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Why Are Energy Commodities Important?

Perhaps more than any category of commodities, energy has the biggest impact on our daily lives.

Energy prices affect the cost of virtually everything we consume including our groceries, the clothes we wear, the electronic devices we use and the gasoline we put in our cars. They determine the costs of heating and cooling our homes, businesses, factories, hospitals and schools. In fact, a world without energy would be a world without the vital things we need to survive!

The unit we typically use to define quantities of energy is the British thermal unit (Btu), which is a measurement of the heat content of fuels. According to the US Energy Information Agency (EIA), annual worldwide energy consumption exceeds 575 quadrillion Btu and is expected to grow to 736 quadrillion Btu by 2040, a 28% increase.

To put the enormity of these numbers into context, we can compare them to fossil fuel consumption in the world`s largest economy. The United States annually consumes:

7.2 billion barrels of petroleum (35.9 quadrillion Btu),
27.5 trillion cubic feet of natural gas (28.4 quadrillion Btu)
729.5 million short tons of coal (14.2 quadrillion Btu)

Yet, US consumption of these fossil fuels amounts to only 13.6% of total global energy consumption.

In other words, the world consumes a staggeringly large amount of energy.

What Are the Different Types of Energy?

The energy we use can be divided into two groups:
  1. Renewable – energy that can easily be replenished
  2. Non-renewable – energy that cannot be replenished

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