­ Crude oil is the term for unprocessed oil, the stuff that comes out of the ground. It is also known as petroleum. Crude oil is a fossil fuel, meaning that it was made natural­ly from decaying plants and animals living in ancient seas millions of years ago -- most places you can find crude oil were once sea beds.Crude oils vary in color, from clear to tar-black, and in viscosity, from water to almost solid. Many of the things derived from crude oil like gasoline, diesel fuel, paraffin wax and so on take advantage of this energy. 2  Hydrocarbons can take on many different forms. 3  The smallest hydrocarbon is methane (CH 4), which is a gas that is a lighter than air.