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Crude Oil

Crude oil is refined into hundreds of products such as gasoline, diesel, jet fuel, natural gas, heating oil, kerosene, asphalt, road oil, lubricants and liquid petroleum gases such as butane and propane. Crude oil byproducts also are useful as petrochemical feedstocks used to make waxes, plastics, chemicals and pharmaceuticals. Oil and natural gas built modern Texas. Texas has been a major producer of both and will continue to be for the foreseeable future. The industry accounts for a significant share of the gross state product and jobs.

Crude oil, when refined into gasoline and diesel, powers the vast majority of vehicles in Texas, the U.S. and the world. Gasoline and diesel were once comparatively the least expensive transportation fuels, but recent increases in the price of oil are changing their economics and spurring a renewed search for better ways to use them. The U.S. imports crude oil from sources around the globe, in addition to producing it domestically.

Cost

Per Million Btu (2005)19 Direct use: $7.36;20 Electricity: $1.75 (Electricity cost based on a weighted average of the following: Residual fuel, $6.91; Distillate fuel, $10.45; Petroleum coke, $0.72)21
Per Gallon (motor vehicle fuel) Regular unleaded gasoline: $2.99; Diesel: $3.40 (January 2008)22
Per Gallon of Gasoline Equivalent Regular unleaded gasoline: $2.99; Diesel: $3.05 (January 2008)23
Direct Subsidy Share of Total Consumer Spending Federal: 0.5 percent (oil and gas combined); State and Local: 1.5 percent (oil and gas combined).24
Notes The daily posted domestic spot price per barrel of oil (for West Texas Intermediate delivered at Cushing, Oklahoma) on April 15, 2008 was $113.77.25

Economic Impact and Viability

Wages and Jobs In 2006, more than 312,000 Texans, or 3.1 percent of the state workforce, were employed in the oil and natural gas industry combined, which accounted for more than $159.3 billion, or 14.9 percent of Texas’ gross state product. Oil and gas industry wages totaled $30.6 billion that year, or about 6.9 percent of all wages in Texas.26
Regulatory Climate Oil refineries must obtain air and wastewater permits from the Texas Commission on Environmental Quality (TCEQ), a process that usually takes about one year. Drilling, operating and related environmental permits are required by the Railroad Commission of Texas.27
Texas Competitive Advantage Texas is the nation’s largest producer and consumer of oil.28 Texas has more than one-fourth of all U.S. oil refining capacity.29
Notes Oil industry executives are concerned about the aging U.S. oilfield workforce, particularly in highly technical or dangerous occupations where experience is critical.30

Unlike other coastal states that own their offshore lands out to three nautical miles, Texas and Florida (in the latter case, only its Gulf coastline) own their offshore lands out to 10.3 nautical miles, greatly increasing their potential for economic benefits from crude oil exploration and production.31

Availability and Current Infrastructure

Estimated Resources in Texas Approximately 28,251 trillion Btu (2006)32
Current Fuel Production Approximately 2,303 trillion Btu (2006)33
Consumption in Texas 5,671.1 trillion Btu (2005)34
Number of Fueling Stations in Texas 16,50035
Vehicle Availability More than 20 million vehicles registered in Texas use gasoline or diesel.36
Notes Texas has a daily refining capacity of 4.7 million barrels.37

Environment, Health and Safety

Greenhouse Gas Emissions38 The combustion of oil products for electricity generation releases an average of 490 pounds of carbon dioxide (CO2) per million Btu of heat energy produced. Gasoline burned in motor vehicles releases an average of 156.5 pounds of CO2 per million Btu; diesel burned in motor vehicles releases an average of 159.7 pounds of CO2 per million Btu.39
Air Pollution (Non-Greenhouse Gas) Burning oil products for electricity generation releases an average of 3.5 pounds of sulfur dioxide (SO2) and 1.2 pounds of nitrogen oxides (NOX) per million Btu of heat energy produced, although high-sulfur diesel oil used in some backup plants produces much higher emissions. Some mercury may be released depending upon the oil’s composition.
Solid Waste Hazardous materials such as salt water, drilling muds and chemicals that are used in and produced by the drilling process must be disposed of after a well is complete. Oil refining creates waste containing metals and other toxic compounds that must be treated and disposed of safely.
Land Use Oil production and refining produces waste products that can cause land contamination, and oil spills can degrade soil. Petroleum products are stored in both above and below ground tanks. Any storage tank can leak, releasing hazardous fuels and chemicals into soil, water and air.40
Water Withdrawal Depending upon the plant type, electricity generation from oil requires withdrawals of zero to 14,658 gallons of water per million Btu of heat produced.41
Water Consumption Crude oil production and refining can require up to 2,500 gallons of water per million Btu of heat energy produced, depending on production methods.42
Water Quality Refineries release treated wastewater into surface water sources, potentially harming aquatic life and reducing water quality if the wastewater is not treated properly. Accidental releases during oil and gas drilling can cause ground and surface water contamination. Salt water mixed with various metals and hydrocarbons is a common byproduct of drilling that must be disposed of properly. Leaky underground petroleum storage tanks can contaminate groundwater. Oil spills from transporting vessels can damage water quality and harm wildlife. TCEQ regulates and permits these discharges.43
Notes Petroleum refineries are a source of air pollutants such as BTEX compounds (benzene, toluene, ethylbenzene and xylene), particulate matter, carbon monoxide, hydrogen sulfide, NOX and SO2. Most are toxic and regulated by the EPA.

Fuel Characteristics

Energy Content Regular unleaded gasoline provides 115,400 Btu per gallon; diesel fuel provides 128,700 Btu per gallon.44
Renewability Oil is a fossil fuel and is not renewable within a human life span.

Other Issues

Dependence on Foreign Suppliers Net imports of foreign oil represented 59.9 percent of the oil consumed in the U.S. in 2006.45
Price and Supply Risks Oil is a global commodity with prices determined in a global market. Factors that may influence prices locally include taxes, regulation, availability, environmental concerns and weather.
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