The rise and fall of oil generation in the USA: A study in institutional adaptability

Abstract

After 1978, the US electric power industry more than halved oil generation of electricity. This reversed a rising trend that had accelerated with the liberalization of residual fuel oil import quotas in 1966. This paper uses detailed data on inter- utility sales filed with the US government and limited circulation statistical reports from electric utilities to appraise the changes. The changes reflect the capacity of a flexible, growing, integrated electric utility system to adapt to changing circumstances. Much of the reduction in oil use was effected by purchases of coal-generated electricity by oil-based companies on the east coast. Another major development was the introduction of new coal-fired plants to the west- south-central states. This allowed coal to take over from oil as the alternative to increasingly more expensive natural gas. In New York and California, however, gas became available to displace oil. A further more modest contribution was made by having plants that had shifted from coal to oil resume coal use.