G

Petroleum-Based Fuel Economics

Most of the energy currently used in fuel-powered transportation vehicles (for example, cars, trucks, buses, and airplanes) is in the form of liquid fuels derived from petroleum. Liquid fuels are uniquely suited for this service. They have a very high energy density on both a volumetric and weight basis. Vehicles can travel long distances between refueling on relatively small amounts of fuel. Liquid fuels are easy and cheap to transport. Vehicle refueling is fast and safe. The average person is capable of personally refueling his or her car in only a few minutes, with enough gasoline to travel over 250 miles. A commercial jet liner can take on enough fuel to fly halfway around the world in less time than it takes to unload and reload the passengers.

According to the U.S. Bureau of Economic Analysis, total personal consumption expenditures for gasoline, fuel oil, and other energy goods in 2008, when oil prices exceeded $140 per barrel, were only about 4 percent of all personal consumption expenditures, lower than they were for all years between 1950 and 1984 (Figure G-1). The U.S. economy and lifestyle have evolved around the availability of cheap, convenient, liquid transportation fuels.

Although petroleum has been used for thousands of years, the modern petroleum industry really began its rapid development during World War II. It has evolved into a very efficient industry for finding and converting a variety of crude oils into the high quality fuels the market and regulatory bodies demand. The industry has done this while meeting ever tightening emission limits for their production facilities and the fuels they produce.

Gasoline, diesel, and jet fuel are by far the largest volume petroleum-based products. Combined, they account for about 85 percent of consumed petroleum products in the United States. A number of steps are involved in getting these products from the well to the ultimate consumer, including

  • Finding the oil-bearing deposits,
  • Obtaining the rights to explore for and produce the oil,
  • Drilling for the oil and installing facilities to recover the oil,
  • Transporting the oil from the well to the refinery,


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G Petroleum-Based Fuel Economics M ost of the energy currently used in fuel-powered transportation vehicles (for ex- ample, cars, trucks, buses, and airplanes) is in the form of liquid fuels derived from petroleum. Liquid fuels are uniquely suited for this service. They have a very high energy density on both a volumetric and weight basis. Vehicles can travel long distances between refueling on relatively small amounts of fuel. Liquid fuels are easy and cheap to transport. Vehicle refueling is fast and safe. The average person is capable of personally refueling his or her car in only a few minutes, with enough gasoline to travel over 250 miles. A commercial jet liner can take on enough fuel to fly halfway around the world in less time than it takes to unload and reload the passengers. According to the U.S. Bureau of Economic Analysis, total personal consumption expen- ditures for gasoline, fuel oil, and other energy goods in 2008, when oil prices exceeded $140 per barrel, were only about 4 percent of all personal consumption expenditures, lower than they were for all years between 1950 and 1984 (Figure G-1). The U.S. economy and lifestyle have evolved around the availability of cheap, convenient, liquid transportation fuels. Although petroleum has been used for thousands of years, the modern petroleum in- dustry really began its rapid development during World War II. It has evolved into a very efficient industry for finding and converting a variety of crude oils into the high quality fuels the market and regulatory bodies demand. The industry has done this while meeting ever tightening emission limits for their production facilities and the fuels they produce. Gasoline, diesel, and jet fuel are by far the largest volume petroleum-based products. Combined, they account for about 85 percent of consumed petroleum products in the United States. A number of steps are involved in getting these products from the well to the ultimate consumer, including • Finding the oil-bearing deposits, • Obtaining the rights to explore for and produce the oil, • Drilling for the oil and installing facilities to recover the oil, • Transporting the oil from the well to the refinery, 309

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315 APPENDIX G per barrel over the same period and an even higher relative increase in natural gas price. At the same time it predicts only a 6-percent increase in the price of ethanol. REFERENCES EIA (Energy Information Administration). 2010. Annual Energy Outlook 2010—With Projections to 2035. Wash- ington, DC: U.S. Department of Energy. NAS-NAE-NRC (National Academy of Sciences, National Academy of Engineering, National Research Council). 2009. Liquid Transportation Fuels from Coal and Biomass: Technological Status, Costs, and Environmental Impacts. Washington, DC: National Academies Press. Oil and Gas Journal. 2010. Alberta’s royalty retreat. Available online at http://www.ogj.com/articles/print/ volume-108/issue-11/General-Interest/editorial-alberta-s-royalty-retreat.html. Accessed March 22, 2010.

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