EBF 301
Global Finance for the Earth, Energy, and Materials Industries

Major Sources of Energy in the United States

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“Non-renewable” energy sources, as well as “renewable” energy and “alternative fuels” help to satisfy the nation’s energy needs. Coal, a non-renewable fossil fuel, plays a large role in the generation of electricity as well as in industrial processes such as the manufacturing of steel. Nuclear, hydro, solar, wind, biomass, and geothermal are all considered “renewable” forms of energy and comprise varying levels of supply in this country. They are classified as renewables since their source is seen as being virtually unlimited. Of these, solar, wind, biomass, biodiesel, and geothermal are all considered “alternative” energy sources since they are not the “traditional” kind (fossil fuels, nuclear and, hydro).

Figure 1 below shows the break-out of fuel sources used in the generation of electricity. As you can see, the single largest fuel is coal, although this is changing as historically low natural gas prices are causing some “fuel switching.” This is followed by natural gas, nuclear, hydro, and “other.” This final category is comprised of energy sources such as fuel oil (a crude distillate), wind, solar, biomass, and geothermal. Note the very small percentage currently represented by all of these combined. It will literally take decades for alternative fuels to make a substantial contribution to the energy portfolio in the United States. Thus, there is a need to continue to use fossil fuels and nuclear power to “bridge” the gap. How the former are delivered to market and how they are priced is the main focus of this course.

Figure 1: U.S. Electricity Generation by Fuel

The following chart illustrates the various types of energy in the US and the corresponding consumption types. Again, note that the current contribution of renewable energy sources is very small.

Primary Energy Consumption by Sourcew and Sector, 2014

Now that we have clarified the difference between renewable and non-renewable sources of energy, let’s have a look at the production and consumption of energy in the United States on a macro level.