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Energy Uses

Energy is used in four distinct sectors: transportation, industry, residential and commercial. The three major types of energy consumed in these sectors are:

• Direct heat, the burning of combustible materials to heat buildings, cook food and transform raw materials by melting and combining them to make finished products.
• Transportation fuel, used to power vehicles.
• Electricity, used to provide heat, power and light to industry, homes and businesses.

Direct Heat

For most of human history, fire was mankind’s main source of energy. Today, much of the energy we use comes from what are considered secondary sources; the heat from burning combustible materials is used to generate energy, typically in the form of electricity or transportation fuels.

In 2005, 32.6 quadrillion Btu, or approximately 32.4 percent of all energy used nationwide, could be attributed to the burning of combustible materials to produce heat for direct use. The raw materials burned for direct uses include natural gas, liquefied petroleum gas (LPG), heating oil, kerosene, wood, biomass (waste products) and coal. In addition to these raw materials, geothermal energy, or heat produced from deep within the Earth’s crust, also represents direct use.²⁶⁵

In 2005, Texans used about 237.4 trillion Btu of direct-use energy to heat homes and another 190.4 trillion Btu to heat commercial buildings.²⁶⁶

Between 1980 and 2005, U.S. direct-use energy consumption by the residential sector fell by 7.8 percent and the industrial sector by 4.2 percent; the commercial sector’s energy use grew by less than one percent.²⁶⁷ These reductions were made possible by advances in efficiency, conservation and a gradual shift from direct-use energy to energy provided through electricity. According to the U.S. Energy Information Administration, overall energy demand will increase by 1.1 percent through 2030; direct-use energy in the residential, commercial and industrial sectors is expected to stay flat or slightly decrease.²⁶⁸

Exhibit 10 summarizes important data for the fuels that can be used for direct heat.

Transportation

The rapid and dependable transportation of people and materials from place to place is essential to modern American society. Americans have become ever more reliant on gasoline-powered vehicles, both for personal and commercial uses. In 2005, the U.S. accounted for 21.5 percent of the cars and 42.7 percent of the trucks and buses registered worldwide.²⁶⁹

In that year, Americans owned nearly 240 million cars and light trucks.²⁷⁰ Texans owned just over 20 million of these vehicles.²⁷¹ In addition, almost 5.2 million commercial vehicles – those weighing more than 10,000 pounds – used American roadways to transport people and goods. And Americans relied on more than 224,000 aircraft, about 53,000 boats and ships and hundreds of thousands of locomotives and railcars to reach places not served by roadways.²⁷²

Nearly all of these vehicles depend upon oil.

In 2005 (most recent data available for both the U.S. and Texas), Americans used nearly 28.3 quadrillion Btu of fuel to transport people or goods from one place to another (Exhibit 11).²⁷³

Approximately 80.5 percent of all energy devoted to transportation in the U.S. was used on local roadways and highways; the other 19.5 percent was used for other forms of transportation, including air, water, railroads and other non-road vehicles (Exhibit 12).²⁷⁴ Data on the amount of energy used on transportation modes in Texas were not available.

While mechanized transportation helped build the U.S. into a global industrial power, its evolution has not been without drawbacks. The emissions from fuels used by most vehicles can be harmful to the environment, and the majority of that fuel is produced and controlled by foreign governments.

To attempt to reduce oil use, the federal government has adopted vehicle fuel efficiency standards. U.S. fuel efficiency standards for light duty vehicles, passenger cars and light trucks are currently at 27.5 miles per gallon (MPG), but new legislation requires those standards to be increased to 35 MPG by 2020.²⁷⁵

In 2006, nearly all Texas vehicles ran on gasoline, with the remainder being hybrids, flexible-fuel vehicles or vehicles using other alternative fuels.²⁷⁶ (Hybrids supplement a conventional gasoline engine with power from electric batteries; flexible-fuel vehicles can use multiple fuels to power their engine, such as either regular gasoline or an ethanol-gasoline mix.)

To encourage more Texans to switch to vehicles using alternative fuels, the production and refining of these fuels and the distribution network must continue to expand and improve.

Exhibit 13 summarizes important data for the fuels that can be used for transportation.

Electricity

Electricity is essential for Texas factories, businesses, homes and recreation. Texas leads the nation in its generation and consumption of electricity.²⁷⁷

Electricity is a secondary energy source, meaning that it comes from the conversion of other sources of energy, such as coal, natural gas, nuclear, hydroelectric and wind power. The energy sources used to make electricity can be renewable or non-renewable, but electricity itself is neither. It can be considered a carrier of energy rather than an energy source.²⁷⁸

Texas has approximately 230 electric utilities responsible for delivering electricity to consumers in their service areas.²⁷⁹ In 2006, their net generation capacity totaled 100,754 megawatts, or 91.9 percent of total “nameplate” capacity (the installed generating capacity running at 100 percent). Net generation capacity has risen by 72 percent since 1995.²⁸⁰

Exhibit 14 shows the change in Texas’ net generation capacity and demand for the last six years.

Exhibit 15 shows the relative shares of electricity produced by various fuel sources in Texas and the U.S. in 2006. In 2005, 49 percent of electricity generation in Texas was powered by natural gas, compared with 36.5 percent for coal.²⁸¹

Texas has access to enough energy resources to meet its projected electricity demands through 2030 and beyond. But meeting that demand will require new generation and transmission capacity. ERCOT expects to spend $3.1 billion on transmission lines from 2006 through 2011, and another $3 billion from 2011 through 2016 to ensure adequate transmission capacity.²⁸² Substantial investments in new generating capacity also will be needed.

Exhibit 16 summarizes important data for the fuels that can be used to generate electricity.