Oil was the primary fuel source of older steam generating plants. These plants were designed to burn heavier grades of oil rather than lighter weight heating oils, although they can use either type. Before the early and mid 1970s oil embargoes, oil was plentiful and cheap. After the crisis, oil prices skyrocketed and using oil to generate electricity became extremely expensive. Today, only two percent of the United States' utility net generation comes from oil-fired plants.

Oil-Fired Steam Generating Plant Graphic Oil-fired steam generating plants are relatively simple. Oil is stored in large storage tanks and pumped through delivery lines into the boiler. The amount or flow of oil is controlled by valves which can increase or decrease the flow of oil depending on the amount of steam needed to generate electricity. The turbine, generator, and condenser are similar to those in other types of steam generating plants.

Oil is also burned as a backup fuel at natural gas and coal-fired steam generating plants. These plants maintain a backup supply of oil since it can be stored in large storage tanks for extended periods. Should the supply of natural gas or coal be interrupted, the plant operators switch to burning oil to make steam. This explains why it is common to see oil storage tanks at natural gas and coal power plants.