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Electricity from Oil

In the United States, oil is used mostly for transportation or home heating purposes, although a small percentage is used as a fuel for electricity generating plants. As with other fossil fuels, oil is found in underground reservoirs. It is the end product of the decomposition of organic materials that have been subjected to geologic heat and pressure over millions of years. Oil is considered a nonrenewable resource because it cannot be replenished on a human timeframe.

The activities involved in producing electricity from oil begin with the extraction of the oil and end with its burning in boilers and turbines at power plants. Initially, crude oil is removed from the ground by drilling deep wells and pumping it up to the surface.

The crude oil is then transported to a refinery where it is refined into a number of fuel products, including gasoline, kerosene, liquefied petroleum gas (such as propane), distillates (diesel and jet fuels), and "residuals" that include industrial fuels. Refineries remove a portion of the impurities in the crude oil, such as sulfur, nitrogen, and metals.

From the refinery, oil is transported to power plants by ship, pipelines, truck, or train. At power plants, several methods can be used to generate electricity from oil. One method is to burn the oil in boilers to produce steam, which is used by a steam turbine to generate electricity. A more common method is to burn the oil in combustion turbines, which are similar to jet engines. Another technology is to burn the oil in a combustion turbine and use the hot exhaust to make steam to drive a steam turbine. This technology is called "combined cycle" and is more efficient because it uses the same fuel source twice.

Environmental Impacts

Although power plants are regulated by federal and state laws to protect human health and the environment, there is a wide variation of environmental impacts associated with power generation technologies.

The purpose of the following section is to give consumers a better idea of the specific air, water, and solid waste releases associated with oil-fired electricity generation.

Air Emissions

Burning oil at power plants produces nitrogen oxides, sulfur dioxide, carbon dioxide, >methane, and mercury compounds. The amount of sulfur dioxide and mercury compounds can vary greatly depending on the sulfur and mercury content of the oil that is burned.

The average emissions rates in the United States from oil-fired generation are: 1672 lbs/MWh of carbon dioxide, 12 lbs/MWh of sulfur dioxide, and 4 lbs/MWh of nitrogen oxides.1

In addition, oil wells and oil collection equipment are a source of emissions of methane, a potent greenhouse gas. The large engines that are used in the oil drilling, production, and transportation processes burn natural gas or diesel that also produce emissions.

Water Resource Use

Oil-fired power plants use large quantities of water for steam production and cooling. When oil-fired power plants remove water from a lake or river, fish and other aquatic life can be killed, which affects those animals and people who depend on these aquatic resources.

In addition, the drilling of oil requires water to remove obstructions from the well, and refineries require water in the various processes used to refine crude oil into usable fuel.

Water Discharges

Refineries release treated wastewater, which can contain pollutants, into streams and other bodies of water. Likewise, power plants release wastewater, which contains pollutants and is generally hotter than the water in nearby lakes and streams, often harming fish and plants. This discharge usually requires a permit and is monitored. For more information about these regulations, visit EPA's Office of Water website.

Drilling can also cause underground water supplies to become contaminated with oil, and runoff from the extraction process can affect surface waters. During the transportation of oil, spills can occur, damaging water quality and harming marine life and birds in oceans and coastal waterways.

Solid Waste Generation

Oil refining produces wastewater sludge and other solid waste that can contain high levels of metals and toxic compounds and that may require special handling, treatment, and disposal. Also, when oil is burned at power plants, residues that are not completely burned can accumulate, forming another source of solid waste that must be disposed.

Land Resource Use

The construction of large oil-fired power plants can destroy habitats for animals and plants. Waste products from refining and from power plants (such as wastewater sludge and residues) can cause land contamination if not properly disposed. In addition, when oil spills occur on land, soils are degraded.


U.S. oil reserves in 2003 were estimated to be 143 billion barrels. These reserves are distributed as follows: Texas, 24 percent; Alaska, 22 percent; California, 17 percent; and the Gulf of Mexico, 14 percent.2 U.S. oil consumption in 2000 was 7.3 billion barrels.

  1. U.S. EPA, eGRID 2000.
  2. U.S. Department of Energy, Energy Information Administration, Annual Energy Outlook 2005.

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