An economic study of fuels in manufacturing

STATE OF ILLINOIS

ADLAI E. STEVENSON, Governor

DEPARTMENT OF REGISTRATION AND EDUCATION

C. HOBART ENGLE, Director

DIVISION OF THE

STATE GEOLOGICAL SURVEY

M. M. LEIGHTON, Chief
URBANA

REPORT OF INVESTIGATIONS — NO. 157

AN ECONOMIC STUDY OF FUELS IN MANUFACTURING

BY

WALTER H. VOSKUIL

PRINTED BY AUTHORITY OF THE STATE OP ILLINOIS

URBANA, ILLINOIS

id5i

This report is also a publication

of the University of Illinois Engineering Experiment Station

as its Circular Series No. 63

STATE OF ILLINOIS

ADLAI E. STEVENSON, Goverjior

DEPARTMENT OF REGISTRATION AND EDUCATION

C. HOBART ENGLE, Director

DIVISION OF THE

STATE GEOLOGICAL SURVEY

M. M. LEIGHTON, Chief
URBANA

REPORT OF INVESTIGATIONS — NO. 157

AN ECONOMIC STUDY OF FUELS IN MANUFACTURING

BY

WALTER H. VOSKUIL

Mineral Economist, State Geological Survey,

and

Professor of Mineral Economics,

Department of Mining and Metallurgical Engineering,

University of Illinois

PRINTED BY AUTHORITY OF THE STATE OF ILLINOIS

URBANA, ILLINOIS
1951

ORGANIZATION

STATE OF ILLINOIS

HON. ADLAI E. STEVENSON, Goverjwr

DEPARTMENT OF REGISTRATION AND EDUCATION

HON. C. HOBART ENGLE, Director

BOARD OF NATURAL RESOURCES AND CONSERVATION

HON. C. HOBART ENGLE, B.Edn., M.A., Chairman

W. H. NEWHOUSE. Ph.D., Geology

ROGER ADAMS, Ph.D., D.Sc, Chemistry

LOUIS R. HOWSON, C.E., Engineering

A. E. EMERSON, Ph.D., Biology

LEWIS H. TIFFANY, Ph.D., Pd.D., Forestry

GEORGE D. STODDARD, Ph.D., Lirr.D., LL.D., L.H.D.

President of the University of Illinois
DELYTE W. MORRIS, Ph.D.

President of Southern Illinois University

GEOLOGICAL SURVEY DIVISION

M. M. LEIGHTON, Ph.D., Chief

CONTENTS

I. Introduction 5

1. Purpose and Significance of the Study 5

2. Fuels Used in Manufacturing 6

Kinds and Quantity 6

Conversion to a Common Equivalent 6

Meaning of Unit Cost 7

II. General Survey of Fuels in Manufacturing 8

3. Consumption by Manufacturing Groups 8

4. Fuels and the Production Worker 9

5. Fuel Costs 9

III. Electric Power in Manufacturing 12

IV. Fuels and Power in the Iron and Steel Industries 16

6. Fuels for Iron Reduction 16

7. Fuels and Power in the Iron and Steel Industries

Compared to Total Fuel Requirements in

Manufacturing 16

8. Fuels Used in Iron and Steel Making 17

9. The Fuel Structure of the Iron and Steel Industries 17

10. Cost of Fuels 18

11. Blast Furnace Fuel Costs 20

Location of Coking Coal Deposits 20

Mine Price of Coking Coal 21

Transportation Costs 21

Cost of Coal and Coke at the Ovens 21

Cost of Coke per Ton of Pig Iron Produced 21

12. Fuels in Steel Works and RoUing Mills 22

13. Fuel Costs in the Steel Industry 24

TABLES

1. Fuels Consumed and Electric Energy Purchased and Generated

by Manufacturing Industries, 1947 and 1939 6

2. Conversion Factors for Fuels 6

3. Conversion Factors for Fuel Units Used in the United States 7

4. Fuel and Power Consumption, by Manufacturing Industr}^ Groups, 1947 8

5. Fuel and Power Used per Production Worker, 1947 10

6. Cost of Fuel, Wages and Salaries Paid, and Value Added by Manufacture 11

7. Electric Power Used in Manufacturing, 1939 and 1947 12

8. Fuels and Electric Power Used in Industry, 1947 13

9. Electric Power Used per Worker, 1939 and 1947 14

10. Electric Power Used by the Primary Metal Industries, 1947 15

11. Electric Power Used in the Production of Aluminum and Electric Steel 15

12. Summary of Fuels Used in Iron and Steel Manufacture 17

13. Fuel Requirements in Coke Ovens, Blast Furnaces, and Steel Works and

Rolling Mills 18

14. Place of the Iron and Steel Industries with Respect to Cost of Fuel and

Related Factors 19

15. All Industries: Ratio of Fuel Costs to Wages and Salaries 19

16. Steel Industries: Ratio of Fuel Costs to Wages and Salaries 19

17. Pig-iron Cost Data 20

18. Cost of Coke, by Leading Coke-Using Counties, 1947 22

19. Costs of Coal at the Oven, and Value of Furnace Coke 23

20. Cost of Coke per Ton of Pig Iron Produced 23

21. Fuel Used in Steel Works and Rolling Mills, 1947 24

22. Comparative Fuel Costs in the Iron and Steel Industry, for Leading States 25

23. Fuels and Power Used, by Geographic Divisions, 1947 25

24. Fuel Consumption, by Geographic Divisions — Converted into MilHons

of Ivilowatt-hour Equivalent 26

25. Fuels and Power Consumption in Selected Metropohtan Areas — Converted

into Millions of Kilowatt-hour Equivalent 27

26. Fuels and Power per Production Worker in Selected Metropohtan Areas 28

I. INTRODUCTION

1 . Purpose and Significance of the Study

More than ordinarily detailed analyses of the role of fuels in manu-
facturing is possible through the use of reports made by the Bureau of
the Census in several years from 1909 to 1947. The Census of Manu-
factures for 1947 gave separate statistics on bituminous coal, anthra-
cite, coke, fuel oil, gas and other fuels (principally gasoline, wood, and
liquefied petroleum gas) consumed in each manufacturing plant for
power and heat. Statistics were also given on the quantity of electric
energy purchased, the quantities generated in the plant, and the quan-
tities sold.

This report by the Bureau of the Census enables us to ascertain the
amount and kind of each fuel used per employee, by industries or
industry groups; the role of electric power, the quantities used by
workers, and the change since 1939; the cost of fuels as a part of the
manufacturing process, compared with value added by manufacture,
wages paid, or cost of materials; comparative fuel costs; and the compet-
itive trend among fuels.

The Census of Manufactures covers some 450 individual manu-
facturing industries classified into 20 major industry groups which are
in turn divided into 141 subgroups. This grouping into major industry
categories affords a convenient means for studying the fuel- and power-
consuming characteristics of related industries and also for studying
the fuel and power use of any single industry that may have unusual
characteristics in these respects.

The items which are most useful in analyzing the fuels and power
used in manufacturing are these four:

Number of employees.

Wages paid.

Value added by manufacture.

Costs of materials and supplies.
The cost of fuels and electric power is one among several items of cost
that closely concerns the manufacturer. As is shown in the detailed
analyses that follow, this item of fuel costs as a part of the cost of
production varies in importance; it is sometimes negligible and some-
times major.

FUELS IN MANUFACTURING

2. Fuels Used in Manufacturing

Kinds and Quantity. The kinds and quantity of fuels used in manu-
facturing (Table 1) are reproduced from Table 1, Chapter VIII of
Vol. I, General Summary, Census of Manufactures.

Table 1

Fuels Consumed and Electric Energy Purchased and Generated by

Manufacturing Industries, 1947 and 1939

"Electric energy generated'

' is not to be added to the total since, presumably, it is made from fuels include^

in the table.

Fuels and electric energy produced

Unit of

1947

1939

Kind

measure

Quantity

Cost in thousands

Quantity

Bituminous coal

M tons

103 788

$647 958

57 170

Anthracite

M tons

7 081

44 869

4 971

Coke

M tons

66 171

729 403

35 001

Fuel oils

M barrels

166 947

474 945

97 362

Gas

Natural

Mill, cu ft

1 238 311

210 637

633 245

Manufactured

Mill, cu ft

1 347 763

82 921

1

185 633

Mixed

Mill, cu ft

1 418 879

89 611

21 528

Other fuels

not available

not available

96 457

not available

Electric energy-

Purchased

Mill, kw-hr

102 822

954 717

44 847

Generated

Mill, kw-hr

43 936

28 593

Generated

and sold

Mill, kw-hr

5 811

2 922

Conversion to a Common Equivalent. It is useful to compare coal,
lignite, oil, electric power, and various kinds of gas. Two ways in
which this can be done are widely used: (1) conversion of all units to
equivalent value of coal; and (2) conversion to British or metric thermal
units. Both methods have disadvantages. The first does not adequately
provide for a realistic comparison between fuels and hydroelectric
power. The second, because it calls for the use of tiny units of energy,

Table 2

Conversion Factors for

Fuels

Heat value,

Electricity

1000 ton-

equivalent.

calories

1000 kw-hr

Coal ^"^'

Unit

per unit<^

per unit^

Germany

Metric ton

7.0

1.63

other

Metric ton

7.2

1.68

Brown coal and lignite

Czechoslovakia

Metric ton

4.9

1.14

Germany

Metric ton

2.2

.51

Other

Metric ton

2.8

.65

Peat

Metric ton

3.6

.84

Coke

Metric ton

6.0

1.40

Coal briquettes

Metric ton

7.2

1.68

Lignite briquettes

Czechoslovakia

Metric ton

7.0

1.63

Other

Metric ton

4.8

1.12

Fuelwood

Cubic meters

1.8

.42

Mineral oil and derivative oil fuels

Metric ton

10.6

2.47

Benzol

Metric ton

10.6

2.47

Alcohol

Metric ton

5.5

1.28

Natural gas

1000 cubic meters

9.6

2.24

Manufactured gas

1000 cubic meters

4.3

1.00

Refinery gas

1000 cubic meters

12.5

2.91

Blast-furnace gas

1000 cubic meters

.8

.19

Electricity

1000 kw-hr

.86

1.00

o 1 ton-calorie = 1000 kg cal.

*> At approximately 20 percent efficiency, except electricity (100 percent).

involves numbers which are too large to be easily comprehended and
which are therefore virtually meaningless to most people. Neither
method, as usually applied, gives adequate consideration to the effi-
ciency with which fuel and power are utihzed.

The present discussion uses a method employed by the State Depart-
ment in its report on '^Energy Resources of the World" (Publication
3428, 1949, page 123) and also by Pavel and Bodea in "Power Resources
of Roumania, Their Development and Utilization" (Transactions of the
Third World Power Conference). This method deviates from others by
less than 1 percent.

Table 3

Conversion Factors for Fuel Units Used

in the United States

Coal

1 . 5272 per ton

Lignite

. 6896 per ton

Coke

1.2704 per ton

Coal briquettes

1 . 5272 per ton

Mineral oils"

2.24138 per ton

. 353 per barrel

Natural gas

.06344 per M cu ft

Benzol — same as mineral oils

Alcohol

.0038 per gallon

Manufactured gas

.02832 per M cu ft

Blast-furnace gas

. 0054 per M cu ft

Refinery gas

.0824 perMcuft

<» In converting from tons to barrels, the following conversion fac-
tors have been used:

Motor gasoline and natural gasoline 8.50

Kerosene 7 . 75

Gas, oil, diesel, and distillate fuel 7 . 25

Residual fuel oil 6 . 66

Mineral oils, unspecified 7.00

Benzol 7.14

The essence of the method is that the various fuels are converted
into kilowatt hours. "The selection of the kilowatt hour as a unit of
energy is based on its constant value, its convertibility to heat, light,
or power. . . . Twenty percent is selected as the efficiency factor
because this portion of the energy contained in any fuel can be made
available, for most purposes, by using the fuel to generate electricity;
and it is estimated that, on the average, 20 percent of the energy avail-
able in fuels is now utilized" (Pavel and Bodea).

The values used, on this basis, in equating specific sources of energy
to electricity are shown in Table 2.

The units in the foregoing table (metric tons and cubic meters)
are converted in Table 3 to short tons, cubic feet, or gallons.

Meaning of Unit Cost. Throughout this discussion, the unit of
energy comparison employed is the kilowatt-hour equivalent. Unit cost
therefore is the cost per thousand kw-hr into which the fuel in question
has been converted. Thus, if 10,083,000 tons of coal used in the blast
furnace and steel-mill industry cost $50,634,000, or $5.02 per ton, the
15,830,310 M kw-hr equivalent of 10,083,000 tons would cost $3.20
per unit of fuel.

II. GENERAL SURVEY OF FUELS IN MANUFACTURING

3. Consumption by Manufacturing Groups

This chapter presents tables and charts showing several relation-
ships of fuels to employment and to other items reported in the Census
of Manufactures. For each of the industry groups, the tables include
fuels and power used per production worker; average wage per worker;
value added by manufacture per worker; fuel cost in relation to wages
paid; and fuel cost in relation to value added by manufacture.

The fuels and power used in manufacturing are expressed in equiv-
alent kilowatt-hours. They comprise all types of fuels used in each of the
manufacturing groups, and also purchased electric power.

Table 4 shows the quantities of fuel and power used by each of the
manufacturing groups, and the percentage distribution of fuel and
power needs. To be noted particularly is the high consumption in the
following industries: primary metals; chemicals; stone, clay, and glass;
and petroleum and coal products.

Table 4
Fuel and Power Consumption, by Monufacturing Industry Groups, 1947

Converted to million kilowatt-hours, according to the conversion units in Table 2.
Industry

no.

Industry groups

20

Food and kindred products

21

Tobacco manufactures

22

Textile mill products

23

Apparel and related products

24

Lumber and products, except furniture

25

Furniture and fixtures

26

Paper and allied products

27

Printing and publishing industries

28

Chemicals and allied products

29

Petroleum and coal products

30

Rubber products

31

Leather and leather products

32

Stone, clay and glass products

33

Primary metal industries

34

Fabricated metal products

35

Machinery (except electrical)

36

Electrical machinery

37

Transportation equipment

38

Instruments and related products

39

Miscellaneous manufactures

Total

Mill, kw-hr

Percent

equivalent

of total

44 056

7.4

979

0.1

23 161

3.9

2 259

0.4

11 808

2.0

2 659

0.4

38 960

6.6

2 685

0.4

61 573

10.4

44 595

7.4

8 144

1.4

2 725

0.4

54 000

9.0

238 827

40.2

11 689

2.0

17 271

2.8

8 187

1.2

18 038

3.2

1 358

0.2

3 485

0.6

596 459

100.0

<• Census numbering and classification. The left-hand columns of Tables 5, 6, 8-10, 15, and 16 use the
same numbers.

4. Fuels and the Production Worker^

The extent to which fuels and power are used by workers in industry
is shown in Table 5 for the 20 groups of industries as classified by the
Census Bureau. The table points up the great contrast in quantities of
fuel and power used by workers. To be noted particularly are the
following industries: primary metals; paper and aUied products; chemi-
cals; stone, clay, and glass; and petroleum and coal.

In this table calculations of the average income per worker and
value added by manufacture have been entered. There is no definite
relationship discernible from the summary figures to indicate a corre-
lation between income of production workers and amount of power used.
This apparent lack of correlation also exists in the case of value added
by manufacture.

5. Fuel Costs

The cost of fuels and power in manufacturing can be evaluated to
a certain extent by comparison with two other items available in the
Census reports — wages and salaries paid, and value added by manu-
facture. The relationship of fuel and power costs to these two items
is shown in Table 6. To be noted particularly are the five groups of
industries in which fuel and power cost is an important factor: pri-
mary metals; paper and allied products; chemicals; stone, clay, and
glass; and petroleum and coal.

^ The term "production worker" is here taken to comprise working foremen and all nonsuper-
visory workers closely associated with production operations. It does not include construction employ-
ees or sales, technical, office, and administrative personnel.

10 FUELS IN MANUFACTURING

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11

III. ELECTRIC POWER IN MANUFACTURING

The use of electricity in manufacturing has increased from a net
amount of 70,518 million kw-hr in 1939 to a total net of 140,947 million
kw-hr in 1947^ (Table 7). This includes both electric power generated by
the manufacturing industries themselves and that purchased from elec-
tric utilities. This doubling of electric power requirements by manu-
facturing industries in an eight-year interval is of interest to the electric

Table?
Electric Power Used in Manufacturing, 1939 and 1947

In millions of kilowatt-hours

Electric power purchased
Electric power generated

1939
44 847
28 593

1947

102 822

43 936

Percent change

129

52

Total
Less sales

73 440
2 922

146 758
5 811

...

Net total

70 518

140 947

100

power industry; it is of special interest to know just where the in-
creases have occurred and what (if any) clue the Census data give as to
future trends.

A summary of the statistical position of electric power in manufac-
turing is given below.

The extent to which electric power is used in manufacturing is
indicated in Table 8, showing total fuels and power used in manufac-
turing stated in kilowatt-hour equivalents, and the proportion of this
which is used in the form of electric power. As would be anticipated,
the proportion of electric power used is highest in those industries where
the principal fuel and power requirements are for mechanical operation
rather than for heat processing operations.

Table 9 shows electric power, in kilowatt-hours per worker, used in
industry groups in 1939 and 1947. The intervening period of eight years
shows an over-all increase of 30 percent. Without doubt, there has been
an increase in the number or size of electric motors at the disposal of
the workmen, or further replacement of hand operations by power-
driven operations. This change, however, is not an adequate explanation

^ Net consumption is here defined as the electric power generated plus electric power purchased
less electric power sold.

12

13

Table 8

Fuels and Electric

Power Used in

Industry, 1947

Total

Electric

power used.

power used.

Jnd.

mill, kw-hr

mill, kw-hr

no.

Industry group

equivalent

equivalent

20

Food and kindred products

44 056

10 180

21

Tobacco manufactures

979

219

22

Textile mill products

23 161

10 041

23

Apparel and related products

2 259

850

24

Lumber and products

11 808

2 338

25

Furniture and fixtures

2 659

826

26

Paper and allied products

38 960

15 386

27

Printing and publishing

2 685

1 280

28

Chemicals and allied products

61 573

19 610

29

Petroleum and coal

44 595

6 498

30

Rubber products

8 144

3 445

31

Leather and leather products

2 725

573

32

Stone, clay and glass

54 000

7 898

33

Primary metal industries

238 827

40 645

34

Fabricated metal products

11 689

3 901

35

Machinery (except electrical)

17 271

5 921

36

Electrical machinery

8 187

3 616

37

Transportation equipment

18 038

6 061

38

Instruments and related products

1 358

545

39

Miscellaneous manufactures

3 485

1 114

Total

594 659

140 947

% electric

power of

total power

used

23.1

22.4

43.3

37.8

19.8

31.0

39.4

47.6

31.8

14.6

38.7

21.0

14.6

17.0

33.4

34.3

44.1

34.6

40.1

32.0

23.7

for the unusual increase in electric power use in Group 33, Primary
Metal Industries. Two items in the group — No. 3313 Electrometallur-
gical Products, and No. 3334 Primary Aluminum — are particularly
heavy users of electric power. Together these two industries use 37 per-
cent of all electric power used by the primary metals group (see
Table 10).

The effect upon electric power consumption of the rapid develop-
ment of aluminum manufacture after 1939 and the doubling of output
of electro metallurgical steel are summarized in Table 11, which shows
the quantities of electric power used for aluminum reduction and elec-
tric steel making in 1939 and 1947 and the change in positions of these
industries as between these two census years.

This table makes clear the effect of increased aluminum reduction
and electric steel manufacture since 1939. When the electric power used
in the two above-named industries is subtracted from the total, the
remaining quantities show (1) an increase of 1947 over 1939 which is
comparable to the increase in all manufacturing industries; and (2) an
increase in the use of electric power per worker of 50 percent over the
1939 level (see Table 10) — indicating that, in addition to unusual devel-
opments in the field of electrometallurgy, there has been a more than
average growth in electric power use in the primary metal industries.

14

FUELS IN MANUFACTURING

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lis

III

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to « ^J

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lip

S c c '^
cj cj c4 «;

T3 cS

o ^
o o

O ft 3 3

3 C ft

O 43 73

fc, CO tu --;

ft^S §

-a 3 <s u

.2 a 73 73

ft " <u i

.2 3-S
-?- aS

-2 <l> X o
« a> «- -^

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8

aj

3

.^>

«h^

^ 2 a

O p eS *?

S 2 gf^

oj Ph fii <5 H E-i

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Sg (N(N(N(N(N<N(N<N(NlNMCOeCifOCOCOfOCCC0CO

15

Table 10
Electric Power Used by the Primary Metal Industries, 1947

Ind.
no.
3311
3312
3313
3321
3322
3323
3331
3332
3333
3334
3339
3341
3351
3352
3359
3361
3391
3392
3393
3399

Electric

Electric

Number of

power used.

power per worker

Industry group

workers

mill, kw-hr

kw-hr

Percent

Blast furnaces

32 697

1 425

43

500

3.5

Steel works and rolling mills

438 088

15 391

35

000

37.9

Electrometallurgical products

8 175

4 903

600

000

12.0

Gray-iron foundries

157 361

966

6

160

2.4

jMalleable-iron foundries

26 659

236

9

000

0.6

Steel foundries

55 252

1 062

19

200

2.5

Primary copper

13 065

738

56

500

1.9

Primary lead

4 022

141

35

000

0.3

Primary zinc

11 088

1 473«

133

000

3.6

Primary aluminum

7 336

10 270«

1 400

000

25.4

Primary non-ferrous metals, n.e.c.

1 885

32

17

000

0.1

Secondary non-ferrous metals

14 750

156

10

500

0.3

Copper rolling and drawing

45 924

987

21

500

2.5

Aluminum rolling and drawing

22 786

970

42

500

2.5

Non-ferrous rolling, n.e.c.

6 086

132

21

700

0.3

Non-ferrous foundries

57 469

295

5

000

0.8

Iron and steel forgings

32 384

296

9

140

0.8

Wire drawing

45 644

714

15

600

1.7

Welding and heavy riveted pipe

11 305

135

12

000

0.3

Primary metal industries, n.e.c.

18 078

323

17

900

0.9

Total

40 645

» Partly calculated.

Table 11
Electric Power Used in the Production of Aluminum and Electric Steel

In millions of kilowatt-hours

1939 1947

18 281 44 546

Group 33 — Primary Metal industries
Aluminum reduction
Electric steel furnaces

Total of aluminum and steel
Difference: all other primary metals
Number of employees in "all other

primary metals"
Electric power used per "other"

employees

2 943»
1 740*

10 270
4 903

4 683
13 608

)96 862
19 500

15 173
29 373

999 995
29 400

" Electric power calculated for 1939 on a basis of 9 kw-hr of electric power
to reduce 1 lb of aluminum.

*> Calculated on the basis of the same rate of electric power consumption
per ton of steel in 1939 as in 1947.

IV. FUELS AND POWER IN THE IRON AND
STEEL INDUSTRIES

6. Fuels for Iron Reduction

The fundamental fact that must be grasped in considering iron
supply for industry is that iron is as much a product of fuel as it is of
the metal-bearing ore itself. Moreover, it is equally essential to under-
stand that in the process of manufacturing — from ore to finished auto-
mobile, corn planter, or Boy Scout knife — the fuel that is needed to get
over the first step of converting the ore to the pig-iron and steel-ingot
stage seems like an inordinately large part of the total fuels needed in
manufacture; it is about 33 percent. Moreover, the fuel that can be
used in the large-scale blast furnace for the production of iron on a
large scale must be a hard, porous, strong load-bearing coke which is
made from coal.

Nor have we as yet included all the necessary factors. This coke must
be low in sulfur, to keep the percentage of the harmful material to a
very small percentage in the resultant pig iron. While all other steps in
manufacturing can, with occasional exceptions, use oil and gas as well
as coal for the needed fuel requirements, the initial step in the manufac-
turing process — getting the metal out of the ore — can be taken, for
all practical purposes, only with coke from coal. This fuel is so special
and exacting in its nature that a special term, ''coking coal," is applied
to those coals from which coke or (more narrowly) metallurgical coke
can be made.

In view of these many circumscribing factors, we realize with a
start that, although the coal deposits of the nation are extensive and
well distributed, yet the supply of coking coals and the districts in
which they are found are very restricted.

7. Fuels and Power in the Iron and Steel Industries Compared to

Total Fuel Requirements in Manufacturing
Among the 20 manufacturing industry groups, the one listed as pri-
mary metal industries is by far the largest user of fuels and power;
and within this group the iron and steel industries are dominant.^ A

^ In this analysis, the manufacturing industries included under iron and steel are blast furnaces,
steel works and rolling mills, and electrometallurgical products, but not gray-iron foundries, mal-
leable-iron foundries, and steel foundries.

16

Quantity

converted into

M kw-hrb

Percent

15 830 310

8.0

841 520

0.4

75 177 650

37.9

17 806 732

9.0

4 817 126

2.5

28 311 858

14.5

37 158 134

18.7

14 256 000

7.0

3 800 670"

2.0

198 000 000

100.0

17

Table 12
Summary of Fuels Used in Iron and Steel Manufacture''

Fuel
Bituminous coal
Anthracite
Coke
Fuel oils
Natural gas
Manufactured gas
Mixed gas
Electric power
Other fuels
Totals

" No. 331 by Census classification.

*> Converted from original fuel units according to conversion units
in Table 2.

e Calculated.

summary of the position of these industries as consumers of fuel and
power among all manufacturing industries is given in Table 4.

When taken alone, iron and steel use one-third of the fuels and power
used by all the manufacturing groups. The group comprising primary
metals — which includes also iron and steel foundries and primary
copper, lead, zinc, aluminum, and other minor metals — uses 40 percent
of the total fuels and power utilized.

8. Fuels Used in Iron and Steel Making

Fuels used in the production of pig iron and steel are bituminous
coal, anthracite, coke, fuel oil, natural gas, manufactured gas, mixed
gas, tar, and electric power. Though all are derived from primary fuel
sources, bituminous coal, anthracite, natural gas, petroleum and water
power, yet the largest quantities used in iron and steel making are the
processed fuels — coke and manufactured gas. The contribution of each
of the fuels is shown graphically in Table 12.

9. The Fuel Structure of the Iron and Steel Industries

The three most prevalent types of fuels and power applications re-
quired in the manufacture of iron and steel are fuels for reducing iron
ore, fuels for reheating steel in the process and manufacture, and power
(mainly electrical) for operating machinery. Only metallurgical coke
can be used for reducing iron ore to the free metal. Gas and fuel oil
are both used for heating and reheating steel. Electric power is both
purchased and produced by the industry. The contribution of anthracite
is insignificant. The key factor in the fuel requirements of the iron and
steel industry is the production and use of metallurgical coke.

To supply the blast furnace with suitable fuel, a special fuel pro-
cessing industry — the manufacture of coke — must be set up. This in-
volves a considerable investment and processing cost, which is reflected
in a relatively high unit cost of fuel used in the reduction of iron ore.

18 FUELS IN MANUFACTURING

The processing of coal into coke and the manufacture of pig iron
in the blast furnace result in the production of by-product gaseous fuels
and tar, which are useful in the subsequent operation of steel manu-
facture. These fuels are (1) coke oven gas, consisting mainly of hydrogen
and methane, with a net Btu content of about 500; (2) blast furnace gas,
mainly carbon monoxide, carbon dioxide and nitrogen, with a net Btu
content of less than 100; and (3) oven tar. Gaseous by-products from the
coke ovens and blast furnaces are used in part to heat the ovens and

Table 13

Fuel Requirements in Coke Ovens, Blast Furnaces, and

Steel Works and Rolling Mills

In millions of kilowatt-hour equivalent

Steel works and

Coke ovens

Blast furnaces

rolling mills

quantity percent

quantity percent

quantity percent

Bituminous coal

653 5.8

1

509 2.0

13 317 11.3

Anthracite

140 1.3

295 0.4

545 0.4

Coke

52 0.5

72

767 95.2

1 886 1.6

Fuel oils

212 1.9

96

17 699 15.1

Natural gas

151 1.3

69

4 730 4.0

Manufactured gas

216 65.0

634 0.9

27 682 23.5

Mixed gas

761 6.7

121 0.2

37 037 31.2

Electric power

606 5.5

679 0.9

9 956 8.5

Other"

1 336 12.0

305 0.4

5 148 4.4

Totals

11 127 100.0

76

475 100.0

118 000 100.0

» Principally gasoline, liquefied petroleum gas, and coal tar.

the stoves and also to run the air compressors, but mainly these fuels
go to the steel works and rolling mills to supply heat in the several
processing steps. The detailed distribution of fuel use, by types, in the
three stages of the primary iron and steel industry is shown in Table 13.
It is to be noted that, while by-product fuels make an important contri-
bution to fuel requirements of steel work and rolling mills, additional
fuel is needed. This is supplied by coal, fuel oil, natural gas, and elec-
tric power.

1 0. Cost of Fuels

The distinctive characteristic of the primary iron and steel is the
large quantities of fuel and power required in the process of freeing
the metal from the ore, as shown by a comparison of key cost items
(Table 14).

Another way of looking at the relationship of fuel costs in the iron
and steel industry is to compare them with wages paid and value added
by manufacture. In this industrial group the cost of fuel is 62.0 percent
of the money paid out in wages and salaries, whereas for all manufac-
turing industries it is only 8.4 percent. Table 15 shows, for the twenty
manufacturing groups, the costs of fuels used, the number of employees,
and wages paid. Table 16 gives a further analysis for the elements com-
prising the primary-metals group.

19

Table 14
Place of the Iron and Steel Industries with Respect to Cost of Fuel and Related Factors

Cost of fuel, in thousands

Number of employees

Wages and salaries paid, in thousands

Value added by manufacture, in thousands

Fuel used per worker per year, kw-hr equivalent

Cost of fuel per worker

Cost of fuel per unif*

" No. 331 under the Census classification.
>> M kilowatt-hour equivalent.

All

industries

$3 331 518

14 294 304

$39 689 527

$24 487 304

41 700

$225

$5.61

Iron and steel

industry

$1 075 323

547 364

$1 735 111

$1 250 499

360 000

$1 140

Iron and steel,
percent of
total
32.80
3.84
4.37
5.10

$5.43

All

Ind.
no. Industry group

20 Food and kindred products

21 Tobacco manufactures

22 Textile mill products

23 Apparel and related products

24 Lumber and products

25 Furniture and fixtures

26 Paper and allied products

27 Printing and publishing

28 Chemicals and allied products

29 Petroleum and coal

30 Rubber products

31 Leather and leather products

32 Stone, clay and glass products

33 Primary metal industries

34 Fabricated metal products

35 Machinery (except electrical)

36 Electrical machinery

37 Transportation equipment

38 Instruments and related products

39 Miscellaneous manufactures

All industries

Table

15

io of Fuel Costs to Wages

and Sola

ries

money values

in thousands

Cost

of

fuel

No. of
workers

Cost of
fuel per
worker

Salaries

and wages

paid

Fuel

% of
wages

$278 783

6 036

166 492

26 728

67 798

1 441

111

1 233

1 081

635

837
782
431
444
708

$193

54

135

25

10.6

$3

2
2

1

789 387
205 838
836 166
527 499
337 612

7.3
2.9
5.9
1.2
5.1

21 568
198 276

35 205
296 604

96 691

322
449
715
632
212

384
833
450
319
003

67
440

49
469
466

1
2
1

824 061
280 672
277 263
910 463
739 345

2.6
15.5

1.5
15.5
13.1

45 912

20 718

257 748

1 317 136

111 008

259
383
462
1 157
971

092
175
072
124
461

177

54

556

1 140

114

1
3
2

783 464
873 566
210 768
594 548
832 835

5.9

2.5

21.3

36.7

3.9

146 971
64 420

124 695
12 459
33 270

1 545
801

1 181
231
464

323
359
680
997
420

95

80

105

53

72

225

4
2
3

1
39

304 563
271 039
719 583
665 347
205 508

689 527

3.1

2.8
3.3

1.9

2.8

3 331 518

14 294 304

8.4

Table

16

Steel Industries: Ratio of Fuel Costs to Wages and Salaries

All money values in thousands

Ind.

no.
33

331
3311
3312
3313

332
3321
3322
3323

333
3331
3332
3333
3334
3339

Industry group
Primary metal industries
Blast furnaces and steel mills
Blast furnaces
Steel works and rolling mills
Electrometallurgical products
Iron and steel foundries
Gray-iron foundries
Malleable-iron foundries
Steel foundries
Primary non-ferrous metals
Primary copper
Primary lead
Primary zinc
Primary aluminum
Primary non-ferrous metals, n.
All industries

Cost of
fuel

No. of
employees

Cost per
employee

Salaries

and wages

paid

Percen

$1 317 136

1 157

124

$1

140

$3 594 548

36.6

1 075 323

634 111

419 991

21 221

547

36

500

9

364
937
799
628

1
17

2

960
180
840
305

1 735 111

112 018

1 593 808

29 285

62.0

566.6

26.4

76.0

83 590
49 909
11 651
22 130

267

173

29

63

306
776
862
668

302
289
386
347

792 485

512 177

90 811

190 497

10.5

9.8

12.7

11.6

59 968
14 772

6 517
14 389
23 246

1 044

42

14

4

12

8

2

804
629
663
424
914
169

1
1
1
1
2

400
000
410
150
610
480

127 026
44 790
14 082
35 476
26 398
6 280

47.2
33.0
46.3
40.5
88.0
18.6

3 331 518

14 253

304

225

39 689 327

8.4

20 FUELS IN MANUFACTURING

1 1 . Blast Furnace Fuel Costs

In the process of pig-iron manufacture, the most important cost
items are fuels and materials; direct labor costs (wages paid) are con-
siderably less. In an over-all report on the industry for the year 1947,
the Bureau of the Census (in Vol. II of its Census of Manufactures)
gives the division of costs as shown below in Table 17.

The Census report shows a recovery of blast-furnace gas equivalent
in fuel value to 10,072,830 tons of coal and valued at $52,925,000. Of
this, nearly all is disposed of in interplant transfer. The report does
not, however, state the details of the disposition of this gas. There are
several possible outlets: gas to heat the coke ovens; fuel to operate the

Table 17

Pig Iron Cost Data

Pig iron produced, net tons 58 339 942
Value of pig iron produced $1 708 313 000

Value, per ton $29.28

Cost of fuel in pig-iron production $634 111 OOO"

Less values of blast-furnace gas recovered and sold $52 925 000

Net fuel cost $581 186 OOOf-

Net fuel cost per ton of pig iron $ 9 . 96

Wages and salaries paid $111 413 000

Wages and salaries per ton of pig iron $ 1 . 90
Cost of materials, parts, containers, and supplies (mainly ore) $751 673 000

Cost per ton $12.88

Value added by manufacture $328 060 000

Value added per ton $ 5.61

" Percentage of value of product — 37. 1 percent.
* Percentage of value of product — 34.0 percent.

compressors in the blast-furnace plant; and fuel to heat the stoves. The
gas could also be used at various reheat operations in the adjoining steel
plant; if so, the value of the fuel thus used should be deducted from the
gross cost of the fuel in the operation of blast furnaces. The data avail-
able in the published reports do not enable us to make this deduction.

Because fuel costs comprise so large a proportion of the costs of
pig-iron production, analysis should be carried further. We should like
to know the cost of coke, what elements comprise this cost, and — if
an estimate is possible — what further changes may be expected.

Three elements are significant in the cost of coke delivered at the
blast-furnace plant: (1) mine price of coal; (2) transportation costs from
mine to coke plant; and (3) cost of processing coal into coke.

Location of Coking Coal Deposits. Coal suitable for the manufacture
of coke is somewhat restricted in its distribution. Currently, 90 per-
cent of coal used for the manufacture of coke is obtained from four
states — West Virginia, Pennsylvania, Kentucky, and Alabama. Coke
for the western steel industry is obtained from Utah, Colorado, and
New Mexico. Interest therefore centers on the location of coking
coal resources.

21

For the years 1948 and 1949, the sources of coal used (in tons) for
oven coke manufacture were as follows (source: Bureau of Mines,
Minerals Yearbook).

1948 1949

West Virginia 36,318,250 32,638,773

Pennsylvania 32 , 278 , 200 27,371, 938

Kentucky 14,573,772 11,316,015

Alabama 8,822,325 7,065,913

Virginia 2,507,608 2,528,847

Partial Total 94,500,155 80,921,486
Western States

(Utah, Colorado, New Mexico) 3,529,512 2,976,447

Other States 2,343,060 1,781,791

Total 100,372,727 85,679,724

Mine Price of Coking Coal. Table 18 shows the mine price of coal,
by counties, for 1947.

Transportation Costs. Freight-rate increases during 1947, 1948, and
1949 affected considerably the delivered price of coal. The extent of
these changes is indicated by two examples of increases in the rates
from coking-coal districts to the Chicago market.

Rail Rates in Effect
Dec. 1946 Dec. 1947 Dec. 1948 Dec. 1949
New River and Pocahontas $3.69 $3.79 $4.09 $4.44

Eastern Kentucky, West

Virginia high volatile $3.49 $3.59 $3.89 $4.25

Cost of Coal and Coke at the Ovens. The combined effect of increased
mine prices of coking coal and increases in rail freight on coal is reflected
in the increasing costs of coke at the plant. The history of these price
changes from 1946 to 1949 for the industry and for leading coke-con-
suming states is shown in Table 19.

Cost of Coke per Ton of Pig Iron Produced. An attempt has been
made in Table 20 to arrive at a cost of coke per ton of pig iron produced
in six of the important pig-iron producing states. In arriving at this
estimate, the figures for pounds of coke needed to produce a ton of pig
iron are available only for the entire industry and not for individual
states. This figure varies from year to year, depending upon the
changing quality of coal available for the making of coke and also
upon changes in operation conditions of the furnaces. It is not to be
taken for granted that there are no variations in coke consumption
among the several pig-iron producing districts or that changes in coke
requirements from year to year are indentical among these districts.
The figures in columns (2), (4), and (6) must therefore be regarded as
approximations only.

22

FUELS IN MANUFACTURING

12. Fuels in Steel Works and Rolling Mills

The operations of the steel mill begin at the point where pig iron
from the blast furnace, either in solid or in liquid form, is transferred
to the steel-making furnaces. As in blast-furnace operation, the fuel
requirements are high. Fuel for heat operations is a particularly large

Table 18

Cost of Coke, by Leading Coke-Using Counties, 1947

Coke

State

used.

Cost,

and county

M tons

M Dollars

Massachusetts

Middlesex

203.4

$2 886.4

New York

Chatauqua

13.6

196.8

Erie

3 471.5

38 971.3

Niagara

374.9

4 347.9

Onondaga

120.3

1 535.8

Rensselaer

182.6

2 240.7

Pennsylvania

Allegheny

10 017.3

97 784.4

Beaver

2 211.4

18 068.3

Cambria

1 659.0

16 000.5

Carbon

145.1

2 041.7

Dauphin

743.7

7 216.7

Erie

202.3

2 604.9

Mercer

848.6

10 855.4

Montgomery

354.4

3 300.0

Northampton

1 544.0

17 258.9

Washington

482.8

4 367.9

Westmoreland

446.0

9 332.8

Ohio

Ashtabula

104.9

1 376.6

Butler

532.0

3 886.9

Cuyahoga

2 446.9

27 368.3

Jackson

176.5

2 125.0

Jefferson

548.7

2 986.0

Lawrence

269.6

3 069.6

Lorain

1 535.3

15 142.9

Lucas

514.4

6 656.8

Mahoning

4 854.6

49 622.8

Scioto

259.2

3 248.7

Stark

435.9

4 272.3

Trumbull

590.8

6 051.2

Indiana

Lake

6 143.4

79 211.4

St. Joseph

12.4

229.4

Illinois

Cook

5 047.9

68 804.8

Madison

410.5

6 150.2

St. Clair

39.8

291.2

Michigan

Saginaw

121.6

2 384.3

Wayne

1 807.6

19 907.3

Minnesota

St. Louis

490.7

5 224.2

Maryland

Baltimore

2 408.0

25 618.0

Baltimore City

39.9

660.7

West Virginia

Hancock

999.8

6 168.4

Kanawha

410.7

2 542.1

Marshall

242.9

1 932.0

Kentucky

Boyd

598.0

5 022.7

Alabama

Etowah

355.6

3 264.1

Jefferson

4 602.9

46 711.7

Colorado

Pueblo

797.1

8 793.2

Utah

Utah

936.5

10 701.5

California

Los Angeles

61.8

1 237.8

Cost
per
ton

$14.21

14.45
11.14
11.58
12.75
12.28

9.27
8.15
9.64

14.10
9.79

12.90

12.45
9.34

11.16
9.08

13.10

7.30
11.04
12.05

5.45
11.40

9.89
12.97
10.20
12.55

9.81
10.22

12.90
18.48

13.62

14.96

7.30

11.00

10.63

10.64
15.21

6.16
7.16
7.96

8.39

9.18
10.15

11.00

11.41

20.00

23

requirement. A detailed Census report of fuels used in steel works and
rolling mills for the year 1947 gives a cross-section of fuel consumption
in this branch of the industry. Fuels used are bituminous coal, anthra-
cite, coke, oil, natural and manufactured gas, and electric power. The
quantities of each of these fuels, and their comparative fuel contribution
to the steel industry, are summarized in Table 21.

Table 19
Costs of Coal at the Oven, and Value of Furnace Coke"

Cost of coal charged

^

Average receipts per

Year

per ton

ton sold (merchant)

1946

$5

.77

$ 8.46

1947

6

.78

10.34

1948

8

.13

13.02

1949

8

.52

13.80

Value of Coke at Ovens, per Ton

Year

Alabama

Illinois

Indiana

New York

Ohio

Pennsylvania

1946

$7.00

$10

.20

$8.92

$ 8,

.79

$ 8.21

$ 7.05

1947

8

.02

12,

.95

13.39

10

.34

9.83

10.04

1948

9

.58

14.

,80

14.60

12,

.79

12

!.20

11.40

1949

10

.75

16,

.35

16.26

13

.37

12.51

12.18

Percentage

increase,

1949 over

1947:

26

.8

28,

14

21.4

29,

.3

27

'.3

21.3

Cost of Coal at Ovens, per Ton

1946

$4

.96

$ 6,

.70

$ 6.75

$ 6,

.71

$ ^

i.72

$ 4.79

1947

5

.57

8,

.00

8.01

7,

.76

6.76

5.87

1948

6

.58

9,

.38

9.35

9

.48

8.11

7.22

1949

6

.81

9

.75

9.71

9

.83

8.42

7.64

Percentage

increase,

1949 over

1947:

22.2 21,
; Bureau of Mines.

.9

21.2

26

.6

24.5

30.1

« Source;

Table 20

Cost of Coke pe

r Ton of Pig Iron

Produced

Quantity

Cost

Cost of

Value of

Percentage

of coke

of coke

coke per ton

pig

iron

(4) is

Year

used.

lb

per ton

of pig iron

per

ton

of (5)

(1)

(2)

(3)

(4)

(5)

(6)

Alabama

1946

1830

.6

$ 7.00

$ 6.40

$21,

,15

30.1

1947

1926

.0

8.02

7.72

28.

10

27.4

1948

1937

.2

9.58

9.27

36.

.52

25.4

1949

1895

.8

10.75

Illinois

10.22

35.

79

28.5

1946

1830

.6

$10.20

$ 9.35

$25.

,17

37.3

1947

1926

.0

12.95

12.44

30.

,97

40.1

1948

1937

.2

14.80

14.52

35.

,72

40.7

1949

1895

.8

16.35

Indiana

15.54

41.

69

37.4

1946

1830

.6

$ 8.92

$ 8.18

$25.

.46

32.7

1947

1926

.0

13.39

12.87

30

.57

42.0

1948

1937

.2

14.60

14.11

37.

,86

37.3

1949

1895

.8

16.26

15.45

41.

26

37.4

New York

1946

1830,

.6

$ 8.79

$ 8.05

$22.

,82

35.2

1947

1926

.0

10.34

9.95

27.

,54

36.2

1948

1937

.2

12.79

12.39

32,

.70

37.8

1949

1895,

.8

13.37

Ohio

12.68

43.

,81

28.9

1946

1830

.6

$ 8.21

$ 7.42

$25,

.00

29.7

1947

1926,

.0

9.83

9.44

30.

87

30.6

1948

1937

.2

12.20

11.80

37.

,98

31.1

1949

1895

.8

12.51

11.87

40.

,92

29.0

Pennsylvania

1946

1830

.6

$ 7.05

$ 6.45

$24.

70

26.1

1947

1926

.0

10.04

9.68

30.

23

32.0

1948

1937.

.2

11.40

11.04

36.

68

30.1

1949

1895

.8

12.18

11.57

43.

03

26.9

24 FUELS IN MANUFACTURING

Table 21
Fuels Used in Steel Works and Rolling Mills, 1947

Quantity

Converted

into
M kw-hr

Percent

Cost
in thou-
sands

Unit
cost

%of
total
cost

Bituminous coal, M tons
Anthracite, M tons
Coke, M tons
Oils, M barrels

8 482

347

1 485

50 138

13 316 740

544 790

1 885 950

17 698 714

11.3
0.4
1.6

15.1

$42 700
1 883
9 973

148 220

$3.21
3.46
5.30
8.36

10.2
0.4
2.4

35.3

Natural gas, mill, cu ft
Manufactured gas, mill, cu ft
Mixed gas, mill, cu ft

74 566

977 488

1 307 806

4 730 467
27 682 177
37 037 066

4.0
23.5
31.2

21 242
35 552
67 293

4.48
1.28
1.86

5.0

8.5

16.0

Electric power, mill, kw-hr
Other

Totals

9 956

9 956 000
5 148 096<'
118 000 000

8.5
4.4

74 581

18 547

419 991

7.50
3.62
3.56

17.8
4.4

« Calculated.

Bituminous coal is used in only small quantities; anthracite and
coke use are both negligible. Interest centers on the gaseous and liquid
fuels, of which manufactured gas is the most important. The reporting
of a large part of the gaseous fuel used by the steel industry as mixed
gas makes it impossible to arrive at a total of natural-gas purchase by
the industry. The cost of a unit of mixed gas when compared with
either natural gas or manufactured gas would seem to indicate that
manufactured gas comprises the larger fraction of the fuel group which
is segregated under the title ''mixed gas."

1 3. Fuel Costs in the Steel Industry

An examination of fuel costs in the steel industry permits some
significant comparisons. In Table 22 an attempt is made to determine
the relationship, if such exists, between fuel costs and the quantity
used by the industry. For the states listed in the table the cost per
unit of fuel and the percentage of fuels used is as shown.

Some inter-fuel competition is apparent. In New York the cost of
coal is high and that of fuel oil is medium; the latter supplies 35 percent
of the fuel requirements. In Pennsylvania and Ohio a low coal price is
accompanied by a relatively high use of this fuel. In Indiana and Illinois,
fuel oil is available at low cost from nearby refineries; the percentage of
fuel oil used is high. West Virginia, with an abundance of coal readily
available at low cost, uses this fuel in high percentage.

Tables 23-26 throw light on the effect of local concentrations of
fuel production upon variation in fuel use by types. Table 23 gives the
quantities of fuels used in major geographic divisions; Table 24
converts these quantities into kw-hr equivalents, permitting calcula-
tion of the contribution made by each type of fuel to the fuel require-
ments of each geographic division. Table 25 shows fuel distribution for
important metropolitan areas, and Table 26, the variation in fuel
requirements per worker among metropolitan areas.

25

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28

FUELS IN MANUFACTURING

Table 26

Fuels a

nd Power per Production Worker in Selected A

Kw-hr equiv-

No. of

alent used, in

production

Area

millions

workers

Buffalo

19 263

149 758

Chicago

51 549

756 115

Cincinnati

2 746

108 476

Cleveland

12 750

218 929

Detroit

18 859

466 922

Los Angeles

7 379

281 806

New York-
North Eastern N.

J } 17 220

1 274 357

Peoria

2 553

34 492

PhUadelphia

11 665

437 553

Pittsburgh

38 669

284 017

St. Louis

8 782

200 123

Youngstown

19 961

94 263

Fuel and power

consumption

per worker,

kw-hr

128 600

68 000

25 300

53 650

40 400

26 200

13 500

74 000

26 600

136 000

43 880

211 700