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Fossil energy still dominates in US GAO report assesses federal and other factors that have impacted the production and consumption of different forms of energy Alan Bailey Petroleum News
A new report by the GAO, or Government Accountability Office, overviews U.S. energy usage and the various factors, including federal government actions that affect energy production and consumption. The report is based on data from the years 2000 to 2013.
Perhaps predictably, the agency found that the use of fossil fuels has dominated energy consumption, accounting for 82 percent of the more than 97 quadrillion British thermal units of energy consumed in the United States in 2013, for example. In that year 9 percent of the energy consumed came from nuclear power sources, with the other 9 percent coming from renewable sources, including wind power, solar power and hydropower, the report says.
Industry, including factories, agriculture, mining and construction, used 32 percent of the energy, mainly in the form of natural gas and electricity, but with some use of petroleum products. Transportation - road vehicles, trains, aircraft and boats - accounted for 28 percent, mostly in the form of gasoline, diesel and jet fuel. Heating, lighting and other uses in homes and apartments accounted for 18 percent, predominantly as electricity and natural gas. Commercial businesses and government facilities accounted for the remaining 18 percent of consumption, with a similar energy mix to the residential sector.
Three factors Three main factors impacted U.S. energy consumption during the period of the study: improved efficiency in energy use, the conservation of energy through the avoidance of energy wastage and the global economic recession of 2007 to 2009, the report says.
Improved energy efficiency included the improved fuel efficiency of motor vehicles - average fuel efficiency increased from 16.9 miles per gallon in 2000 to 17.6 miles per gallon in 2012. And, overall, the consumption of energy per dollar of gross domestic product in the United States decreased from about 7,900 Btu in 2000 to about 6,200 Btu in 2013, the report says.
The economic recession reduced energy demand and had long-term effects on global energy markets as a consequence of a general reduction in economic activity.
Shale oil and gas Against this background, dramatic advances in drilling technologies enabled the economic production of oil and gas from “tight” rock formations such as shale, increasing U.S. production of petroleum resources. As a consequence U.S. natural gas prices tumbled, starting around 2009. Oil prices climbed, in response to the dynamics of global oil markets. The global financial crisis of 2008 saw a sharp dip in oil prices, but prices climbed again thereafter.
Around 2010 U.S. refiners began processing increasing quantities of oil, while declining U.S. consumption of petroleum products led to the increased export of U.S. manufactured fuels, especially diesel fuel, the report says.
In part because of the drop in natural gas prices, the United States saw a shift from coal-fired electricity generation towards gas-fired generation. However, although there was a resulting decline in domestic coal production, that decline was slowed by an increase in coal exports, the report says.
Federal activities The federal government may have influenced the dynamics of fossil fuel markets through activities that created incentives or disincentives for fossil energy production and use. These activities included the setting of standards for fossil energy emissions; assuming the risks associated with the maintenance of the Strategic Petroleum Reserve; assuming some of the financial risks associated with oil spills; collecting taxes on transportation fuels; collecting royalty payments from oil and gas leases; and foregoing some government revenues through factors such as royalty relief for some oil and gas production, the report says.
In terms of emission standards, for example, the cost of compliance with these standards is a disincentive for fossil fuel use. On the other hand, a tax credit for enhanced oil recovery costs, for example, can provide an incentive for higher oil production, the report says.
Nuclear energy The report says that several factors may have influenced the production and consumption of nuclear energy during the study period. In particular, declining U.S. natural gas prices alongside the aftermath of the Fukushima nuclear disaster may have led to a decline in nuclear energy usage in recent years. Federal activities that may have influenced the situation included the setting of standards for the operation of nuclear power plants; providing services relating to nuclear waste storage; assuming some of the risks associated with power plant operations; and foregoing some nuclear-power-related tax revenues, the report says.
Uncertainty over government policies for the storage of nuclear waste, including the licensing of storage facilities at Yucca Mountain, may also have provided a disincentive for nuclear power generation, the report says.
Renewables When it comes to renewable energy usage, state and federal policies have led to an increase in the use of wind and solar energy for power generation - states have required the use of renewable energy in electricity production, while the federal government has provided tax credits and grants. There was a 30-fold increase in the use of wind power and a 19-fold increase in the use of solar during the study period, the report said.
The report also said that federal tax credits and federal policies for use of ethanol in transportation fuels were major factors in an eight-fold increase in the use of ethanol during the study period. And excess production of U.S. ethanol has resulted in an increase in ethanol exports, the report says.
The report also says that a number of other government activities may have influenced U.S. energy production and consumption, including loans, loan guarantees and funding support for energy efficiency; selling electricity; incentives for energy production and consumption; and government sponsored energy-related research and development.
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