U.S. Energy Situation: Exploring Consumption and Supply Issues Part 2
Wed, Jan 6, 2010

U.S. Energy Situation:  Exploring Consumption and Supply Issues Introduction

U.S. Energy Situation is a series of five articles sequentially addressing U.S. energy consumption, supply, concerns, solutions and policies.  The series is intended to prepare readers to better follow and participate in what the author hopes will be an informed debate about U.S. energy policy. 

The articles’ content originated as a slide presentation intended for general audiences, and both the program and the articles provide an overview and understanding of the U.S. energy position. The author has used publicly available data, mainly from U.S. government agencies, in his research.  He received no support or direction of any kind from any interest group, association or other entity in the research and development of these articles or in the creation of the underlying slide presentation.

2. Sources of Energy Consumed in the U.S.: Where Do We Obtain Energy?

Sources of primary energy consumed in the U.S. include petroleum, natural gas, coal, nuclear and renewables (hydroelectric, wind, solar, biomass and others).  About 40% of the 101.6 quads (quadrillion BTUs) of primary energy used in the U.S. in 2007 were consumed to generate electricity. 

During electric generation, primary energy--typically coal, natural gas, nuclear or renewable forms of energy--is converted to a second form of energy: electricity. Electric generation (energy conversion) occurs because electricity suits many applications. Electric light, for example, is generally more useful than natural gas lighting, and electric motors are preferable to steam engines.

Petroleum (including natural gas liquids), our largest fuel source, represented 38% (39 quads) of the United States’ total primary energy consumption during 2007).  Natural gas and coal each provided about 23% of the total primary energy consumed in 2007 (23.7 quads from natural gas, and 22.9 quads from coal).  Fossil fuels, such as petroleum, natural gas and coal, supply about 85% of the United States’ primary energy needs.  Nuclear represents only 8% of U.S. supply, while renewables deliver approximately 6%.  Hydroelectric power makes the largest single contribution within the renewables group, supplying 2.5 quads of energy. 

We tend to use certain fuels for particular jobs.  Petroleum, for instance, provides 96% of our transportation primary energy.  75% of the primary energy consumed in the residential and commercial sector, on the other hand, comes from natural gas.  And 90% of coal and all nuclear primary energy is used to generate electricity.

The following table shows the growth of imports as a share of total U.S. petroleum consumption and the resulting increase in the share of total, primary energy consumption supplied by imports:  

 U.S. Imports as a % of Consumption

 Up until 1950, the U.S. was essentially energy self sufficient.  In 1950, we imported 1.9 quads of energy, mostly in the form of petroleum. Although most of our imports were in the form of petroleum, those imports represented only a small portion of the petroleum we used in 1950: we imported about 9% of the petroleum we consumed. That same year, the U.S. exported 1.5 quads of energy, mostly in the form of coal. 

As a result of our petroleum imports and coal exports, 1950 ended with net imports of about 1% of total U.S. primary energy (a mere .4 quads of primary energy consumption).   Our imports of petroleum increased during the next two decades and into the 1970s.  By 1977, we imported almost half (49%) of the petroleum we consumed.  Overall, the U.S. imported 23% of its primary energy needs in 1977.  (Proponents of government solutions to our current energy problems should consider the unfortunate impact of federal wellhead price controls on natural gas: price controls discouraged development of domestic oil and gas supplies, and they ultimately encouraged both energy consumption and imports between 1950 and 1977.)  

Three decades later, in 2007, the U.S. imported a net of 25.8 quads of petroleum, or 66% of the petroleum it consumed, and imported 36% of its total primary energy consumption.  Since 1950, energy imports soared as the United States’ energy consumption increased and domestic supplies decreased.  Since the 1970s, campaigns of both political parties have espoused “energy independence,” or reduced reliance on energy imports. 

Despite these promises, energy consumption continues to grow and domestic production fails to keep pace: oil production has actually declined by nearly 50% since 1970.  Imports fill the gap between the United States’ energy consumption and its energy production.   

We are and should be concerned about the sources and level of energy imports into the U.S.  Imports, however, are not categorically bad.  During 2007, the U.S. imported nearly 90% of its nuclear energy fuel.  Half of these nuclear imports were old Soviet Block nuclear warheads brought to the U.S. for safe, secure processing into fuel for power plants.  The old warheads were kept out of the hands of potential enemies and processed into something both useful and far less dangerous.  The balance of our nuclear imports were driven by economics – someone else produced the uranium at a lower cost.  Raising the cost of goods and services made in the U.S. by using only energy produced in the U.S. could reduce our international competiveness and harm our economy.   

Energy consumption greatly affects our standard of living.  Despite the importance of our energy supply, its security is uncertain.  We now import two-thirds of the petroleum and nearly 36% of the total energy we consume.  Energy prices have been rising, and price volatility has increased.  And world demand for energy is increasing.  We will examine our energy supply concerns in the next segment of this series.

Dick Moore has more than 30 years experience in the energy industry including jobs in both regulated and unregulated segments of this industry.  He has held senior management positions in oil and gas production companies, interstate and intrastate natural gas pipelines, gas and electric utilities as well as natural gas gathering, processing and marketing companies.

After receiving BBA and MBA degrees from the University of Oklahoma, Mr. Moore’s business career commenced with Skelly Oil Company, a fully integrated oil company, in Tulsa, Oklahoma.  After assignments in the Controller’s Department and following 30 months of active duty with the U.S. Army, Mr. Moore transferred to the natural gas liquids supply organization wherein he held positions involving the purchase, sale and exchange of Skelly’s natural gas processing plant production and refinery supplies of natural gas liquids.

In 1980 Mr. Moore was named Vice President Marketing of Home Petroleum Corporation.  His responsibilities included crude oil and NGL marketing, truck and rail fleet operations, as well as operation of an underground LPG storage facility.  In 1983 he joined Tejas Gas Corporation in Houston.  As Vice President of Marketing for this natural gas gatherer and intrastate pipeline company, he was responsible for natural gas sales to industrial and Local Distribution Company customers.

In 1985 Mr. Moore joined Arkla Energy Resources (AER), Arkla Inc.’s interstate natural gas pipeline entity, as Vice President Market Development.  He later became Senior Vice President Marketing of AER and Senior Vice President and General Manager of Arkla Energy Marketing Company.  Following Arkla’s acquisition of ENTEX, a natural gas local distribution company, he became Executive Vice President of ENTEX.

He joined PG&E Resources Company, an independent oil and gas exploration and production subsidiary of Pacific Gas and Electric Company, as Vice President Marketing in 1991.  His responsibilities included marketing PG&ER’s oil and gas production.  PG&ER was acquired by Enserch Corporation in 1995.  In 1995 he was named Vice President Business Development at Enserch’s intrastate natural gas pipeline, Lone Star Pipeline Company, and in 1996 he became President of Enserch Processing, Inc.  Following the merger of Enserch into Texas Utilities, Enserch Processing was renamed TXU Processing Company and he was made Senior Vice President of TXU Processing.

Mr. Moore previously served on the Board of Directors of the Gas Processors Association and has held a position as adjunct faculty in the economics department at Richland College in Dallas.  He serves as faculty for the Utility Executive Course at the University of Idaho as well as the Professional Development Institute at the University of North Texas and has been a speaker on energy topics for the Maguire Energy Institute at Southern Methodist University in Dallas.