Oil is one of the most widely-used fossil fuels, but its production process and role in the energy sector is still a mystery to many of us. What really goes on behind the scenes at power generation plants? And is there much of a difference between gas and oil?  

Let’s take a look at the ways we use oil as an energy source, from its role in electricity generation to its use as a transportation fuel and in petroleum products. 

What’s the Difference Between Gas and Oil? 

The difference between gas and oil depends on whether you’re referring to natural gas or gasoline. According to the U.S. Energy Information Administration (EIA), both oil and natural gas can be found in the same shale deposits, and are formed from the remains of ancient plant and animal matter:  

“Pressure and heat changed some of this carbon and hydrogen-rich material into coal, some into oil (petroleum), and some into natural gas.”  

Gasoline, on the other hand, isn’t actually a gas. It’s a liquid fuel derived from crude oil, so it’s an artificial petroleum product rather than a natural compound. 

Do You Need Oil and Gas for Electricity? 

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We don’t need to use oil or gas to generate electricity – renewable energy sources like solar energy and wind power don’t use fossil fuels at all – but burning fossil fuels is one way to generate electricity. Coal, oil, and natural gas can all be used to produce steam, which spins a turbine that produces electric power.  

Of course, burning fossil fuels (which are non-renewable sources) of any kind produces carbon dioxide, a greenhouse gas that’s a leading cause of climate change. Natural gas, when used in modern facilities, produces 50-60% fewer carbon emissions than coal for the same amount of energy, but it still has a significant environmental impact. 

What Percentage of Electricity Comes from Oil and Gas? 

As of 2022, the U.S. gets 38.4%of its electricity from natural gas and 21.9% from coal. Petroleum, or oil, accounts for less than 1% of the total. In terms of world energy use, coal makes up an even bigger share. According to the Brookings Institute, up to 63% of the world’s coal is used for electricity production in coal-fired power plants.  

Why don’t more countries get electricity from oil as an energy source? Mostly because it’s more efficient to use oil as transportation fuel rather than to generate electricity. The exception is for small-scale generators, which commonly run on gasoline, diesel fuel, and other petroleum products. 

How Much Oil Does It Take to Create Electricity from Oil? 

The EIA reports that it takes 0.08 gallons of liquid petroleum to produce 1 kilowatt-hour (kWh) of electricity – that’s roughly 12.69 kWh per gallon of petroleum.  

But what does that mean in everyday terms? According to OilPrice.com, “an average American home consumed 10,908 kWh of electricity [in 2013],” the equivalent of 20 barrels of oil per year.  

Since most power plants don’t use oil as an energy source, this is just a ballpark figure, and doesn’t represent actual energy production statistics in your area. 

Is Gas Made from Oil? 

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Gasoline is derived from crude oil, and oil production almost always starts underground – or under the sea, in the case of offshore oil drilling. Although we might think of an “oil reservoir” as a big pool of liquid oil, it’s more accurate to describe it as “droplets” of oil dispersed through massive layers of rock.  

Primary production refers to the collection of crude oil as it flows up through oil wells due to natural pressure in the Earth. Secondary production uses additional methods, such as pumping water into the reservoir, to capture more crude oil.  

Since both of these methods only capture about 30-40% of the oil, new methods such as hydraulic fracturing (fracking) and enhanced oil recovery (EOR) may be used. 

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How Does Gas Get Made? 

A single barrel of oil contains 42 gallons. About half of that – 20 gallons – is used to produce gasoline, while the rest is used for jet fuel and other petroleum products.  

The term “barrel” is just a measurement, and in most cases, crude oil isn’t actually loaded up into barrels. It’s usually shipped to the oil refinery through pipelines, and again from the refinery to storage facilities or delivery vehicles.  

Gasoline is made through a distillation process, in which the crude oil is heated and its components split into different layers. Heavy hydrocarbons end up at the bottom, while lighter ones turn into vapor and wind up at the top.  

These individual components, including gasoline, can then be further processed and refined to produce a wide range of petroleum products and petrochemicals. 

What Is Gas Made Out of? 

Although gasoline is derived from crude oil, it actually consists of up to 150 chemical components, including benzene and ethylbenzene. It also has “lubricants, anti-rust agents and anti-icing agents,” which improve its usefulness but can present some health risks, according to the Virginia Department of Health.  

These days, nearly all gasoline contains some amount of ethanol, which helps it burn more efficiently and reduces the risk of explosion. Ethanol is derived from crops like corn and sugar cane, and can also be used as a standalone biofuel.  

Remember, gasoline is not the same thing as natural gas, which is mostly made up of methane and a mix of other gasses like nitrogen and carbon dioxide. 

What Causes Gas Prices to Rise? 

Gas prices are influenced by a number of factors, including supply and demand, as well as geopolitics and market forces. Since crude oil is a non-renewable resource, and oil reserves aren’t evenly distributed around the world, countries with limited oil reserves rely on other countries to produce it for them.  

According to the EIA, just five countries export the majority of the world’s oil resources: the U.S., China, Russia, Saudi Arabia, and Iran. In the U.S., oil production takes place mostly in California, Texas, Louisiana, Oklahoma, and Alaska.  

In order to retain some control over rising gas prices, the U.S. maintains a “Strategic Petroleum Reserve” with over 700 million barrels of oil. The oil is kept underground in massive salt caverns, and up to 4.4 million barrels of oil can be released every day, reducing the impact of an oil shortage on gas prices. 

What’s More Important, Gas or Oil? 

Oil is the world’s primary energy source, accounting for around a third of all energy use. Since gasoline is derived from oil, it represents a small subset of that amount, but is the main fuel source for many internal combustion engines.  

Globally, oil is the primary fuel source per capita in many countries, including the U.S., Japan, and Germany. China and India are more dependent on coal, while Sweden gets a large portion of its energy from hydropower. France is an outlier, with nuclear energy supplying as much as 40% of its total energy needs.  

As for natural gas, it’s making up an increasing part of the world’s energy mix, and is now the primary energy source in the U.K. and second only to oil in the U.S. 

Can We Live Without Oil as an Energy Source? 

Oil as an Energy Source | Picture of a Contractor Taking Readings
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Concerns about “peak oil” have turned out to be premature, largely because of new oil discoveries and more efficient extraction methods. Instead of running out of oil, we’re going to have to wean ourselves off of it voluntarily due to its impact on the planet.  

But can we live without oil as an energy source? And what about its use in petroleum products, such as paints and plastics? While transitioning to a world without oil would take time, there are some promising alternatives on the horizon. 

What Happens After Oil Runs Out? 

An article in Business Insider imagines what would happen if the world’s supply of oil suddenly dried up: “in the short-term, the grid would likely still be active for a majority of Americans,” since only a small portion of power plants use oil as an energy source.  

Generating electricity without oil would be easy, since there are plenty of alternatives, from hydroelectric power stations to nuclear power plants. The more difficult challenge would be finding an alternative to gasoline and other products made from oil. 

Can We Make Plastic Without Oil? 

Although many everyday products, such as plastic bags, are derived from oil, that isn’t the only way to make plastic. The British Plastics Federation points out that plastic can also be made from vegetable oils, carbohydrates such as sugar cane, and bacteria.  

In fact, there’s a long history of bioplastics in the manufacturing sector, with Henry Ford experimenting with soy-derived plastics to build a car body in the 1940s.  

Scientists are also working on new ways to produce plastic products without crude oil. A process called electrosynthesis could create ethylene, an ingredient in some plastics, by splitting water and carbon dioxide molecules, instead of using a more energy-intensive process called steam fracking. 

Can We Make Gas Without Oil? 

While we can’t make gasoline as we know it without oil, it isn’t the only way to power an internal combustion engine. Researchers at Princeton have made the case for synthetic fuels made with “coal, natural gas and non-food crops.”  

We can also make hydrogen fuel cells using a process called electrolysis, which doesn’t require an internal combustion engine at all.  

Although the rise of electric vehicles may reduce our reliance on gas, it will take time to find alternatives for other modes of transport. EV batteries have a lower energy density than hydrocarbons, so they aren’t a viable alternative to jet fuel, for example. 

How Can I Reduce My Reliance on Oil as an Energy Source? 

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Only a small portion of U.S. households get their electricity from oil. Even though there are over 1,000 electric plants in the U.S. that use oil as an energy source, Hawaii is the only state in which they make up a majority of the power supply. They’re more common on the East Coast than on the West Coast, and the state of Oregon has none.  

Even if you don’t get your electricity from oil, you may have other household appliances that use oil as an energy source. For example, if you have an oil-fired boiler, consider replacing it with a radiant heating system to reduce your reliance on fossil fuels and improve your energy efficiency at home.  

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