forming the basis of oil, natural gas, and coal. While their combustion is vital for fueling the modern economy, it has significant environmental implications, contributing to climate change through greenhouse gas emissions. This has spurred efforts to transition towards renewable energy sources like solar, wind, and geothermal power, which offer cleaner and more sustainable alternatives. Understanding the economic impact and environmental costs of hydrocarbons is crucial for informed decision-making in energy consumption and investment.

> **Article Sources**
>
> 1.  Our World in Data. "[Energy Mix](https://ourworldindata.org/energy-mix)."
>     
> 2.  World Population Review. "[Solar Power by Country 2022](https://worldpopulationreview.com/country-rankings/solar-power-by-country)."