The United States consumes energy from three major categories of sources: fossil, nuclear, and renewable. Fossil energy comes from coal, natural gas, crude oil, and petroleum products. Nuclear energy comes from uranium, which is mined and processed into nuclear fuel. This fuel undergoes nuclear fission in a nuclear reactor to produce heat, which is converted into electricity using steam turbine technology. Renewable energy comes from a variety of sources, including biomass, which is organic material from plants and animals and includes liquid biofuels (such as ethanol and biodiesel), wood, and waste (such as municipal solid waste and agricultural byproducts); hydroelectric power; geothermal; wind; and solar. Many sources of renewable energy are converted into electricity before being consumed. The United States domestically produces most of the energy it consumes. However, it also imports a portion, mostly in the form of crude oil and petroleum products. In 2013, the United States consumed over 97 quadrillion British thermal units (Btu) of energy, including over 12 quadrillion Btus of imported energy, according to EIA data. As shown in figure 1, most of this energy (or about 82 percent) came from fossil energy sources. The rest came from renewable and nuclear energy sources. There are four major sectors of the U.S. economy that consume energy at the point of end use: the industrial sector, which includes facilities and equipment used for manufacturing, agriculture, mining, and construction; the transportation sector, which generally comprises vehicles (such as cars, trucks, buses, trains, aircraft, and boats, among others) that transport people or goods; the residential sector, which consists of homes and apartments; and the commercial sector, which includes buildings such as offices, malls, stores, schools, hospitals, hotels, warehouses, restaurants, and places of worship, among others, as well as federal, state, and local facilities and equipment. End-use sectors obtain energy from different combinations of sources. The industrial sector mainly consumes natural gas and electricity but also uses some petroleum products as feedstock. The transportation sector mainly consumes gasoline, diesel, and jet fuel; it also consumes biofuels and natural gas, as well as small amounts of electricity. The residential and commercial sectors mainly consume energy from electricity and natural gas but also use some petroleum products. As described above, every sector consumes electricity produced by the electric power sector, which takes electricity generated from fossil, nuclear, or renewable energy and delivers it to the end-use sectors through transmission and distribution lines. As shown in figure 2, the industrial sector consumed the largest share of energy (32 percent or 31.3 quadrillion Btus) in 2013, followed by the transportation, residential, and commercial sectors. Not all of the energy produced is available for consumption at the point of end use, mainly because energy losses occur whenever energy is converted from one form to another. For example, coal-fueled power plants produce electricity by burning coal in a boiler to heat water and produce steam. The steam, at tremendous pressure and temperature, flows into a turbine, which spins a generator to produce electricity. During this process, the burning of coal produces heat energy, some of which converts water into steam. In turn, some of the energy in the steam is converted into electrical energy. At each point in this process, some of the original energy contained in the coal is lost. According to EIA, about two- thirds of the energy consumed to generate electricity is lost in conversion, and most of these losses occur in fossil-fueled and nuclear power plants that generate steam to turn turbines. According to general economic principles, a number of factors may affect the production and consumption of energy. These factors include the following: Changes in the supply of energy relative to changes in demand may affect the price that consumers pay. For example, if the supply of gasoline increases faster than the demand for it, the price of gasoline will most likely decrease. In contrast, if the demand for gasoline increases faster than the ability to supply it, the price of gasoline will most likely increase. Prices of energy provide signals to producers and consumers and may affect their behavior. For example, lower gasoline prices provide an incentive for consumers to consume more gasoline, while higher gasoline prices provide an incentive for consumers to consume less gasoline. (However, incentives or disincentives may not actually change behavior if they are insufficient to outweigh other factors or considerations.) Costs associated with producing energy provide signals to producers and may affect their behavior. For example, lower production costs provide an incentive for oil companies to produce more gasoline, while higher production costs provide an incentive for oil companies to produce less gasoline. Three important factors—energy efficiency, energy conservation, and the global economic recession of 2007 to 2009—had a major influence on U.S. energy production and consumption over the past decade but generally affected all energy producers and consumers rather than affecting only a specific source of energy. The first two factors are related but have distinct meanings. Energy efficiency is the use of technology that requires less energy to perform the same function, such as using a compact fluorescent light bulb in place of an incandescent bulb. Energy conservation is any behavior that results in the use of less energy, such as turning the lights off when you leave the room. Both energy efficiency and conservation reduce our consumption of energy and thereby influence the total amount of energy produced and consumed in the United States. Some data suggest that the United States increased the efficiency with which it used energy from 2000 to 2013. For example, according to Federal Highway Administration data, the fuel economy of U.S. motor vehicles increased from an average of 16.9 miles per gallon in 2000 to 17.6 miles per gallon in 2012 (the latest year for which data are available). Another measure of the efficiency with which the United States uses its energy is to compare U.S. energy consumption with the U.S. gross domestic product, which is a measure of the value of all final goods and services produced within the United States in a given period. By making this comparison, we can measure whether it takes less energy over time to produce the same value of goods and services. According to EIA data, the consumption of energy per dollar value of gross domestic product decreased from about 7,900 Btus per dollar in 2000 to about 6,200 Btus per dollar in 2013, indicating that the United States became more energy efficient. The third factor, the global economic recession of 2007 to 2009, resulted in reduced economic activity in general, which reduced energy demand and had long-term effects on global energy markets. For example, according to a 2009 International Energy Agency report, the recession’s effects on both energy producers and consumers included the following: Energy companies drilled fewer oil and gas wells and reduced spending on refineries, pipelines, and power stations. Businesses and households spent less on energy-using appliances, equipment, and vehicles. Tighter credit and lower prices made investment in energy savings less attractive financially, while the economic crisis encouraged energy consumers to reduce overall spending. As a result, the deployment of more energy-efficient equipment was delayed. Equipment manufacturers were expected to reduce investment in research, development, and commercialization of more energy- efficient models. The federal government supports or intervenes in U.S. energy production and consumption through a number of key methods, including (1) setting standards and requirements, (2) directly providing goods and services, (3) assuming risk, (4) providing funds, and (5) collecting or forgoing revenue from taxes or fees. The federal government also conducts and provides funding for energy-related R&D. Through laws and regulations, the federal government sets standards and requirements for (or prohibitions against) certain activities. Some laws and regulations focus on affecting economic activity by controlling prices, output, or the entry and exit of firms in a market. For example, under the Atomic Energy Act, as amended, the Nuclear Regulatory Commission is responsible for issuing licenses to commercial nuclear reactors and conducting oversight of activities under such licenses to protect the health and safety of the public, among other things. Without such licenses, firms cannot operate nuclear reactors and generate electricity from nuclear energy. Other laws and regulations focus on the effects of economic activity on the health and welfare of citizens. For example, under the Clean Air Act, EPA is responsible for regulating emissions of a variety of air pollutants from coal-fueled power plants and other energy producers. While laws and regulations vary widely in how they are designed, they tend to function by influencing the decisions of producers and consumers in the market. In addition, laws and regulations may impose a variety of costs, such as costs on regulated entities to comply with the laws and regulations (“compliance costs”), and costs on government agencies to administer and enforce them. To the extent that the compliance costs affect the costs of engaging in particular energy-related activities, laws and regulations may change the behavior of energy producers and consumers. The federal government provides some goods or services directly—that is, through a government agency—rather than providing funds to another entity to provide these goods or services. For example, the federal government may produce and sell electricity generated at federally- owned facilities and produce reports and information on energy markets, among other things. Government provision of goods or services may be deemed necessary to address certain circumstances, such as economic inequalities among segments of the public or a need for a good or service considered unlikely to be met by the private sector. Such activities may affect energy producers and consumers in different ways. For example, production and sales of electricity generated at federally-owned facilities may involve energy sources and prices that differ from those of electricity produced and sold by private market participants.