The management of energy has been a prerequisite for the development of human societies, enabling the control and adaptation to the environment. Since the Industrial Revolution, the increasing use of energy has become essential for agriculture, transportation, waste collection, and communications. Historically, primitive energy use involved the collection and distribution of firewood, a practice that remains common for cooking and heating in poorer countries.
The transition to modern energy resources led to the invention of machines designed to improve comfort, such as gas burners and microwave ovens. In the industrialized world, these resources are now synonymous with fuels, petroleum products, and electricity. While energy is conserved during use, the resources themselves are not, as processes typically transform energy into unusable forms like excess heat.
The industry's modern structure is defined by various international classification systems. The United Nations International Standard Industrial Classification does not have a distinct category for the energy industry, instead classifying it by activities and expenditures. In North America, the North American Industry Classification System (NAICS) defines the sector through mining and utilities (sectors No. 21 and 22), a standard utilized by the U.S. Securities and Exchange Commission.
Financial markets, specifically the Global Industry Classification Standard used by Morgan Stanley, define the industry as companies working with oil, gas, coal, and consumable fuels. This definition generally excludes companies focused on specific industrial gases.
The energy sector has seen significant financial activity through mergers and acquisitions. Between 1985 and 2018, approximately 69,932 deals occurred with a total value of US$9,578 billion. The year 2010 was the most active by deal count with 3,761 transactions, while 2007 represented the peak in value at US$684 billion.
Throughout the 20th century, the industry was dominated by carbon-emitting sources. Fossil fuels served as the primary source of generation globally, though this led to increased pollution and environmental impacts. In response, many economies have begun investing in renewable and sustainable energy, such as wind and solar power, to reduce air pollution and limit global warming.
The industry has been shaped by major crises and geopolitical conflicts. Notable oil crises occurred in 1973 and 1979, causing significant economic and political instability. Political analysts have also linked the 1991 and 2003 Iraq Wars to the strategic control of international energy resources, though some counter this by noting the U.S. spent $336 billion in Iraq compared to a $25 billion annual budget for oil import dependence.
Environmental incidents, including oil spillages from petroleum extraction and the release of toxic gases from fuel combustion, have led to increased government regulation. The industry now frequently involves the trading of carbon and pollution credits on the free market to internalize these environmental costs.
The efficiency of energy production has improved significantly over time. Coal-fired plants built recently have reached efficiency rates of 46–49%, compared to 32–40% for those built before the 1990s. Modern gas technology can reach 58–59% efficiency, while combined heat and power (CHP) systems offer rates between 80–90%.
Despite these gains, the industry faces the challenge of "peak oil," the point of maximum global petroleum extraction. This has led to a focus on energy security, which addresses the intersection of national security and resource availability. Threats to this security include political instability in producing nations, attacks on infrastructure, and the uneven distribution of supplies.
The industry is currently exploring new methods of energy production and transportation. Research is underway regarding the enzymatic decomposition of biomass and the production of hydrogen fuel from water. Additionally, coal gasification and liquefaction are being utilized as alternative fuels due to the limited lifespan of oil reserves.
Transportation remains a critical sub-sector, as energy resources are often located far from their point of consumption. This requires extensive networks of tankers and pipelines for liquid fuels, and grid cables for the distribution of electricity. The development of smart grid infrastructure is also a priority to align capacity with demand curves.
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