The idea of energy is abstract and difficult to visualize. You can understand it better from the point that although you cannot measure energy directly, you can measure the effects of energy. The two most common visible effects of energy are work being done or a change in temperature.
Figure 1 shows how coal contains energy in the form of chemical bonds. When the bonds in coal reform to make carbon dioxide and water, radiant heat releases and heats water. The water boils and steam expands and causes a piston that moves and forces a wheel to move.
The energy to mechanically move the gear comes from energy within the bonds between atoms in the coal.
By work, we mean a piston moves, an elevator is hauled up, or some type of visible force acts on a body to move it a distance.
A change in temperature means heat flows from a reservoir to an area which has less energy. It is principally the flow of heat chemists concern themselves with.
All matter contains a certain amount of energy from the motion of the atoms or molecules which make it. Even when particles are not in motion, they vibrate and rotate. Because the direction of vibration of one particle is independent from any other particle, the overall effect is that the vibrations and rotations occur at random. These random motions are what thermal energy are made of.
Regardless of how the energy transfers from one place to another place, energy is divided into two forms: potential energy and kinetic energy.
Potential energy is often referred to as the "energy of position". The idea is taken from the fact that if you consider a rock at a given height, when you drop the rock it accelerates from resting until it impacts the grounds.
In Figure 2, on the left a rock perched fifty feet above the ground is held in a field (gravity). When you release the rock, the potential energy converts to kinetic energy. The rock strikes the ground and releases kinetic energy in the form of mechanical energy. (Even if you do not realize it, some heat energy is also released).
The energy released when the rock hits the ground was stored by the position above the ground the rock occupied. The higher the rock, the harder the rock strikes the ground. This means rocks which are higher have more potential energy than rocks at a lower height.
The same idea can be extended to include chemical reactions. If burning wood heats a boiler that goes onto cause the expansion of steam to move a piston, then you can say the wood contained the potential energy, which when converted to heat, caused the piston to move.
But where is this potential energy? The potential energy comes from the chemical bonds between the atoms which form the wood. In the process of combustion chemical bonds break and reform with oxygen. The difference in potential energy between the bonds in wood the products of combustion are released as heat.
So chemists speak about chemical bonds as containing potential energy, since breaking or formation of bonds can be measured either in the form of mechanical work or a change in temperature.
Kinetic energy is the energy of motion. You may well think in terms of translational motion. That is. motion which moves through space. However kinetic energy also refers to the fact atoms and molecules vibrate and rotate. This also contributes to the total kinetic energy of matter.
The most important conversion of potential energy to some other kind of energy is the potential energy in bonds which change as a result of the change of bonds between specific atoms. How atoms rearrange with new bonding partners determines whether they release or absorb energy, often in the form of heat.
In an abstract sense, Figure 3 shows that a generic organic molecule reacts with oxygen and produces carbon dioxide and water. When the bonds between atoms in the organic molecule rearrange when they encounter molecules of oxygen, both molecules trade their bonds to form bonds between hydrogen and oxygen and carbon and oxygen.
The atoms go from one bond with a certain potential energy to another bond with another amount of potential energy stored in the bonds. The difference in potential energy before a chemical reaction and after a chemical reaction releases energy. In the case of hydrocarbons, the difference in energy is released as heat.