Bitumen, aka asphalt in the US, is a substance produced through the distillation of crude oil that is known for its waterproofing and adhesive features. Production of this material through distillation removes lighter crude oil components, such as gasoline and diesel, leaving the “heavier” bitumen behind. The producer often refines it several times to improve its grade.
I can also occur in nature: Deposits of naturally occurring bitumen form at the bottom of ancient lakes, where prehistoric organisms have since decayed and have been subjected to heat and pressure.
It is comprised of complex hydrocarbons and contains elements such as calcium, iron, sulfur, and oxygen. The quality of material and ease of production depends on the source and type of crude oil it is derived from.
This is generally for industry use. The substance was first used for its natural adhesive and waterproofing characteristics, as a binder to bind building materials together, as well as to line the bottoms of ships. It has also been taken in the past as a medicine.
Nowadays, the material is used mostly in road paving. The majority of roads are made of either bitumen or a combination of bitumen and aggregates, such as concrete. A key benefit, other than its adhesive and waterproofing qualities, is that engineers replacing asphalt roads can reuse the material on other road projects. It is also commonly used by manufacturers in the creation of roofing products.
Under heavy loads, it can deform permanently, depending on the composition of the asphalt mixture, the ambient temperature, and the amount of stress placed on the material. Bitumen oxidizes, which can leave the asphalt brittle and result in it cracking.
Bitumen is also a term used to refer to oil sands, or partially consolidated sandstone containing a naturally occurring mixture of sand, clay, and water, saturated with a dense and extremely viscous from petroleum.
Bituminous sands are extremely abundant in Canada, especially in the province of Alberta, where rising oil prices have made it economical to extract petroleum from these sands on a large scale. The Canadian Energy Research Institute (CERI) estimates that the price of crude oil must hit $70.08 per barrel for a stand-alone bitumen mine to be profitable.
Fun Fact: World’s ancient civilizations used to trade the material and Herodotus, a fifth-century BC historian from Greece, claimed that the walls of ancient Babylon were partly of bitumen.
Bitumen Price Fluctuations
One factor that influences the prices for this product is the price spread between heavy and light crude. Bitumen is produced as a byproduct during the distillation process for heavy crude; as such, refiner decisions to process heavy versus light crude plays is critical for prices.
Bitumen is a residual material during the process of refining crude oil into liquefied petroleum gas (LPG) and gasoline. As such, the prices are heavily reliant on the same set of factors that affect crude prices. These include supply and demand for crude and geopolitical stability in crude-producing regions.