Mankind’s energy use has shifted over the centuries. Coal powered the industrial revolution. A century ago, it provided most home heating and fueled steam locomotives. But new technologies allowed people to find cleaner and more convenient fuels; today, coal is used almost exclusively as a boiler fuel in large electric power plants, where economies of scale allow it to be used efficiently, with reasonably effective emissions controls. Coal is the most abundant and economic fossil fuel available to the nation, but wider use of it may be limited by concerns about air pollution and carbon emissions.

In the last century, petroleum came to dominate heating, industrial and transportation uses, due to its flexibility, including its ease of storage and transportation. Abundant, cheap oil changed Texas forever; it is almost certainly the most important industry in the state’s history.

Oil continues to be the backbone of the state’s industrial sector, and fuels virtually all of Texas’ transportation systems, whether by air, land or water.

Today, oil continues to be the backbone of the state’s industrial sector, and fuels virtually all of Texas’ transportation systems, whether by air, land or water. The significant jump in oil prices during the past decade – from $12 per barrel in 1998 to more than $110 per barrel today – may spur some technological advances and fuel switching in the transportation sector.5

Over time, the U.S. has become more dependent on petroleum imports. In 2006, total liquids supply (including crude oil and refined products) from foreign sources accounted for 60 percent of U.S. supply.6

Natural gas initially was a nuisance byproduct of oil production that was commonly eliminated by “flaring” it at the wellhead. After pipelines allowed natural gas producers to connect with their customers, it began to play a significant role in meeting Texas’ energy needs. In 1970, the price of natural gas was 62 cents per thousand cubic feet (in 2000 dollars). Today’s prices are more than 10 times this amount; in 2005, they averaged $6.50 per thousand cubic feet. Despite higher prices, natural gas is still a highly valued, clean fuel that has become a Texas mainstay for industrial applications and electricity production.


Commercial nuclear power is an offshoot of the nation’s enormous investment and expertise in nuclear technology for military purposes. Nuclear power can produce large amounts of heat that is best suited for use in very large power plants, and it has some very desirable features (such as low-cost fuel and extremely long run times between refueling) as well as significant drawbacks (very high front-end costs, long regulatory and construction lead times, and unique safety and security concerns).

Renewable energy represents a vast palette of natural energy resources, encompassing usable energy from the sun, wind, biomass (plant materials and animal waste), water and the earth itself (geothermal energy). These are fundamentally different from conventional fuel sources in that they are renewed by nature over short time cycles and hence are not depletable, as are fossil fuels. Renewable energy sources are virtually infinite, offering great promise for our long-term energy needs. Technology is the key to making use of these abundant but challenging resources, as they tend to be more dispersed and lower in energy density than fossil fuels.


Energy efficiency can help meet our energy needs by reducing our demand for energy. Better power plants, advanced auto technology and energy-saving lighting and appliances have proven that economic growth can be achieved with lower energy consumption. More efficient technology under the hood can stretch a tank of gas by many miles. Actions to reduce customer demand and consumption are the quickest and often the lowest-cost options for meeting short-term energy needs.

Decreasing energy intensity is an indication of greater energy efficiency and structural changes in the economy, such as growth in less energy-intensive industries like services.

A growing economy and population will require more energy than can be saved with improved efficiency. But Texas has a great assortment of energy options available to power its future. As the supply of traditional fuels become less certain and more costly, advanced technology will play an increasingly important role.

Note: The following sections include data through 2005, as this is the most recent data available across all fuel sources in a standard format. Subsequent chapters frequently rely on more recent data related to their topics.

Non-Renewable Fuel


Oil, natural gas, coal and uranium – the most common fuels in the world – are considered to be non-renewable, due to the eons it took to create them and mankind’s inability to synthesize similar fuels readily. All but uranium are called “fossil fuels” because of their genesis in decaying plant and animal matter. Together, oil, natural gas and coal account for about 85 percent of the world’s energy supply, a share that has changed little over recent decades. Nuclear power now provides 6.3 percent, a six-fold increase from 1973 levels.

Renewable Energy


The oil price shocks of the 1970s and 1980s spurred a national movement to develop other kinds of energy and decrease our dependence on petroleum. In this period, Texas oil and gas production peaked and the industry began to play a diminishing yet still important role in the state’s economy. As energy prices fell, however, interest in renewable energy sources waned. Recent events, including dramatically higher oil prices and environmental concerns, again have led to heightened interest in renewable sources of energy, such as solar and wind energy, biomass, hydropower and geothermal power, which are virtually inexhaustible and relatively clean.

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