Oil and Gas Markets Notes

Marios Mavrides
European University Cyprus

Source: Energy Information Agency

 What is energy

Energy is the ability to do work

Energy comes in different forms:
Heat (thermal)
Light (radiant)
Motion (kinetic)
Electrical
Chemical
Nuclear energy
Gravitational

We use energy for everything we do, from making a jump shot to sending
astronauts into space.
There are two types of energy:
Stored (potential) energy
Working (kinetic) energy

For example, the food you eat contains chemical energy, and your body
stores this energy until you use it when you work or play.

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Energy sources can be categorized as renewable or nonrenewable
When we use electricity in our home, the electrical power was probably generated
by burning coal, by a nuclear reaction, or by a hydroelectric plant on a river, to name
just a few sources. Therefore, coal, nuclear, and hydro are called energy sources.

When we fill up a gas tank, the source might be petroleum refined from crude oil or
ethanol made by growing and processing corn.

Energy sources are divided into two groups:

Renewable (an energy source that can be easily replenished)
Nonrenewable (an energy source that cannot be easily recreated)

Renewable and nonrenewable energy sources can be used to produce secondary

energy sources like electricity.

Renewable energy
There are five main renewable energy sources:
Solar energy from the sun, which can be turned into electricity and heat
Wind energy
Geothermal energy from heat inside the earth
Biomass from plants, which includes firewood from trees, ethanol from corn, and
biodiesel from vegetable oil
Hydropower from hydroelectric turbines 3
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Nonrenewable energy
We get most of our energy from nonrenewable energy sources, which include fossil
fuels (oil, natural gas, and coal). These energy sources are called fossil fuels because
they were formed over millions of years by the action of heat from the earth's core and
pressure from rock and soil on the remains (or fossils) of dead plants and creatures like
microscopic diatoms. Another nonrenewable energy source is uranium, whose atoms
can be split (through a process called nuclear fission) to create heat and eventually
electricity.

We use renewable and nonrenewable energy sources to generate the electricity we

need for our homes, businesses, schools, and factories. Electricity powers our
computers, lights, refrigerators, washing machines, and heating and cooling systems.
Most of the gasoline used in cars and motorcycles, and the diesel fuel used in trucks,
tractors, and buses are both made from crude oil and other hydrocarbon liquids that
are nonrenewable resources. Natural gas, used to heat homes, dry clothes, and cook
food, is also a nonrenewable resource.

The chart above shows what energy sources the United States used in 2013.
Nonrenewable energy sources accounted for 90% of all energy used in the nation.
Biomass, which includes wood, biofuels, and biomass waste, is the largest renewable
source accounting for about half of all renewable energy and 5% of total energy
consumption
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What is energy?
Energy makes change possible. It moves cars along the road and boats
through the water. It bakes a cake in the oven, keeps ice frozen in the
freezer, and lights our homes.

Scientists define energy as the ability to do work. Modern civilization is

possible because we have learned how to change energy from one form to
another and then use it to do work for us.

Forms of energy
There are many forms of energy, but they can all be put into two
categories:

Potential energy
Kinetic energy

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Potential energy is stored energy and the energy of position. There are several forms
of potential energy.

Chemical energy is energy stored in the bonds of atoms and molecules. Batteries,
biomass, petroleum, natural gas, and coal are examples of stored chemical energy.
Chemical energy is converted to thermal energy when we burn wood in a fireplace or
burn gasoline in a car's engine

Mechanical energy is energy stored in objects by tension. Compressed springs and

stretched rubber bands are examples of stored mechanical energy.

Nuclear energy is energy stored in the nucleus of an atomthe energy that holds the
nucleus together. Large amounts of energy can be released when the nuclei are
combined or split apart. Nuclear power plants split the nuclei of uranium atoms in a
process called fission. The sun combines the nuclei of hydrogen atoms in a process
called fusion

Gravitational energy is energy stored in an object's height. The higher and heavier the
object, the more gravitational energy is stored. When you ride a bicycle down a steep
hill and pick up speed, the gravitational energy is being converted to motion energy.
Hydropower is another example of gravitational energy, where the dampiles up water
from a river into a reservoir. 7
Kinetic energy
Kinetic energy is the motion of waves, electrons, atoms, molecules, substances, and
objects

Radiant energy is electromagnetic energy that travels in transverse waves. Radiant

energy includes visible light, x-rays, gamma rays and radio waves. Light is one type of
radiant energy. Sunshine is radiant energy, which provides the fuel and warmth that
make life on earth possible.
Thermal energy, or heat, is the vibration and movement of the atoms and molecules
within substances. As an object is heated up, its atoms and molecules move and collide
faster. Geothermal energy is the thermal energy in the earth
Motion energy is energy stored in the movement of objects. The faster they move, the
more energy is stored. It takes energy to get an object moving, and energy is released
when an object slows down. Wind is an example of motion energy. A dramatic example
of motion is a car crash, when the car comes to a total stop and releases all its motion
energy at once in an uncontrolled instant.
Sound is the movement of energy through substances in longitudinal
(compression/rarefaction) waves. Sound is produced when a force causes an object or
substance to vibrate. The energy is transferred through the substance in a wave. Typically,
the energy in sound is far less than other forms of energy.
Electrical energy is delivered by tiny charged particles called electrons, typically moving
through a wire. Lightning is an example of electrical energy in nature.
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Source: U.S. Energy Information Administration, Monthly Energy Review (May 2014),
Table 1.3, preliminary 2013 data
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Most of our energy is nonrenewable
Most of the energy comes from nonrenewable energy sources. Coal, petroleum, natural gas,
and uranium are examples of nonrenewable energy sources. They are used to make
electricity, to heat our homes, to move our cars, and to manufacture products.

These energy sources are called nonrenewable because their supplies are limited.
Petroleum, for example, was formed millions of years ago from the remains of ancient sea
plants and animals.

Use of renewable energy is growing

Renewable energy sources include biomass, geothermal energy, hydropower, solar energy,
and wind energy. They are called renewable energy sources because they are naturally
replenished regularly. Day after day, the sun shines, the wind blows, and rivers flow. We use
renewable energy sources to create electricity, for heat, and for transportation fuels.

How are secondary sources of energy different from primary energy sources?
Electricity and hydrogen are different than other energy sources because they
are secondary sources of energy. Secondary sources of energyenergy carriersare used
to store, move, and deliver energy in an easily useable form. We have to use another energy
source to make secondary sources of energy like electricity and hydrogen.

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Energy is neither created nor destroyed

To scientists, conservation of energy does not mean saving energy. Instead, the
law of conservation of energy says that energy is neither created nor
destroyed. When we use energy, it doesn't disappear. We change it from one
form of energy into another form of energy.

A car engine burns gasoline, converting the chemical energy in gasoline into
mechanical energy. Solar cells change radiant energy into electrical energy.
Energy changes form, but the total amount of energy in the universe stays the
same.

Most energy transformations are not very efficient. The human body is a good
example. Your body is like a machine, and the fuel it requires is food. Food
gives you energy to move, breathe, and think. But your body isn't very efficient
at converting food into useful work. Your body is less than 5% efficient most of
the time. The rest of the energy is lost as heat

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Physical units reflect measures of distances, areas, volumes, heights, weights, mass,
force, and energy. Different types of energy are measured by different physical units:

Barrels or gallons for petroleum

Cubic feet for natural gas
Tons for coal
Kilowatthours for electricity

To compare different fuels, we need to convert the measurements to the same units.

Units for comparing energy

Some popular units for comparing energy include British thermal units (Btu), barrels
of oil equivalent, metric tons of oil equivalent, metric tons of coal equivalent, and
terajoules.

The Btu, a measure of heat energy, is the most commonly used unit for comparing
fuels. Because energy used in different countries comes from different places, the Btu
content of fuels varies slightly from country to country.

The Btu content of each fuel provided below and used in the energy calculator
reflects the average energy content for fuels consumed in the United States
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Btu content of common energy units

1 barrel (42 gallons) of crude oil = 5,800,000 Btu

1 gallon of gasoline = 124,262 Btu

1 gallon of diesel fuel = 138,690 Btu

1 gallon of heating oil = 138,690 Btu

1 barrel of residual fuel oil = 6,287,000 Btu

1 cubic foot of natural gas = 1,025 Btu

1 gallon of propane = 91,333 Btu

1 short ton of coal = 19,489,000 Btu

1 kilowatthour of electricity = 3,412 Btu

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How big is a barrel?
A barrel is a unit of volume or weight that is different depending on who
uses the term and what it contains...

For example:

1 barrel (bbl) of petroleum or related products = 42 gallons

1 barrel of Portland cement = 376 pounds

1 barrel of flour = 196 pounds

1 barrel of pork or fish = 200 pounds

1 barrel of (U.S.) dry measure = 3.29122 bushels or 4.2104 cubic feet

A barrel may be called a "drum," but a drum usually holds 55 gallons.

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Examples of converting different energy sources to Btu

Example 1:
You have a natural gas furnace in your home that used 81,300 cubic feet of natural gas
for heating last winter. Your neighbor has an oil furnace that used 584 gallons of heating
oil last winter. You can convert the natural gas and heating oil consumption data into
Btu to determine which home used more energy for heating.

Natural gas: 81,300 cubic feet x 1,025 Btu per cubic foot = 83,332,500 Btu
(your home)
Heating oil: 584 gallons x 138,690 Btu per gallon = 80,994,496 Btu
(neighbor's home)

Answer: You used more energy to heat your home.

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 Example 2
You are employed at an electric power company. Your companys power generators can
operate on natural gas or residual fuel oil. Your responsibility is to switch fuels when
the cost of the fuel you are currently using becomes more expensive than the other
fuel. This switch will allow costs to remain low for the company and their customers.
The generators are currently operating on residual fuel oil, but in 2013 fuel oil prices
were about four times more than natural gas prices. Based on the fuel costs listed
below, you need to make a decision to switch to natural gas now or at a later time.

Natural gas: $4.48 per 1.025 million Btu per $4.37 per
thousand cubic thousand cubic feet = million Btu
feet
Residual fuel $108.86 per 6.287 million Btu per barrel = $17.32 per
oil: barrel million Btu

Answer: When you convert the fuels into the same units, the residual fuel oil costs
more than natural gas now. You decide to switch to natural gas to save money.

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Common energy units: (Scientific notation)
British thermal unit (Btu) 1.0
Millions of Btu 1.0E+06 Btu
Therm 1.0E+05 Btu
Billions of Btu 1.0E+09 Btu
Quad 1.0E+15 Btu
Calorie 1.0 Calorie
Kilocalorie 1.0E+03 Calories
Food calorie 1.0E+03 Calories
Thermie 1.0E+05 Calories
Teracalorie 1.0E+12 Calories
Megajoule 1.0E+06 Joule
Joule 1.0 Joule
Gigajoule 1.0E+09 Joules
Terajoule 1.0E+12 Joules
Watthour 1.0
Kilowatthour (kWh) 1.0E+03 watthour
Megawatthour (mWh) 1.0E+06 watthour
Gigawatthour (gWh) 1.0E+09 watthour
Terawatthour (tWh) 1.0E+12 watthour
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 Btu conversion factors

Energy source Physical units and Btu

(averages, 2012)
Electricity 1 kilowatthour = 3,412 Btu
Natural gas 1 cubic foot = 1,025 Btu
1 therm = 100,000 Btu
Motor gasoline 1 gallon = 120,524 Btu
Diesel fuel 1 gallon = 138,690 Btu
Heating oil 1 gallon = 138,690 Btu
Propane 1 gallon = 91,333 Btu
Wood 1 cord = 20,000,000 Btu

1Weighted averages across different contexts of each fuel such as imports, exports,
production, and consumption.
2Gasoline sold at retail in the United States, with about 10% ethanol content by

volume.
3This is estimated. A cord of wood is a volume unit and does not take wood density

or moisture content into account. Wood heat content varies significantly with
moisture content.
The Btu conversion factors above are approximations.
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What is a British thermal unit?
A British thermal unit (Btu) is a measure of the heat content of fuels. It is
the quantity of heat required to raise the temperature of 1 pound of liquid
water by 1 degree Fahrenheit at the temperature that water has its
greatest density (approximately 39 degrees Fahrenheit).

Why use British thermal units?

Energy or heat content can be used to compare different fuels on an equal
basis. Fuels can be converted from physical units of measure (such as
weight or volume) to a common unit of measurement of the energy or heat
content of each fuel. EIA uses British thermal units as a unit of energy
content.

Using British thermal units to compare fuels for electricity generation

Fuels are sold in different physical units, but prices can be compared in
dollars per million Btu by dividing the price per unit by the energy content
per unit. This shows which fuel is the least expensive.

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 Price Btu (energy content) $/Million Btu

Coal $47.51 per ton 19.59 million per short ton $2.43

Oil $133.44 per barrel 6.04 million per barrel $22.11

Natural gas $3.81 per thousand cubic 1.02 million per Mcf $3.74
feet (Mcf)

Based on the unit prices and heat contents in the table above, coal is the least
expensive fuel on a price-per-energy content basis.

Of course, fuel price is not the only factor to consider when selecting a particular fuel.
The efficiency of the device (generator, car engine, or household combustion
appliance) burning the fuel will determine how much of the fuels heat content is
converted to useful energy (electricity, horsepower, or space heat). Environmental
emissions and equipment costs are other factors that should also be taken into
account.
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An abbreviation denoting a thousand cubic feet of natural gas. A natural gas
well that produces 400 Mcf of gas per day operates with a daily production rate
of 400,000. A single Mcf is equal to approximately 1,000,000 Btu (British
thermal units) of energy. The "M" in MCF comes from the ancient Roman letter
M, which stood for one thousand. One million cubic feet is instead denoted as
MMcf.

Different energy sources yield different outputs for an equivalent amount of

resource. Coal, for example produces 25 million Btu of energy per ton while oil
produces 5.6 million Btu per barrel. One Btu is the amount of heat energy
required to raise the temperature of one pound of water by one
degree Fahrenheit

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One Btu is approximately equal to the
energy released by burning a match.

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 What is a degree day?

Cold winter weather or sweltering summer heat can increase utility bills. But
how much of the rise in cost is a result of the weather? You can find out by
using a unit of measure called the degree day. A degree day compares the
outdoor temperature to a standard of 65F. The more extreme the
temperature, the higher the number of degree days. A higher number of
degree days will require more energy for space heating or cooling.

Hot days are measured in cooling degree days. On a day with a mean
temperature of 80F, for example, 15 cooling degree days would be recorded.

Cold days are measured in heating degree days. For a day with a mean
temperature of 40F, 25 heating degree days would be recorded. Two such
cold days would result in a total of 50 heating degree days for the two-day
period

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What is degree day data used for?
By studying degree day patterns in your area, you can assess the climate and
the heating and cooling needs based on time and season.

What are population-weighted degree days?

Degree day data can be weighted according to the population of a region to
estimate energy consumption. The U.S. Energy Information Administration
(EIA) uses population-weighted degree days to model and project energy
consumption for the United States and for U.S. Census Regions and Divisions.

Where can I find degree day data?

In some areas, degree day information is published in the local newspapers,
usually in the weather section. Degree day information may also be available
from your local utility and its public relations department. Some utility bills even
show degree days for each billing period.

What is the significance of knowing degree days for each area?

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 Americans use many types of energy

Petroleum (oil) is the largest share of U.S. primary energy consumption,

followed by natural gas, coal, nuclear electric power, and renewable energy
(including hydropower, wood, biofuels, biomass waste, wind, geothermal,
and solar). Electricity is a secondary energy source that is generated from
primary forms of energy

Energy sources are commonly measured in different physical units to include

barrels of oil, cubic feet of natural gas, tons of coal, and kilowatthours of
electricity. In the United States, British thermal units (Btu), a measure of heat
energy, is commonly used for comparing different types of energy. In 2013,
total U.S. primary energy use was about 97.5 quadrillion (1015, or one
thousand trillion) Btu.

The major energy users are residential and commercial buildings, industry,
transportation, and electric power generators. The pattern of fuel use varies
widely by sector. For example, petroleum oil provides 92% of the energy
used for transportation, but only 1% of the energy used to generate
electricity.

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In 2013, energy produced in the United States provided about 84% of the
nation's energy needs. The remaining energy was supplied mainly by
imports of petroleum.

The three major fossil fuelspetroleum, natural gas, and coalaccounted

for most of the nation's energy production in 2013:

Natural gas30%
Coal24%
Petroleum (crude oil and natural gas plant liquids)24%
Renewable energy11%
Nuclear electric power10%

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The mix of U.S. energy production changes

The three major fossil fuelspetroleum, natural gas, and coalhave dominated
the U.S. energy mix for more than 100 years. There are several recent changes
in U.S. energy production:

The share of coal produced from surface mines increased significantly from
25% in 1949 to 51% in 1971 to 66% in 2012. The remaining share was
produced from underground mines.

In 2013, natural gas production was higher than in any previous year. In recent
years, more efficient and cost-effective drilling and production techniques have
resulted in increased production of natural gas from shale formations.

Total U.S. crude oil production generally decreased each year from a peak in
1970, but the trend reversed in 2010. In 2013, crude oil production was the
highest since 1989. These increases were the result of increased use of
horizontal drilling and hydraulic fracturing techniques, most notably in North
Dakota and Texas.

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The mix of U.S. energy production changes continued

Natural gas plant liquids (NGPL) are hydrocarbons that are separated
as liquids from natural gas at processing plants. They are important
ingredients for manufacturing plastics and gasoline. Propane is the only
NGPL that is widely used for heating and cooking. Production of NGPL
fluctuates with natural gas production, but the NGPL share of total U.S.
crude oil and petroleum field production increased from 8% in 1950 to
26% in 2013.

In 2013, total renewable energy production and consumption reached

record highs of about 9 quadrillion Btu each. Hydroelectric power
production in 2013 was about 9% below the 50-year average, but
increases in biofuels use and wind power generation increased the
overall total contribution of renewable energy. Production of energy
from wind and solar were at record highs in 2013.

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How we use energy

The United States is a highly developed and industrialized society.

Americans use a lot of energy in homes, in businesses, in industry, and for
personal travel and transporting goods. There are four major sectors that
consume energy:

The industrial sector includes facilities and equipment used for

manufacturing, agriculture, mining, and construction.

The transportation sector includes vehicles that transport people or goods.

Cars, trucks, buses, motorcycles, trains, aircraft, boats, barges, and ships
are included in the transportation sector.

The residential sector consists of homes and apartments.

The commercial sector includes offices, malls, stores, schools, hospitals,

hotels, warehouses, restaurants, places of worship, and more.

Each end-use sector consumes electricity produced by the electric power

sector.
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Demand for energy has been growing over the years

Primary energy consumption in the United States was almost three times
greater in 2013 than it was in 1949. In all but 18 of the years between
1949 and 2013, primary energy consumption increased over the
previous year.

There was a sharp contrast to this historical trend in 2009 as a result of

the economic recession. In 2009, real gross domestic product (GDP) fell
2% compared to 2008, and energy consumption declined by nearly 5%,
the largest single-year decline since 1949. Decreases occurred in all four
major end-use sectors (residential3%, commercial3%, industrial
9%, and transportation3%). Consumption increased about 3% in 2010,
then declined slightly in 2011 and declined again by about 3% in 2012.
Consumption increased about 3% in 2013. Economic growth and other
factors like weather and fuel prices impact consumption in each sector
differently.

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How much energy does a person use in a year?

In 2011, total energy use per person (or per capita consumption)
in the United States was about 313 million British thermal units
(Btu). The world per capita consumption of energy1 in 2011 was
about 75 million Btu.

1Consumption data for most countries does not include biomass

fuels, such as wood and charcoal used for heating and cooking,
which are major energy sources in many countries. The U.S.
Energy Information Administration does not have an estimate for
the amount of those fuels consumed in other countries.

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 Total Primary Energy Consumption per Capita (Million Btu per Person)
2005 2006 2007 2008 2009 2010 2011
EU-27 156 156 154 154 144 149 145
Austria 191 190 187 187 179 186 179
Belgium 268 265 265 280 257 272 258
Bulgaria 120 124 112 112 99 103 109
Cyprus 119 120 120 123 116 110 107
Czech Republic 150 155 160 159 150 157 155
Denmark 156 165 161 154 144 150 143
Estonia 64 71 71 73 66 63 61
Finland 243 254 255 249 231 247 234
France 180 180 176 176 167 170 166
Germany 171 174 168 172 161 172 165
Greece 135 138 140 137 131 126 122
Hungary 115 114 111 110 104 105 103
Ireland 158 162 157 154 136 137 127
Italy 138 136 134 132 122 126 123
Latvia 81 81 76 73 74 73 74
Lithuania 97 98 107 106 90 74 80
Luxembourg 434 424 411 405 379 397 386
Malta 103 98 103 192 217 257 226
Netherlands 259 254 259 257 246 258 245
Poland 95 100 100 101 98 105 106
Portugal 105 102 104 100 100 104 99
Romania 75 76 75 76 64 65 69
Slovakia 151 149 144 146 132 141 135
Slovenia 157 158 157 169 153 155 153
Spain 149 148 149 142 132 134 131
Sweden 260 247 250 244 227 243 236
United Kingdom 162 160 153 150 141 143 134
North America 278 274 276 268 254 260 258
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United States 339 334 336 327 308 317 313
Use of energy in the United States

The United States is a highly industrialized country. Industry accounts for about
one-third of the energy used in the country.

There are a variety of different energy sources used in the industrial sector. Energy
sources can be used as boiler fuel, which is used to generate steam or hot water.
Energy sources can also be used in process heating, which is used to raise the
temperature of products in the manufacturing process. Energy sources are also
used as feedstocks to make products.

In the manufacturing sector, the predominant energy sources are natural gas and
electricity (a secondary source).
Manufacturers also use several other energy sources for heat, power, and
electricity generation:
Steam
Pulping liquor from paper making
Agricultural waste
Tree wood
Wood residues from mill processing
Wood-related and paper-related refuse

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Energy use by type of industry

Every industry uses energy, but there are a handful of energy-intensive

industries that use most of the energy consumed by the industrial sector.

The petroleum refining industry is the largest industrial consumer of

energy, followed closely by the chemical industry.

The refining, chemical, paper, and metal industries combine to use 96%
of energy feedstocks; 60% of energy consumed for heat, power, and
electricity generation; and 78% of total energy use.

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Other energy sources account for 38% of the energy manufacturers'
use of heat, power, and electricity generation. Included in these
sources are steam, pulping liquor from paper making, agricultural
waste, tree wood, wood residues from mill processing, and wood-
related and paper-related refuse.

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Energy sources used as feedstocks
Many energy sources like coal and petroleum are used in
manufacturing. When raw materials are used in the manufacturing
process, they are called feedstocks.
Liquefied petroleum gas, coal, natural gas, and other, less common
sources were used as energy-related feedstocks in 2010:

Liquefied petroleum gas (33%)

Coal (8%)
Natural gas (8%)
Other, less common sources (49%)

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Petroleum is the main source of energy for transportation
Petroleum fuels are made from crude oil and liquids from natural gas
processing. The petroleum fuels used for transportation include gasoline,
diesel fuel, jet fuel, residual fuel oil, and liquid petroleum gases. In 2013,
those fuels provided about 92% of the total energy used by the
transportation sector in the United States. Biofuels, such as ethanol and
biodiesel, contributed about 5%, and natural gas contributed about 3%.
Electricity provided less than 1%.

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Gasoline is the most utilized U.S. transportation fuel
Gasoline is the dominant transportation fuel used in the United States.
Gasoline (excluding fuel ethanol) accounted for 57% of total U.S.
transportation energy use in 2013. When the ethanol that is blended into
finished motor gasoline is included, gasoline's share was about 61%.
Gasoline (including fuel ethanol) consumption for transportation averaged
about 8.6 million barrels (363 million gallons) per day. About 6 million gallons
per day of gasoline were consumed for uses other than for transportation.
Gasoline is used mainly in cars, motorcycles, and light trucks. Diesel fuel (or
distillate) is used mainly by heavy trucks, buses, and trains. Kerosene is used
in jet airplanes, and residual fuel oil is used in ships. Natural gas and liquid
petroleum gas are used in all types of vehicles, but they are used
predominantly in heavy duty vehicles such as buses and other transportation
fleets. Most of the electricity used for transportation is used by public mass
transit systems.

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Biofuels are added to petroleum fuels
Ethanol and biodiesel were actually some of the first fuels used
in automobiles, but they were replaced by gasoline and diesel
fuel. Today, most of the biofuels used in vehicles are added to
gasoline and diesel fuel. Government incentives and mandates
contributed to large increases in the use of biofuels in the United
States over the past several decades. The amount of fuel
ethanol added to motor gasoline consumed for transportation
went from about 1.3 billion gallons in 1995 to about 13 billion
gallons in 2013. Biodiesel consumption increased from 10 million
gallons in 2001 to about 1.4 billion gallons in 2013.

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Energy use in homes

The amount of energy we use in our homes mainly depends on the climate
where we live and the types and number of energy consuming devices we use.
The pie chart on the right shows the major energy uses in homes in 2009,
when most energy use was for space heating (42%), followed by electronics,
lighting and other appliances (30%), water heating (18%), air conditioning
(6%), and refrigeration (5%)

The number and variety of ways we use energy in homes is changing rapidly.
Energy use for air conditioning has doubled since 1980. U.S. households
currently plug in more appliances and electronics at home than ever before.
While refrigerators and cooking equipment have long been standard in homes,
the ownership of appliances such as microwaves, dishwashers, and clothes
washers and dryers has increased over the past 30 years.

It is increasingly common for homes to use multiple televisions and computers.

Additionally, the home electronics market is constantly innovating, and new
products such as DVRs, game systems, and rechargeable electronic devices
are becoming ever more integral to our modern lifestyle. As a result of these
changes, appliances and electronics (including refrigerators) now account for
nearly one-third of all energy used in homes
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Types of Energy Used In Homes
Natural gas and electricity are the most-consumed energy sources in U.S.
homes, followed by heating oil, and propane. Natural gas and heating oil
(fuel oil) are used mainly for home/space heating. Space heating accounts
for the largest share of the energy used in U.S. homes. Electricity, which is
used for heating and cooling, also lights our homes and runs almost all of
our appliances including refrigerators, toasters, and computers. Many
homes in rural areas use propane for heating, while others use it to fuel their
barbecue grills

Regional Consumption Data Reflect Population Shifts and Climate

In the late 1990s, homes in the South Census Region surpassed the
Midwest in consuming the most energy in the United States. This shift
reflects the economic boom in the region, which stimulated U.S. migration to
the South and the construction of more and larger homes. In 2009, homes in
the South consumed 3.22 quadrillion Btu, about 3% of the country's total
energy use and about 32% of energy used in homes.

Due to the longer heating seasons, the Northeast and Midwest regions still,
consume the most energy per household, at 108 and 112 Million Btu per
household in 2009, respectively

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Use of energy in buildings

Commercial buildings include a wide variety of building types offices,

hospitals, schools, police stations, places of worship, warehouses,
hotels, and shopping malls. Different commercial activities all have
unique energy needs but, as a whole, commercial buildings use more
than half of their energy for heating and lighting.

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Types of energy used in buildings

Electricity and natural gas are the most common energy sources used in
commercial buildings. Commercial buildings also use another source
that you dont usually find used in residential buildings district energy.
When there are many buildings close together, like on a college campus
or in a big city, it is sometimes more efficient to have a central heating
and cooling plant that distributes steam, hot water, or chilled water to all
of the different buildings. This type of system (referred to as a district
system) can reduce equipment and maintenance costs as well as save
energy.

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Energy used by type of building

The types of buildings in the commercial sector are used for a mix of
many different activities and uses. Retail and service buildings use the
most total energy of all the commercial building types. This is not very
surprising when you think about all the stores and service businesses
there are all over the United States. Other commercial users of energy
include offices, schools, health care and lodging facilities, food
establishments, and many others.

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Top five energy-consuming categories

Retail and Service (20% of total energy consumed by

commercial buildings)
Malls and stores
Car dealerships
Dry cleaners
Gas stations
Office (17% of consumption)
Professional and government offices
Banks
Education (13% of consumption)
Elementary, middle, and high school
Colleges
Health Care (9% of consumption)
Hospitals
Medical offices
Lodging (8% of consumption)
Hotels
Dormitories
Nursing homes
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Shares of fuels used by commercial buildings - 2003

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We all use energy

We use energy each day for transportation, cooking, heating and

cooling rooms, manufacturing, lighting, and entertainment, among other
uses. The choices we make about how we use energyturning
machines off when were not using them or choosing to buy fuel-
efficient vehicles and energy-efficient appliancesaffects our
environment and our lives.

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Efficiency and conservation are different but related

The terms energy conservation and energy efficiency have two distinct
meanings. There are many ways we can use less energy (conservation)
and many ways we can use energy more wisely (efficiency).

Energy conservation is any behavior that results in the use of less energy.
Turning the lights off when you leave the room and recycling aluminum
cans are both ways of conserving energy.

Energy efficiency is the use of technology that requires less energy to

perform the same function. Using a compact fluorescent light bulb that
requires less energy rather than using an incandescent bulb to produce the
same amount of light is an example of energy efficiency.

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The ENERGY STAR label on appliances and electronic
equipment identifies energy-efficient products.

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Energy and the environment

Energy sources have different impacts or effects on the

environment. Some of these effects may include emissions,
waste, and land or water use impacts.

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Greenhouse gases

Many chemical compounds found in the earths atmosphere act as

greenhouse gases. When sunlight strikes the earths surface, some
of it is reradiated back toward space as infrared radiation (heat).

Greenhouse gases absorb this infrared radiation and trap its heat in
the atmosphere.

Many gases exhibit these greenhouse properties. Some occur

naturally. Some are produced by human activities, and some gases
are exclusively human made like industrial gases

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What are the types of greenhouse gases?

There are several major greenhouse gases the United States emits
as a result of human activity, and they are included in U.S. and
international emissions estimates:

Carbon dioxide (CO2)

Methane (CH4)
Nitrous oxide (N2O)
Industrial gases:
Hydrofluorocarbons (HFCs)
Perfluorocarbons (PFCs)
Sulfur hexafluoride (SF6)

There are other greenhouse gases that are not counted in U.S. or
international greenhouse gas inventories

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There are other greenhouse gases that are not counted in U.S. or
international greenhouse gas inventories:

Water vapor is the most abundant greenhouse gas, but most scientists
believe that water vapor produced directly by human activity contributes very
little to the amount of water vapor in the atmosphere, so EIA does not
estimate emissions of water vapor. Research by NASA suggests a stronger
impact from the indirect human effects on water vapor concentrations.

Ozone is technically a greenhouse gas because it has an effect on global

temperature. However, at higher elevations in the atmosphere
(stratosphere), where it occurs naturally, ozone is needed to block harmful
ultraviolet (UV) light. At lower elevations of the atmosphere (troposphere),
ozone is harmful to human health and is a pollutant regulated independently
of its warming effects.

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Greenhouse gas emissions and atmospheric concentrations have
increased over the past 150 years

Emissions of several important greenhouse gases have increased

substantially since large-scale industrialization began in the mid-1800s. During
the past 20 years, about three-fourths of human-caused (anthropogenic)
emissions came from burning fossil fuels. Concentrations of carbon dioxide
(CO2) in the atmosphere are naturally regulated by many processes
collectively known as the carbon cycle.

The flux, or movement, of carbon between the atmosphere and the earth's
land and oceans is dominated by natural processes like plant photosynthesis.
While these natural processes can absorb some of the anthropogenic
CO2 emissions produced each year (measured in carbon equivalent terms),
emissions have exceeded the capacity to absorb carbon.

This imbalance between greenhouse gas emissions and the ability for natural
processes to absorb those emissions has resulted in a continuing increase in
atmospheric concentrations of greenhouse gases. Concentrations of CO2 in
the atmosphere have increased by about 40% since the mid-1800s

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Greenhouse gases warm the planet
Scientists know with virtual certainty that increasing greenhouse gas
concentrations tend to warm the planet.1 In computer-based models,
rising concentrations of greenhouse gases produce an increase in the
average surface temperature of the earth over time. Rising temperatures
may produce changes in precipitation patterns, storm severity, and sea
level. Collectively, this is commonly referred to as climate change

Did you know?

Fossil fuels supply 84% of the primary energy consumed in the United
States and are responsible for about 94% of carbon dioxide emissions

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In the United States, greenhouse gas (GHG) emissions come
primarily from the burning of fossil fuels in energy use. Energy use is
largely driven by economic growth, with short-term fluctuations in its
growth rate, and by weather patterns that affect heating and cooling
needs. The fuels used in electricity generation also have an impact
on the amount of GHG emissions.

Carbon dioxide
Energy-related carbon dioxide (CO2) emissions, resulting from the
combustion of coal, petroleum, and natural gas, account for about
80% of total U.S. human-caused (anthropogenic) GHG emissions.
There are many sources of non-energy CO2 emissions, but those
emissions account for a relatively small share of total GHG
emissions.

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Other greenhouse gases
There are several other greenhouse gases emitted by the United
States as a result of human activity that are included in U.S. and
international emissions estimates:
Methane (CH4), which comes from landfills, coal mines,
agriculture, and oil and natural gas operations
Nitrous oxide (N2O), which comes from the use of nitrogen
fertilizers, from burning fossil fuels, and from certain industrial and
waste management processes
High global warming potential (GWP) gases, which are human-
made industrial gases
Hydrofluorocarbons (HFCs)
Perfluorocarbons (PFCs)
Sulfur hexafluoride (SF6)

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The energy connection

Fossil fuels consist of hydrogen and carbon. When fossil fuels are
burned, the carbon combines with oxygen to create CO2. The
amount of CO2 produced depends on the carbon content of the
fuel. For example, for the same amount of energy produced,
natural gas produces about half and petroleum produces about
three-fourths of the amount of CO2 produced by coal

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Carbon dioxide emissions are expected to increase

In the U.S. Energy Information Administration's International Energy Outlook

2013 Reference case, which does not assume new policies to limit
greenhouse gas emissions, world energy-related carbon dioxide emissions
increase from 31.2 billion metric tons in 2010 to 36.4 billion metric tons in
2020 and 45.5 billion metric tons in 2040. Much of the growth in emissions is
attributed to developing countries that are not members of the Organization
for Economic Cooperation and Development (OECD) that continue to rely
heavily on fossil fuels to meet fast-paced growth in energy demand. Non-
OECD carbon dioxide emissions total 31.6 billion metric tons in 2040, or
69% of the world total. In comparison, OECD emissions total 13.9 billion
metric tons in 2040, or 31% of the world total.

The United States, with 4% of the world's population, produced about 17%
of global carbon dioxide emissions from burning fossil fuels in 2011, the
most recent year for which global data are available. The United States
accounts for this share primarily because the U.S. economy is the largest in
the world and meets 83% of its energy needs by burning fossil fuels.

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Recycling and Energy

Recycling is the act of converting waste into reusable material.

Recycling often saves energy and natural resources.
Natural resources include land, plants, minerals, and water. By using
materials more than once, we conserve natural resources.

Recycling saves energy in the production of new products

Making a product from recycled materials almost always requires less
energy than it does to make the product using new materials. For
example, using recycled aluminum scrap to make new aluminum cans
uses 95% less energy than making aluminum cans from bauxite ore, the
raw material used to make aluminum.

Recycling paper saves trees and water. Making a ton of paper from
recycled paper saves up to 17 trees and uses 50% less water.

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Nonrenewable and renewable energy sources
Energy sources are classified as nonrenewable if they cannot be replenished
in a short period of time. Renewable energy sources such as solar and wind
can be replenished naturally in a short period of time.
There are four major nonrenewable energy sources:
- Crude oil
- Natural gas
- Coal
- Uranium (nuclear energy)

Nonrenewable energy sources come out of the ground as liquids, gases, and
solids. Crude oil (petroleum) is the only commercial nonrenewable fuel that is
naturally in liquid form. Crude oil is used to make liquid petroleum products
like gasoline, diesel fuel, and heating oil. Propane and other gases such as
butane and ethane are found in natural gas and crude oil. They are extracted
and stored as liquids and are called liquid petroleum gases.

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All fossil fuels are nonrenewable, but not all nonrenewable energy
sources are fossil fuels

Coal, crude oil, and natural gas are all considered fossil fuels because
they were formed from the buried remains of plants and animals that lived
millions of years ago.

Uranium ore, a solid, is mined and converted to a fuel used at nuclear

power plants. Uranium is not a fossil fuel, but it is classified as a
nonrenewable fue

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Oil crude and petroleum products

How was oil formed?

Oil was formed from the remains of animals and plants (diatoms) that
lived millions of years ago in a marine (water) environment before the
dinosaurs. Over millions of years, the remains of these animals and
plants were covered by layers of sand and silt. Heat and pressure
from these layers helped the remains turn into what we today call
crude oil. The word petroleum means rock oil or oil from the earth.

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Products made from a barrel of crude oil
After crude oil is removed from the ground, it is sent to a refinery by
pipeline, ship, barge, or rail. At a refinery, different parts of the crude
oil are separated into useable petroleum products. Crude oil is
measured in barrels.

A 42 U.S. gallon barrel of crude oil yields about 45 gallons of

petroleum products. This gain from processing the crude oil is similar
to what happens to popcorn, which gets bigger after it is popped

Did you know crude oil can be sweet or sour?

Crude oil is called sweet when it contains only a small amount of
sulfur and sour if it contains a lot of sulfur. Crude oil is also classified
by the weight of its molecules. Light crude oil flows freely like water,
while heavy crude oil is thick like tar.

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What fuels are made from crude oil?

One barrel of crude oil, when refined, produces about 19 gallons of

finished motor gasoline, and 10 gallons of diesel, as well as other
petroleum products. Most petroleum products are used to produce energy.
For instance, many people across the United States use propane to heat
their homes.

There are many other products made from petroleum, some of those
products include:

Ink
Crayons
Dishwashing liquids
Deodorant
Eyeglasses
CDs and DVDs
Tires
Ammonia
Heart valves and other medical equipment
Computers
Tires
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What is a refinery?
A refinery is a factory. Just as a paper mill turns lumber into paper, a
refinery takes crude oil and other feedstocks and turns them into
gasoline and many other petroleum products.

Refineries operate 24/7

A refinery runs 24 hours a day, 365 days a year and requires a large
number of employees to run it. A refinery can occupy as much land as
several hundred football fields. Workers often ride bicycles to move from
place to place inside the complex.

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Where is oil produced?

Crude oil is produced in 31 U.S. states and in U.S. coastal waters. In 2013,
64% of U.S. crude oil production came from five states:
Texas (34%)
North Dakota (12%)
California (7%)
Alaska (7%)
Oklahoma (4%)

In 2013, about 17% of U.S. crude oil was produced from wells located
offshore in the federally administered waters of the Gulf of Mexico.
Although total U.S. crude oil production generally declined between 1985
and 2008, it has been increasing since 2008. More cost-effective drilling
technology has helped boost production, especially in Texas, North Dakota,
Oklahoma, and Colorado.

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Many countries produce crude oil

About 100 countries produce crude oil. In 2013, 46% of the worlds
total crude oil production came from five countries:
Saudi Arabia (13.2%)
Russia (12.8%)
United States (9.8%)
China (5.5%)
Canada (4.4%)

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