Why do we need oil and gas?

Oil and natural gas are an important part of everyday life. Not only do they give us mobility, they heat and cool our homes and provide electricity. Millions of products are made from oil and gas, including plastics, life-saving medications, clothing, cosmetics, and many other items you may use daily.

In the United States, 97% of the energy that moves the transportation sector (cars, buses, subways, railroads, airplanes, etc.) comes from fuels made from oil. [1] Auto manufacturers are developing cars to run on alternative fuels such as hydrogen and ethanol or even powered by electricity. However, the batteries in electric cars need to be charged and the fuel to generate the electricity comes from oil or gas. Also, the hydrogen needed for fuel cells may be generated from natural gas or petroleum-based products. Even as alternative fuels are developed, oil will be crucially important to assuring that people can get where they need to be and want to go for many years. Barring any increase in the penetration of new technologies, alternative fuels are not expected to become competitive with oil for transportation before 2025. [3]

Increase in need

In areas of the world that are still developing, businesses and individuals are demanding greater mobility for themselves and their products. World vehicle ownership is projected to increase from 122 vehicles per thousand people in 1999 to 144 vehicles per thousand in 2020, with the largest growth occurring in developing nations. In China, for example, the number of cars has been growing by 20% per year. [3] Airports are being added in these countries as well, expanding jet fuel demand. Oil is expected to remain the primary fuel source for transportation throughout the world for the foreseeable future, and transportation fuels are projected to account for almost 57% of total world oil consumption by 2020. [2]

World population is currently around 6 billion people, but is expected to grow to approximately 7.6 billion by 2020. That will mean a huge increase in the demand for transportation fuels, electricity, and many other consumer products made from oil and natural gas.

Oil byproduct

Natural-gas use is growing across all economic sectors. Natural gas burns cleaner than oil or coal, and this environmental benefit has encouraged its use. While decades ago natural gas was seen as an unwanted byproduct of oil and may have been wasted, its value has been recognized today. Developing nations with gas reserves are finding this resource invaluable to building their economies. Most natural gas is distributed by pipelines, which is a limiting factor for remote resources that are not near the major consuming markets. Some natural gas is chilled to a liquid state whereby it can be transported across oceans by tanker. Similarly, there is considerable development of technology to convert natural gas to liquids to enable transportation.

[1] US Energy Information Administration, Annual Energy Review, 2002.
[2] US Energy Information Administration, International Energy Outlook, 2002.
[3] US Energy Information Administration, International Energy Outlook, 2003.