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Josh Owens

Josh Owens

Josh Owens is the Content Director at Oilprice.com. An International Relations and Politics graduate from the University of Edinburgh, Josh specialized in Middle East and…

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The Complete Guide To Fossil Fuels

Fossil fuels are the main source of the energy consumed globally and are expected to continue to be the primary energy source for the world’s growing demand for decades to come.

Amid the outcry from climate activists against fossil fuels production, and amid growing concern from investors that the fossil fuel industries are doomed to fail, it is more important than ever to understand the fundamentals of what fossil fuels are and how the world uses them every single day.

This complete guide to fossil fuels will cover the following topics:

- What are fossil fuels?

- How are fossil fuels formed?

- Types of fossil fuels

- Global reserves of fossil fuels

- What are fossil fuels used for?

- Consumption of fossil fuels

- The environmental impact of fossil fuels

What Are Fossil Fuels?

Definition of fossil fuels

Fossil fuels take millions of years to form through natural processes in the Earth’s crust. Fossil fuels are a class of materials formed from dead organisms that sunk below the surface of the earth millions of years ago.

Fossil fuels are a finite energy source, meaning that once extracted from the earth’s crust, that’s it—they are non-renewable. Because we use fossil fuels much faster than they can be formed, and they form over millions of years, fossil fuels cannot be replaced.  

Chemically, fossil fuels consist mostly of carbon and hydrogen, plus some oxygen, nitrogen, sulfur, and small quantities of many other elements.

All fossil fuels can be burned to provide heat. This heat, in turn, can be used either directly in a home furnace for example, or indirectly to generate steam for generators or to power engines of cars or aircraft.

All fossil fuels were organic material once, but different geological conditions such as pressure, temperature, rocks, and sediment, have led to the formation of different types of fossil fuels.

Fossil fuels examples

The three fossil fuels, which are widely used as sources of energy around the world, are oil, natural gas, and coal.

Oil and natural gas formation Source: EIA

Types of Fossil Fuels


Oil is generally a liquid and consists mainly of hydrogen and carbon, and is therefore known as a hydrocarbon. Even within this one class of fossil fuels, there are many varieties of oil, because various deposits of oil have formed under different conditions in different areas of the earth’s crust at different depths at different times hundreds of millions of years ago.

Conventional oil is found in reservoirs in the pores of porous and permeable rocks.

Unconventional oil, mainly shale oil, is held in very tight reservoirs in rocks with very small pores or poorly connected pores that prevent oil from flowing through them easily. That is why unconventional oil was very difficult to extract before hydraulic fracturing, or fracking, that launched the shale revolution in the United States in the 2000s.

Natural Gas

Natural gas is a colorless gaseous fossil fuel consisting of mostly methane and ethane—composed of hydrogen and carbon—and is also known as hydrocarbon. Natural gas typically occurs in association with crude oil.

Natural gas burns cleaner than oil and coal to provide heat, and consequently, energy. The combustion of natural gas is relatively free of carbon monoxide and nitrogen oxides, while sulfur dioxide emissions are nearly non-existent. The methane in natural gas is a major source of environmental concern in the natural gas value chain from extraction to end-consumption, but due to the lower emissions of other harmful substances, natural gas is widely considered as the ‘cleanest-burning fossil fuel’ and has started to replace coal as an energy source, especially in electricity generation in advanced economies.


Coal is a rock which consists primarily of carbon. Geological processes, temperature, and high pressure helped dead organic matter to form in layers. There are several main types of coal depending on the place where it formed and on how far evolved it is. All coal types are minerals and rocks made mostly of carbon, but they differ in density, dryness, carbon content, and heat content.

Four different types, or ‘ranks’, of coal exist. These are anthracite, bituminous coal, subbituminous coal, and lignite.

Anthracite is the highest rank of coal and it is often referred to as hard coal. Anthracite is hard and black lustrous coal. It contains a high percentage of fixed carbon and a low percentage of volatile matter. Its dry carbon content is 86-92%. Anthracite has the highest heat content of any coal and releases a lot of energy when burned.

Bituminous coal is considered a middle rank coal. Bituminous coal has a carbon content of between 76% and 86%, and it is the most abundant type of coal. It has the second-highest heating value and is the most common type of coal used in electricity generation in the United States.

Subbituminous coal is black and does not shine. It can be either hard or soft because it is a kind of intermediate stage between low quality lignite and higher-quality bituminous coal.

Lignite coal is also known as brown coal, and it is the lowest grade coal with the lowest carbon content and the lowest heat content.

Then there is peat—it is soft and crumbly, and it is not really coal. Peat is actually the first step in the coal formation. When peat is placed under high pressure and heat, it becomes coal.  

Reserves of Fossil Fuels

Despite more than two centuries of fossil fuel extraction and production, the world still has a lot of oil, natural gas, and coal under ground.

Global Crude Oil Reserves

According to the BP Statistical Review of World Energy 2019, total global proved reserves of oil—that is the volumes that can be recovered from known reservoirs under existing economic and operating conditions—stood at 1.730 trillion barrels at the end of 2018.

The countries with the largest proved crude oil reserves at the end of 2018 were:

  1. Venezuela with 303.3 billion barrels or 17.5% of global reserves
  2. Saudi Arabia with 297.7 billion barrels, or 17.2% of global reserves
  3. Canada with 167.8 billion barrels, or 9.7% of world reserves
  4. Iran with 155.6 billion barrels of oil, or 9.0% of global reserves
  5. Iraq with 147.2 billion barrels of oil, or 8.5% of total world reserves
  6. Russia with 106.2 billion barrels
  7. Kuwait with 101.5 billion barrels
  8. The United Arab Emirates (UAE) with and 97.8 billion barrels of oil.
  9. The United States with 61.2 billion barrels.

A total of 71.8% of global proved oil reserves are located in nations members of the Organization of the Petroleum Exporting Countries (OPEC), according to the BP statistics.

According to OPEC’s own estimates, in 2018, OPEC’s share of total world oil reserves stood at 79.4%, most of which lie in the Middle East.

Global Natural Gas Reserves

As per the BP Statistical Review of World Energy 2019, the world had 6,952 trillion cubic feet (cu ft) of natural gas reserves at the end of 2018.

The countries with the largest proved reserves of natural gas in 2018, according to EIA, were:

  1. Russia with 1,688 trillion cu ft
  2. Iran with 1,191 trillion cu ft
  3. Qatar with 850 trillion cu ft
  4. United States with 438 cu ft
  5. Saudi Arabia with 304 trillion cu ft
  6. Turkmenistan with 265 trillion cu ft
  7. United Arab Emirates with 215 trillion cu ft
  8. China with 208 trillion cu ft
  9. Venezuela with 203 trillion cu ft
  10. Nigeria with 193 trillion cu ft

Global Coal Reserves

In global coal reserves, the United States leads the world ranking with 253,455 million short tons of recoverable coal reserves.

According to EIA figures, as of December 31, 2017, estimates of total world proved recoverable reserves of coal were about 1,114 billion short tons (or about 1.1 trillion short tons), and just five countries held around 75% of the world’s proved coal reserves.

The top five countries and their share of world proved coal reserves in 2017 were:

- United States with a 22% share of global coal reserves

- Russia with 15%

- Australia with 14%

- China with 13%

- India with 10%

Six states held 77% of the demonstrated reserve base (DRB) of coal in the United States as of January 1, 2019, EIA has estimated. These are:

- Montana—25%

- Illinois—22%

- Wyoming—12%

- West Virginia—6%

- Kentucky—6%

- Pennsylvania—6%

What are Fossil Fuels Used For

Modern life as we know it would be impossible without fossil fuels. Oil, natural gas, and coal combined continue to account for the largest part of energy consumption in the world and in the United States. Fossil fuels continue to dominate the global electricity generation mix, despite recent strides of renewables into electricity generation in many countries, including in the United States.

Fossil fuels are used not only for burning to provide electricity, but they are the key fuels of many industries such as steelmaking, plastics, and petrochemicals. Modern transportation would not be possible without fossil fuels—refined oil products such as gasoline, diesel, marine fuel, and jet fuel power vehicles, ships, and aircraft.

Uses of Oil

Crude oil is first pumped out of the ground and later sent to refineries where it is separated into different hydrocarbons, which boil at different temperatures. The lightest fractions of crude are used to make plastics, pharmaceuticals, pesticides, fertilizers, many consumer products such as plastic credit cards, rubber boots, fabrics, synthetic leathers, and detergents.


Then come the fuels gasoline, kerosene, and diesel. Heavier fractions of the crude are used to make home heating oil and fuel for factories and ships.

The heaviest fractions are used for making waxes and lubricants, while the remains of the barrel include asphalt used for roads.

According to the EIA, a U.S. 42-gallon barrel of crude oil yields about 45 gallons of petroleum products in U.S. refineries, thanks to the refinery processing gain. This increase in volume is similar to what happens to popcorn when it is popped.

Uses of Natural Gas

Natural gas is used for electricity generation and for industrial and commercial heating and cooking. Thanks to modern natural-gas-fueled combustion systems, around 60 percent of the heat from natural gas is harnessed to make electricity.  

In the U.S., most natural gas is used for heating and electricity generation, but other sectors also use natural gas in their industrial processes. The industrial sector uses natural gas as a fuel for process heating and as a raw material, or feedstock, to produce chemicals, fertilizers, and hydrogen.

Around half of U.S. homes use natural gas to heat buildings and water, to cook, and to dry clothes. In the commercial sector, natural gas is used to heat buildings and water, to operate refrigeration and cooling equipment, to dry clothes, and to provide outdoor lighting.

In 2018, the electric power sector accounted for 35% of U.S. natural gas consumption, the industrial sector represented 34% of total consumption, the residential sector accounted for 17% of consumption, the commercial sector for 12%, and the transportation sector for 3% of natural gas consumption.

Uses of Coal

Depending on the uses, there are two types of coal:

- Steam coal, also known as thermal coal, mainly used in electric power generation.

- Coking coal, also known as metallurgical coal, primarily used in steel production.

Coal is mainly used for electricity generation, as well as in steel production, cement manufacturing, and as a liquid fuel. Thousands of different products have coal or byproducts of coal as components. These include soap, solvents, dyes, plastics, and fibers such as rayon and nylon. Coal is also an ingredient in silicon metal, which in turn is used to produce silicones and silanes, which are in turn used to make lubricants, cosmetics, hair shampoos, and toothpastes.

In the United States, coal is predominantly used in the power generation sector. The electric power sector accounted for a massive 92.6% of coal consumption in the U.S. in 2018, the industrial sector accounted for 7.3 percent, while the residential and commercial sectors each had less than 1 percent share of total U.S. coal consumption.

Share of fossil fuels in electricity generation

As for electricity generation, coal held the largest share of power generation globally in 2018—at 38%, the same share as 20 years ago, as per the BP Statistical Review of World Energy 2019.

Natural gas was the second most widely used fuel in the power sector globally, with a share of 23.2%, much higher compared to 20 years ago, while the share of oil and nuclear has declined substantially over the same period.

The share of renewables in global electricity generation stood at 9.3% in 2018. This compares to only 1.3% share 20 years ago.  

In the United States, some 64% of the electricity generated in 2018 was from fossil fuels—coal, natural gas, petroleum, and other gases.

Natural gas had the largest share of all electricity generation sources, at 35.2%, followed by coal with 27.5%. The other main sources of power generation in the U.S. were nuclear and renewables including hydropower, with shares of 19.4% and 16.9%, respectively.

Environmental Impact of Fossil Fuels

In the United States, carbon dioxide emissions from burning fossil fuels for energy accounted for around 76% of total U.S. anthropogenic GHG emissions and about 93% of total U.S. anthropogenic CO2 emissions, EIA data shows.

Among sectors, transportation (28.9%), electricity generation (27.5%), and industry (22.2%) were the three top sources of U.S. greenhouse gas emissions in 2017, according to EPA data.

Source: EPA

The burning of fossil fuels is considered the single biggest source of emissions of carbon dioxide (CO2) globally. CO2 is one of the greenhouse gases (GHGs) that contributes to global warming. Methane, another GHG, is the key component of natural gas. GHGs absorb the heat energy emitted from the surface of the Earth and reradiate that heat back to the surface, contributing to the human-induced global warming.

That is why many countries around the world have pledged to work under the Paris Agreement to curb greenhouse gas emissions in an effort to keep the global temperature rise this century well below 2 degrees Celsius above pre-industrial levels. Countries are also introducing policies to boost the share of renewable energy in power generation, to encourage electric vehicle (EV) purchases and efficiencies in buildings and vehicle designs.

While an energy transition may be underway, fossil fuels remain an irreplaceable part of human existence.

By Josh Owens of Oilprice.com

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