Energy in the United States: 1635-2000

Energy is essential to life. Living creatures draw on energy flowing through the environment and convert it to forms they can use. The most fundamental energy flow for living creatures is the energy of sunlight, and the most important conversion is the act of biological primary production, in which plants and sea-dwelling phytoplankton convert sunlight into biomass by photosynthesis. The Earth's web of life, including human beings, rests on this foundation.

Over millennia, humans have found ways to extend and expand their energy harvest, first by harnessing draft animals and later by inventing machines to tap the power of wind and water. Industrialization, the watershed social and economic development of the modern world, was enabled by the widespread and intensive use of fossil fuels. This development freed human society from the limitations of natural energy flows by unlocking the Earth's vast stores of coal, oil, and natural gas. Tapping these ancient, concentrated deposits of solar energy enormously multiplied the rate at which energy could be poured into the human economy.

Coal ended the long dominance of fuelwood in the United States about 1885, only itself to be surpassed in 1951 by petroleum and then by natural gas a few years later. Hydroelectric power and nuclear electric power appeared about 1890 and 1957, respectively. Solar photovoltaic, advanced solar thermal, and geothermal technologies represent further recent developments in energy sources. The most striking of these entrances, however, is that of petroleum and natural gas. The curves depicting their consumption remain shallow for several decades following the success of Edwin Drake's drilling rig in 1859, but begin to rise more steeply in the 1920s. Then, interrupted only by the Depression, the curves climb at increasingly alpine angles until 1973. Annual consumption of petroleum and natural gas exceeded that of coal in 1947 and then quadrupled in a single generation. Neither before nor since has any source of energy become so dominant so quickly.

Figure 1. Energy Consumption by Source, 1635-2000

(Quadrillion Btu)

Figure 1. Energy Consumption by Source, 1635-2000

As fossil fuels and the machines that ran on them proliferated, the nature of work itself was transformed along with the fundamental social, political, and geopolitical circumstances of the Nation. In the middle of the 19th century, most Americans lived in the countryside and worked on farms. The country ran mainly on wood fuel and was relatively unimportant in global affairs. A hundred years later, after the Nation had become the world's largest producer and consumer of fossil fuels, most Americans were city-dwellers and only a relative handful were agricultural workers. The United States had roughly tripled its per-capita consumption of energy and become a global superpower.

Figure 2. Energy Production by Source for 2000

Figure 2. Energy Production by Source for 2000

America's appetite for energy as it industrialized was prodigious, roughly quadrupling between 1880 and 1918. Coal fed much of this growth, while electricity expanded in applications and total use alike. Petroleum got major boosts with the discovery of Texas's vast Spindletop Oil Field in 1901 and with the advent of mass-produced automobiles, several million of which had been built by 1918.

Most energy produced today in the United States, as in the rest of the industrialized world, comes from fossil fuels--coal, natural gas, crude oil, and natural gas plant liquids (Figure 2). Although U.S. energy production takes many forms, fossil fuels together far exceed all other sources of energy. In 2000 they accounted for 80 percent of total energy production and were valued at an estimated $148 billion (nominal dollars).  

Figure 3. Energy Overview, 2000

Figure 3.  Energy Overview

 

 

 

For much of its history, the United States was mostly self-sufficient in energy.  Through the late 1950s, production and consumption of energy were nearly in balance. Over the following decade, however, consumption slightly outpaced domestic production and by the early 1970s a more significant gap had developed (Figure 3).

    

 

Figure 5. Petroleum Imports, 1960-2000

Figure 5.  Petroleum Imports, 1960-2000This appetite for imported energy is driven by petroleum consumption. U.S. petroleum imports in 1973 totaled 6.3 million barrels per day (3.2 million barrels per day of crude oil and 3.0 million barrels per day of petroleum products).  In 2000 U.S. petroleum imports reached an annual record level of 11 million barrels per day.

The Arab oil embargo of the 70's, and the resulting response of the Carter administration reduced imports and consumption in the late 70's and early 80's.

 

  

 

Figure 6. Energy Consumption by End Use

Figure 6.  Energy Consumption by End Use

 

Sectoral energy sources have changed dramatically over time. In the residential and commercial sectors, for example, coal was the leading source as late as 1951 but then disappeared rapidly (Figure 7). Petroleum usage grew slowly to its peak in 1972 and then subsided. Natural gas became an important resource, growing strongly until 1972, when its growth essentially stalled. Electricity, only an incidental source in 1949, expanded in almost every year since then, as did the energy losses associated with producing and distributing the electricity. (See "Electricity" section below for an explanation of these losses.)

Figure 7. Residential and Commercial Energy Consumption 

Figure 7. Residential and Commercial Energy Consumption

 

 

While variety and change in energy sources are the hallmarks of the industrial, residential, and commercial sectors, transportation has relied almost totally on petroleum since 1949 (Figure 9).

 

 

 

 

Figure 8. Industrial Energy Consumption

Figure 8.  Industrial Energy Consumption
 

 

 

 

 

 

 

 

 

 

Figure 9. Transportation Energy Consumption

Figure 9. Transportation Energy Consumption   
 

 

 

 

 

 

 

 

 

 

Petroleum

 

Figure 11. Petroleum Overview

Figure 11. Petroleum Overview

Until the 1950s the United States produced nearly all the petroleum it needed. But by the end of the decade the gap between production and consumption began to widen and imported petroleum became a major component of the U.S. petroleum supply (Figure 11). Beginning in 1994, the Nation imported more petroleum than it produced. 

To meet demand, crude oil and petroleum products were imported at the rate of 11 million barrels per day in 2000, while exports measured 1 million barrels per day. Between 1985 (when net imports fell to a post-embargo low) and 2000, net imports of crude oil and petroleum products more than doubled from 4.3 million barrels per day to 10 million barrels per day. The share of U.S. net imports that came from OPEC nations reached 72 percent in 1977, subsided to 42 percent in 1985, and stood at 51 percent in 2000. Total net imports as a share of petroleum consumption reached a record high of 52 percent in 2000. The five leading suppliers of petroleum to the United States in 2000 were Canada, Saudi Arabia, Venezuela, Mexico, and Nigeria.

Figure 12. Lower 48 and Alaskan Crude Oil Production

Figure 12. Lower 48 and Alaskan Crude Oil ProductionCrude oil production in the lower 48 States reached its highest level in 1970 at 9.4 million barrels per day (Figure 12). A surge in Alaskan oil output at Prudhoe Bay beginning in the late 1970s helped postpone the decline in overall U.S. production, but Alaska's production peaked in 1988 at 2.0 million barrels per day and fell to just under 1.0 million barrels per day per well in 2000.

 

 

 

 

  

Figure 13. Oil Well Productivity

Figure 13. Oil Well Productivity

Another index of the Nation's petroleum output is oil well productivity, which fell from a high of 18.6 barrels per day per well in 1972 to 10.9 barrels per day per well in 2000 (Figure 13).

 
 

 

 

 

 

 

 

Figure 14. Petroleum Consumption by Sector

Figure 14.  Petroleum Consumption by Sector

 

 

   

 

 

 

   

 

 

 

Figure 15. SPR Stocks as Days' Worth on Net Imports

Figure 15.  SPR Stocks as Days' Worth on Net Imports  

To protect against supply disruptions, the United States began to create a Strategic Petroleum Reserve in the late 1970s. By 1985 the reserve's holdings reached 493 million barrels, which would have provided enough crude oil to replace about 115 days' worth of net petroleum imports that year. In 2000, the reserve held 541 million barrels of crude oil. Due to the increased rate of imports, however, that amount would replace only 53 days' worth of net imported petroleum (Figure 15).   

 

 

 

Figure 16. Crude Oil Refiner Acquisition Cost

Figure 16.  Crude Oil Refiner Acquisition Cost

U.S. petroleum prices rose steeply between 1998 and 2000. Refiners' acquisition costs for crude oil in 2000 (composite of domestic and imported oil costs) averaged $28.23 per barrel, a 16-year high. When adjusted for inflation, the cost was $26.40 per barrel (chained 1996 dollars), 58 percent above the previous year's cost--but still 53 percent below 1981's record of $56.50 per barrel (Figure 16).

 

 

 

 

 

Natural Gas  

Figure 17. Natural Gas Overview

Figure 17. Natural Gas Overview The United States had large natural-gas reserves and was essentially self-sufficient in natural gas until the late 1980s, when consumption began to significantly outpace production (Figure 17). Imports rose to make up the difference, nearly all coming by pipeline from Canada, although small volumes were brought by tanker in liquefied form from Algeria and, in recent years, from a few other countries as well. Net imports as a share of consumption more than tripled from 1986 to 2000 (Figure 18).   U.S. natural gas production in 2000 was 19.2 trillion cubic feet, well below the record-high 21.7 trillion cubic feet produced in 1973. Gas well productivity peaked at 435 thousand cubic feet per well per day in 1971, then fell steeply through the mid-1980s before stabilizing. Productivity in 2000 was 150 thousand cubic feet per well per day (Figure 19).

 

 Figure 18. Net Imports as Share of Consumption

Figure 18. Net Imports as Share of Consumption  

 

 

 

 

 

 

 

 

 

Figure 19. Natural Gas Well Productivity  

Figure 19. Natural Gas Well Productivity

Figure 20. Natural Gas Consumption by Sector

Figure 20. Natural Gas Consumption by Sector

For decades, the industrial sector of the economy has been the heaviest user of natural gas (Figure 20). In 2000 industrial entities (including most electric power producers other than utilities) accounted for nearly half of all natural gas consumption, followed by the residential sector, which used another fifth of the total. In recent years, very small amounts of natural gas (about 6 billion cubic feet in 1999) have been reported for use in vehicles.

 

The price of natural gas at the wellhead (i.e., where the gas is produced) was $3.37 per thousand cubic feet in 2000, in real terms (chained 1996 dollars), up 63 percent over the previous year's price but well below the historical high of $3.76 per thousand cubic feet in 1983. In nominal dollars, the 2000 wellhead price was $3.60 per thousand cubic feet.

NPP1 = nonutility power producers