Study examines shifting industrial energy use, future gas demand

The natural gas industry can only hope the past is prologue. Between 1985 and 1992, United States industrial consumption of natural gas increased 3.3 percent annually-nearly twice the rate of competing fuels.

This finding comes from a report-“The Implications of the Changes in Industrial Energy Demand: 1985-1992”-issued by the Gas Research Institute (GRI) and Energy and Environmental Analysis in Arlington, Va.

Providing an in-depth historical perspective and assessing future implications, the report examines how shifts in energy prices, technology, regulation, the industrial production mix, and other factors affect industrial energy consumption. The report also analyzes industrial energy consumption data nationally, regionally, and by industry during the eight-year period. (See “Energy consumption by fuel type & industry group, 1992”)

“Detailed data on industrial energy consumption are difficult to collect,” said Marie Lihn, GRI project manager. “But the rarity of such data is the main reason we felt industry analysts, energy marketers and planners would value this kind of in-depth analysis.”

For example, she said, the report details changes in product mix, processes, and energy use during the eight-year period for the six major energy-intensive industries-food, paper, chemical, petroleum refining, primary metals, and stone, clay and glass. And it analyzes the two most rapidly growing, but less energy-intensive industries-rubber and metal durables.

Regarding future industrial demand, the study indicates the following:

– Continued growth in electricity consumption will come from the fast-growth metal durables and rubber industries, while petroleum will continue to rely on the petrochemical and refining industries for its growth. Except in certain niche markets, natural gas and other fuels will continue to displace coal as environmental concerns persist.

– Industrial energy demand will remain highly dependent on the production levels of the energy-intensive industries. Given current and future economic conditions and the maturity of each of these industries, sizable growth isn`t expected in any of the six segments. Except for electricity, even the growth industries aren`t expected to provide significant growth potential for energy demand in the sector.

– While energy prices at current levels aren`t a major factor in production decisions that ultimately affect industrial energy consumption, prices will continue to be an important consideration in boiler, kiln fuel choice and feedstock consumption.

– Adoption of new processes and technologies, especially in the energy- intensive industries, will continue to be important drivers of industrial energy consumption.

– The increased focus on environmental issues is an important factor in industrial natural gas demand. New air emissions standards continue to favor natural gas over coal and oil.

However, gas needs to be competitive with electricity, which has no pollution at the point-of-use. And more recycling and increased production of methanol to meet growing demand for methyl-tertiary-butyl-ether (MTBE) have and will continue to affect future natural gas consumption.

To order a copy of the complete report (GRI-99/0030), contact GRI at, or by fax, 703-526-7808.

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