.*«_•#< 338.272809773 V927s W.H. Voskuil & Hubert E. Risser. |^Some Economic Aspects of the Illinoii Oil Industry. (1963) UBRARYU.OFI.URBANA-CHAMPAIGN ILLINOIS HISTORICAL SURVEY "• < «w— "—---— STATE OF ILLINOIS DEPARTMENT OF REGISTRATION AND EDUCATION SOME ECONOMIC ASPECTS OF THE ILLINOIS OIL INDUSTRY W. H. Voskuil Hubert E. Risser ILLINOIS STATE GEOLOGICAL SURVEY John C. Frye, Chief URBANA CIRCULAR 358 1963 SOME ECONOMIC ASPECTS OF THE ILLINOIS OIL INDUSTRY W. H. Voskuil and Hubert E. Risser ABSTRACT The 75 to 80 million barrels of crude oil produced annually in Illinois contribute significantly to income and employment with- in the state. Payment of royalties, wages and salaries, purchase of supplies and equipment, and payments for contract services pro- vide a substantial economic stimulus to the oil producing districts. Refineries in Illinois and surrounding states process crude oil into refined products to serve industrial, transportation, and household needs within a broad Upper Mississippi Valley market area. Much of the oil processed in these refineries comes from the western and southwestern United States, while most of Illinois crude oil moves eastward to other refinery districts. ILLINOIS CRUDE OIL'S CONTRIBUTION TO INCOME AND EMPLOYMENT Crude oil, estimated at 2.384 billion barrels and having an estimated value of 4.869 billion dollars, has been obtained from the oil fields of Illinois during the period from the 1880 's through 1962. More than 82 percent of this oil and 88 percent of the value have occurred since 1937 when major production began in the Illinois Basin The production of crude oil has contributed inestimably to the economy of the state of Illinois and even more significantly to those counties in which the production occurred. Payments for royalties, wages, salaries, supplies and materials, and con- tract services as well as capital investments, pump millions of dollars into the oil producing regions each year. The full impact of this income upon the economies of the counties and of the state cannot be accurately measured, for in addition to direct income payments by the industry multiplying effects of the expenditure of this income upon the level of business activity and tax collections must be considered also. Table 1 shows the annual production of crude oil in Illinois, the value of to- tal production, and the average value per barrel; United States production and value per barrel also are shown. The quantity of oil runs to stills and receipts at refin- eries operating within Illinois are given also. These refineries process each year about l\ times the quantity of oil produced in Illinois. In general, however, only about a third of the crude oil produced in Illinois is refined within the state. The remainder moves eastward to find its way into refineries in Indiana, Ohio, Pennsyl- vania, New York, Michigan, Kentucky, and Tennessee. Meanwhile, about 175 mil- lion barrels of crude oil move into Illinois from the west and southwest for process- ing each year. \5 ILLINOIS STATE GEOLOGICAL SURVEY CIRCULAR 358 TABLE 1 - UNITED STATES AND ILLINOIS PRODUCTION, AND AVERAGE VALUE PER BARREL OF CRUDE OIL PRODUCED, 1931-1961 United States 3 111 . . b inois Estimated Crude oil runs Crude oil Estimated Crude oil total Estimated to stills and ^ear produced (1,000 bbls av. value .) per barrel produced (1,000 bbls value .) (1,000) av. value per barrel refinery receipts (1,000 bbls.) 1931 851,081 $ 0.65 5,039 $ 4,500 $ 0.89 na 1932 785,159 0.87 4,673 4,720 1.01 na 1933 905,656 0.67 4,244 3,690 0.87 na 1934 908,065 1.00 4,479 4,990 1.11 na 1935 996,596 0.97 4,322 4,810 1.13 35,469 1936 1,099,687 1.09 4,475 5,390 1.23 39,803 1937 1,279,160 1.18 7,499 9,970 1.34 45,626 1938 1,214,355 1.13 24,075 30,100 1.30 46,996 1939 1,264,962 1.02 94,912 102,800 1.09 57,651 1940 1,353,214 1.02 147,647 160,900 1.09 73,422 1941 1,402,228 1.14 134,138 174,379 1.30 85,206 1942 1,386,645 1.19 106,590 144,962 1.36 91,676 1943 1,505,613 1.20 82,256 112,700 1.37 88,154 1944 1,679,904 1.21 77,413 107,370 1.39 95,146 1945 1,713,655 1.22 75,210 105,294 1.40 96,587 1946 1,733,939 1.41 75,297 119,722 1.59 100,114 1947 1,856,987 1.93 66,459 139,564 2.10 112,899 1948 2,020,185 2.60 64,808 179,518 2.77 121,064 1949 1,841,940 2.54 64,501 178,668 2.77 118,711 1950 1,973,574 2.51 62,028 171,818 2.77 128,249 1951 2,247,711 2.53 60,244 166,876 2.77 153,490 1952 2,289,836 2.53 60,071 166,397 2.77 159,272 1953 2,357,082 2.68 59,025 171,586 2.91 165,552 1954 2,314,988 2.78 66,940 200,820 3.00 169,635 1955 2,484,428 2.77 81,131 237,714 2.93 189,614 1956 2,617,283 2.79 82,314 242,826 2.95 203,567 1957 2,616,901 3.09 76,649 239,911 3.13 199,225 1958 2,448,987 3.01 80,779 242,337 3.00 207,277 1959 2,574,590 2.90 76,727 230,181 3.00 191,517 1960 2,574,933 2.92 77,341 230,338 2.98 199,578 1961 2,621,578 2.89 77,478 232,434 3.00 205,375 1962° 2,676,185 2.90 78,800 236,400 3.00 205,712 na not available. a U. S. Bureau of Mines Minerals Yearbooks. Illinois Geological Survey data. All 1962 figures are subject to revision. ECONOMIC ASPECTS OF THE ILLINOIS OIL INDUSTRY In table 2 are shown the estimated total production of crude oil in Illinois counties since 1888, estimated production and value of oil output over the past ten years, and salient statistics on the Illinois oil industry in 1958, including county production, value, employment, and payroll data. Data for the years after 19 58 are not available. Direct personal income from royalties (normally one-eighth of the oil production value at the wellhead) and from wages and salaries amounted to about 62 million dollars for 1958. Estimates for each county can be obtained from table 2. Table 3 gives the reported expenditures for various items and for capital investments during 19 58. It may be noted that in addition to salaries and wages a significant portion of the money was spent for items that were procured, at least in part, from local sources and thus contributed further to the local economies STRUCTURE OF THE ILLINOIS -INDIANA OIL INDUSTRY The oil industry in Illinois is engaged in discovering, producing, refining, transporting, and marketing crude oil and oil products in the Upper Mississippi Valley. Of major significance to these diverse functions are the group of refineries in the Illinois-Indiana area in Chicago, the refineries of the Wood River area, and those located in the southeast Illinois-southwest Indiana district. Refineries assemble crude oil supplies locally and by pipe line from the midcontinent and mountain states. By tank car, barge, and products pipe line, refined oils are distributed to markets in Illinois, Indiana, and adjacent states, including Wis- consin, Minnesota, Iowa, and Missouri. Sources of Crude Petroleum for Refineries in Illinois and Indiana Refineries in Illinois and Indiana receive about 10 percent of their crude oil supplies from producing fields in these states and the remainder from the gulf coast, midcontinent, and Rocky Mountain fields. Sources and quantities of crude petroleum in 1960, 1961, and the average quantities for the five-year period, 19 56-1960, are presented in table 1. This table indicates that shipments from Colorado, Kansas, North Dakota, and New Mexico have shown significant increases, while shipments from Oklahoma have remained stationary and those from Texas have declined. Outgoing Illinois and Indiana Crude Oil Shipments The U. S. Bureau of Mines reported production of crude oil in Illinois and Indiana as follows: (thousands of barrels) Illinois Indiana Total 1960 77,341 12,054 89.395 1961 76,818 11,500 88,318 1956-60 average 79,054 11,837 90,891 A considerable portion of this crude petroleum was shipped to refineries in Ohio, Pennsylvania, and other eastern states. The relative importance of eastward shipments is shown in table 5. ILLINOIS STATE GEOLOGICAL SURVEY CIRCULAR 35 TABLE 2 - ILLINOIS CRUDE OIL PRODUCTION, VALUE AND EMPLOYMENT, BY COUNTIES, FOR SPECIFIED PERIODS nty Estimated total pro- duction, 1888-1962 (1000 bbls.) a Estimated , j ■ r i o production & value 1953-1962 inclusive Salient Statistics for 1958° Estimated production (1000 bbls.) Estimated value (1000) Employment in crude oil & natu- , i j . d ral gas production Employees in oil and gas field services" Employees Payroll (1000) Employees Payroll Co i. (1000 bbls)| (1000) (1000) Adams 105 105 $ 314.0 Bond 6,089 4,958 14,851.3 615 $ 1,845 20 $ 92 Brown 162 162 484.5 Christian 18,211 14,581 44,686.1 1,757 5,271 56 258 Clark- Cumberland 82,282 16,521 49,385.0 1,730 5,190 163 751 Clay 101,860 38,497 115,089.7 3,605 10,815 346 1,594 Clinton 71,720 24,755 74,358.8 4,779 14,337 148 682 Coles 16,655 6,299 18,865.5 554 1,662 95 437 Crawford 195,946 31,638 94,706.5 2,999 8,997 482 2,220 Douglas 2,703 2,703 8,174.6 316 948 Edgar 2,420 1,038 3,094.3 90 270 Edwards 35,621 14,928 44,634.9 1,721 5,163 126 580 Effingham 10,288 4,705 14,066.3 427 1,281 105 484 Fayette 297,548 112,660 337,963.0 14,089 42,267 228 1,050 Franklin 55,832 21,769 64,954.5 2,175 6,525 77 355 Gallatin 37,949 20,469 61,251.0 2,377 7,131 84 387 83 $ 290 Hamilton 98,808 33,765 100,863.2 2,912 8,736 224 1,032 Hancock- McDonough 4,946 601 1,795.6 56 168 Jasper 37,860 13,747 41,030.2 1,731 5,193 63 290 106 370 Jefferson 64,908 24,318 72,775.4 2,630 7,890 272 1,253 Lawrence 314,855 56,153 168,093.0 6,196 18,588 533 2,455 Macon 636 645 1,933.9 80 240 Macoupin 187 63 188.6 9 27 Madison 14,843 4,090 12,192.1 344 1,032 Marion 339,656 77,500 231,792.6 7,171 21,513 409 1,884 Monroe 2 2 6.2 Montgomery 100 40 119.2 3 9 443 2,040 Moultrie 47 47 140.8 10 30 3 10 Perry 441 369 1,073.4 61 183 Randolph 2,918 2,509 7,468.7 179 537 Richland 78,253 26,567 79,288.9 2,198 6,594 154 538 St. Clair 2,883 169 500.8 7 21 Saline 13,117 12,646 37,360.7 1,196 3,588 77 355 Sangamon 603 603 1,802.9 30 90 Schuyler 1 1 3.0 Shelby 879 530 1,588.4 43 129 Wabash 80,634 29,778 89,042.0 3,101 9,303 318 1,465 Washington 21,121 9,300 27,773.8 917 2,751 53 244 Wayne 174,567 64,833 193,674.2 6,529 19,587 538 2,478 117 409 White 201,955 82,773 247,368.9 8,083 24,249 530 2,441 372 1,299 Williamson 347 347 1,048.0 59 177 548 2,526 355 1,400 Total 2,389,958 757,184 $2 ,264,802.3 80,779 $242,337 5,938 $27,353 1,190 $4,316 Mineral Production in Illinois in 1962, Illinois Geological Survey Circular 357, 1963, table 13. Estimates based on estimated average value per barrel each year. Statistics for 1958 are presented here because this is the latest year for which county employment statistics are available. 1958 Census of Mineral Industries, Vol. II Area Statistics, U. S. Department of Commerce, Bureau of the Census, 1961, p. 10-9 through 10-12. ECONOMIC ASPECTS OF THE ILLINOIS OIL INDUSTRY 5 Refinery Location and Capacity Refineries in Indiana are grouped with those in Illinois since both groups serve the same general market. The location, number, and daily capacity of refin- eries in 19 62 are shown in table 6. Also shown in table 6 are the locations, number, and capacities of other re- fineries in the market area or closely adjacent to it. Especially important in the latter group are the twelve refineries, with aggregate capacity of 163,739 barrels of crude per day, operating in Michigan and the two refineries, with a combined capa- city of 130,000 barrels per day, operating near Kansas City. THE OIL MARKET The relation of an oil market area to its source or sources of supply is dif- ficult to delineate because data available on the consumption of oil products by states give no reference to the refineries from which they come. The Upper Mis- sissippi Valley area (Illinois, Indiana, Wisconsin, Minnesota, Iowa, and Missouri) was selected for analysis because it constitutes the major market for Illinois and Indiana refined products, and this area probably fills the bulk of its requirements from Illinois and Indiana. The strategic geographic positions of the Illinois-Indiana refining districts as suppliers of the Upper Mississippi Valley market are indicated in table 6. How- ever, competion also is present from refineries on the periphery of the market area and from products pipe lines entering the area from more distant sources. The prin- cipal pipe lines involved are those of the Great Lakes Pipe Line Co., Cherokee Pipe Line Co., and Phillips Petroleum Company. Finally, oil products are barged into the area from refineries on the lower Mississippi River. Consumption of Oil Products The six- state oil fuels market shown in table 7 represents about 16 percent of the national total and in recent years has been divided among the principal pro- ducts in quantities as shown. Distribution of oil by states and products for 1959 through 1961 and the aver- age for the period 1956 to 1960 also are shown. Refining of crude petroleum results in a number of products varying from the highly volatile gasoline-the fuel of the small internal combustion engine-to the heavy residual fuel oil. The refinery classification of products based on ascending degrees of viscosity is gasoline, kerosene, distillate, and residual fuel oil. Although there is a degree of overlapping of services among these fuels, each has a particular function in the energy market. Table 8 shows the heat content of the major fuels, including the four oil- derived fuels. Consumption of gasoline, kerosene, distillate, and residual fuel oil in the six state area is in table 9. The differential growth rates among these fuels arises from distinctive competitive conditions within each group. Gasoline Consumption of gasoline, used primarily as a fuel for automobiles, from 1950 to 1961 inclusive is shown in table 9 by states. In this 11 -year period the ILLINOIS STATE GEOLOGICAL SURVEY CIRCULAR 35 TABLE 3 - REPORTED EXPENDITURES IN OIL AND GAS PRODUCTION IN ILLINOIS, 1958 Item of expenditure Principal expenses Wages of production and development workers Salaries of all other employees Supplies and materials Gas purchased for gas lift and repressuring Fuel purchased Electric energy purchased Contract work Capital expenditures Development and exploration of mineral properties Buildings, machinery, and equipment $ 76,895,000 21,312,000 6,869,000 18,160,000 135,000 2,686,000 3,992,000 23,741,000 $ 26,549,000 11,064,000 15,485,000 Source: 1958 Census of Mineral Industries, Volume I, Summary and Industry Statistics, United States Department of Commerce, Bureau of the Census, 1961, p. 13B-23. TABLE 4 - SOURCE OF CRUDE OIL FOR ILLINOIS-INDIANA REFINERIES, (thousands of barrels) 1961, 1960, AND 1956-60 AVERAGE state 1961 1960 1956-60 avera ?e to Total to Total to Producing Illinois Indiana Illinois Indiana Illinois Indiana Total Illinois 29,906 7,826 37,732 26,801 7,525 34,326 24,639 6,209 30,849 Indiana 1,347 1,347 1,335 1,335 899 1,055 1,954 Indiana-Mi chigan 1,213 1,213 1,458 1,458 Total 31,119 9,173 40,292 28,259 8,860 37,119 25,538 7,264 32,803 Michigan 507 507 364 364 Colorado 2,450 9,681 12,131 3,252 7,985 11,237 1,493 4,031 5,524 Kansas 10,950 20,496 31,446 9,513 21,491 31,004 12,420 2,441 14,861 Kentucky, Ohio 33 33 35 35 12 12 Louisiana 1,630 1,630 771 771 324 324 Montana 446 9,621 10,067 8,028 8,028 252 6,030 6,282 Nebraska, North Dakota, South Dakota 1,475 10,045 11,520 929 9,515 10,444 2,542 3,573 6,115 New Mexico 15,045 7,394 22,439 11,807 7,720 19,527 8,543 3,734 12,277 Oklahoma 27,172 29,441 56,613 28,470 27,114 55,584 26,928 28,950 55,878 Texas 95,544 20,332 115,876 96,276 24,880 121,156 92,665 35,882 128,547 Utah 1,809 1,809 5,107 5,107 3,136 3,136 Wyoming Totals 17,656 38,969 56,625 15,094 37,785 52,879 13,466 35,598 49,064 Granc 205,296 155,692 360,988 199,478 153,777 353,245 Source: Minerals Yearbooks, U. S. Bureau of Mines, annual copies. ECONOMIC ASPECTS OF THE ILLINOIS OIL INDUSTRY TABLE 5 - OUTGOING SHIPMENTS OF ILLINOIS AND INDIANA CRUDE PETROLEUM (thousands of barrels) Destination Illinois Indiana I960 Total Illinois Indiana 1961 lol New York: West 2,420 2,420 2,790 2,790 Pennsylvania: West 1,851 1,851 1,782 1,782 Illinois 26,081 l,458 a 27,539 29,906 1,213 s 31,119 Indiana 7,525 1,335 8,860 7,826 1,347 9,173 Kentucky, Tenn. 3,218 a 3,218 2,221 a 2,221 Michigan 3,268 3,268 2,650 2,650 Ohio: East 27,396 27,396 26,901 26,901 Ohio: West 13,697 13,697 14,206 116 a 14,322 TOTAL 76,048 12,201 88,249 86,061 4,897 90,958 Source: Monthly Petroleum Statement No. 465, April 10, 1961. Bureau of Mines, Table 23, page 23, and Table 23, Statement No. 478, April 10, 1962. Indiana-Michigan combined. TABLE 6 - REFINERY LOCATIONS AND CAPACITIES Area Capacity Number of Refineries Chicago District Illinois and Indiana Wood River - E. St. Louis Southeastern Illinois Other Indiana Kentucky, (Louisville) Michigan Kansas City (Kansas and Missouri) Minnesota Wisconsin 592,000 340,500 128,800 48,100 17,000 163,739 130,400 79,200 25,000 9 4 3 6 1 12 2 4 2 Source: Petroleum Refineries in the United States, January 1, 1963, U. S. Bureau of Mines, a Barrels of crude oil per day. ILLINOIS STATE GEOLOGICAL SURVEY CIRCULAR 358 TABLE 7 - CONSUMPTION OF REFINED PRODUCTS IN THE SIX STATE AREA, 1961, 1960, 1959, and 1956-60 AVERAGE (thousands of barrels) State Gasoline Kerosene Distillate Residual Oil Total 1961 Illinois 73,835 5,007 42,472 25,750 147,064 Indiana 43,374 3,676 25,842 11,998 84,890 Wisconsin 32,753 2,971 22,330 4,028 62,082 Minnesota 32,702 1,991 15,849 5,524 56,066 Iowa 28,863 2,303 9,990 1,032 42,188 Missouri 41,775 1,466 12,820 2,638 58,699 Total 253,302 17,414 129,303 50,970 450,989 1960 Illinois 73 ,591 Indiana 43 529 Wisconsin 32 690 Minnesota 32 916 Iowa 28 ,837 Missouri 41 ,864 Total 253,427 5,359 3,892 2,958 2,565 2,582 2,083 19,439 42,490 25,596 21,711 16,241 11,141 12,830 130,009 25,893 12,885 4,275 6,363 1,021 3,026 53,463 147,333 85,902 61,634 58,085 43,581 59,803 456,338 1959 Illinois 72,221 5,546 40,939 23,689 142,395 Indiana 42,777 4,231 23,329 13,035 83,372 Wisconsin 31,529 3,714 19,345 4,167 58,755 Minnesota 31,618 2,486 14,358 6,399 54,861 Iowa 28,378 2,749 10,816 1,067 43,010 Missouri 41,271 2,737 12,093 3,394 59,495 Total 247,794 21,463 120,880 51,751 441,888 1956-1960 Average Illinois 70,254 5,550 39,388 24,089 139,281 Indiana 41,774 3,801 22,890 13,567 82,032 Wisconsin 30,795 2,790 19,087 3,278 55,950 Minnesota 30,747 2,352 16,912 4,734 54,745 Iowa 27,750 2,503 11,386 1,045 42,684 Missouri 39,748 2,239 12,785 4,418 59,190 Total 241,068 19,234 122,447 51,131 433,880 Source: Minerals Yearbooks, Bureau of Mines, 1955 to 1959. ECONOMIC ASPECTS OF THE ILLINOIS OIL INDUSTRY 9 average annual growth in gasoline consumption was 4.1 percent, but since 1957 distinct signs of a declining rate are appearing. This has been attributed to the introduction of compact cars, but other factors not presently discernible also may be contributing factors. Kerosene Kerosene consumption shows small gains only. Kerosene is used as a range oil, space heater, tractor fuel, and as a furnace oil for cc:ain types of furnaces. Distillate Distillate fuel has shown the greatest increase among the liquid fuels in the six state area. The principal outlet for distillate is in domestic and commer- cial heating. The post-war history of distillate fuel use has been that of a replace- ment of coal for domestic and commercial heating. This is shown in the large in- creases of fuel consumption each year until about 1957. Displacement of oil heat- ing by natural gas is the factor now significantly affecting heating oil sales ad- versely. Minor quantities of distillate fuel oil are used by power plants, manufac- turing industries, and armed forces. Diesel fuel is drawn from both the kerosene and distillate groups and is used mainly in railroad locomotives and in lake and ocean vessels and river barge tows. However, it is also used in diesel trucks and tractors. Residual Residual fuel oil, a product that usually sells for less than the price of crude oil at refineries, competes directly with coal and natural gas for heavy fuel uses. Since it cannot be moved by pipe line, distribution depends primarily on cheap water transport and limited tank-car movements. Consumption of residual fuel oil increased very slowly in the decade from 1950 to 1961. Seventy percent or more of the sales of residual fuel oil consumed in the six state area is in the states of Illinois and Indiana near refinery locations and in heavily industrialized areas. Although imports of residual fuel oil into the United States were placed under mandatory oil import regulations in April 19 59, by Presidential Proclamation No. 3279, it is doubtful if this had effect in the six state area. Residual fuel oil prices here must meet the effective competition of nearby coal, which is efficiently produced and delivered to markets. FUEL AND ENERGY IN INDUSTRY Within industry the range of fuel requirements is so wide that a correspond- ingly wide variety of fuels is needed to meet them. In the power-using industries, the many kinds of engines call for fuels in various specialized forms. In industries where fuel is used only to provide heat a substitution often can be made. A general classification of fuel-using industries is shown below. CLASSIFICATION OF FUEL USING INDUSTRIES SMELTING AND REFINING MANUFACTURING - power-using industries including mobile units; heat-using industries 10 ILLINOIS STATE GEOLOGICAL SURVEY CIRCULAR 358 TABLE 8 - HEAT CONTENT OF FUELS Item Unit Bituminous Coal Anthracite Crude oil Natural gas: Before treatment After treatment Natural gasoline Coke-oven and manufactured gas products: Coke Gas Tar Light oils Refinery products: Motor fuel Kerosene ■ • • Diesel and gas oil Residual fuel oil Coke Lubes Wax Asphalt Road oil Shale: Ore. . o Oil Source: U. S. Bureau of Mines, Information Circular 7582, Supplies, 1939, 1947, 1965, Table 19, p. 32, 1950 BTU's per unit ton 26,200,000 ton 27,200,000 bbl. 6,000,000 cu. ft. 1,075 cu. ft. 1,000 bbl. 4,620,000 ton 26,000,000 cu. ft. Converted to 540 bblo 6,300,000 bbl. 5,460,000 bbl. 5,250,000 bbl. 5,640,000 bbl. 5,920,000 bbl. 6,270,000 bbl. 6,000,000 bbl. 6,060,000 bbl. 5,570,000 bbl. 6,640,000 bbl. 6,640,000 ton 4,000,000 bbl. 6,000,000 Energy Uses and TABLE 9 - SUMMARY OF LIQUID FUEL CONSUMPTION IN SIX STATE AREA (thousands of barrels) Year Gasoline Change % Kerosene Distillate Change % Residual Fuel Oil 1950 180,056 19,101 76,569 46,212 1951 188,295 +4.6 20,196 86,194 + 12.6 48 , 143 1952 197,442 7.9 19,733 90,738 + 5.3 48,420 1953 205,940 +3.8 18,105 93,190 + 2.7 49,191 1954 212,568 +3.2 18,992 98,230 + 5.4 44,915 1955 222,296 +4.1 18,422 109,385 + 11.4 48 , 540 1956 230,209 +3.6 18,413 116,444 + 6.4 50,345 1957 234,362 + 1.8 14,712 116,673 + 0.2 48,167 1958 239,960 +2.4 22,158 127,729 + 9.5 51,945 1959 247,794 +3.3 21,463 120,880 - 5.4 51,751 1960 253,427 +2.2 19,439 130,009 + 7.6 53,463 1961 253,302 -0.05 17,914 129,303 - 0.5 50,960 Source: U. S. Bureau of Mines Minerals Yearbook. ECONOMIC ASPECTS OF THE ILLINOIS OIL INDUSTRY 11 ELECTRIC UTILITIES TRANSPORTATION - rail, highway (truck, bus and automobile), airtransport, water transport AGRICULTURE - mobile tractor power, electric power CONSTRUCTION - mobile earth moving equipment, portable electrical equipment, trucks and industrial tractors MINING - earth-moving equipment, mine locomotives, hoisting equipment, mechanical mining equipment, ventilation equipment In supplying heat or power to the several industries under each of the cate- gories in this classification, each fuel is selected with two general considerations in mind. Technology sets the limits within which one fuel can be substituted for anoth- er. Comparative cost is the selective mechanism by which one out of several pos- sible fuels is chosen. Table 10 shows the quantity (in coal equivalent) and cost of fuels used in manufacturing industries within the six state area for the years 1947, 1954, and 1958. Detailed data on quantities and costs of the several fuels are available from census reports in these years. Oil fuels represent about 10 percent of the total fuel contribution and 17. 19 percent of the cost. Although fuel oil costs are considerably above coal or natural gas, other factors favor the use of oil as a fuel in certain in- dustries or industrial operations. Comparative costs of coal, coke, fuel oil, and gas, used in the primary metal industries in 1954, were reported at 26, 61, 52 and 35 cents per million BTU, respectively (see Circular 259, Illinois Geological Survey, p. 16). The blast furnace, the largest single user of fuel among the manufacturing industries, depends almost exclusively at present upon coke, the specially pre- pared fuel obtained from coal. It accounts for about 30 percent of all fuel energy used by manufacturing industries within the United States. Recent experiments in- dicate that the addition of oil, natural gas, or coal to the blast furnace can effect a saving in the amount of costly coke consumed. These experiments have not yet af- fected appreciably the demand for oil products but may provide a market in the fu- ture. In most other manufacturing activities, oil fuels or gas can meet the fuel re- quirements as well as coal, and comparative cost or convenience in use is the gov- erning factor. In electric-power production, oil fuel contributes about one percent of the total. Coal dominates and will continue to dominate the electric utility market be- cause of its lower cost. The extent to which natural gas is used in this industry is primarily the result of a special rate on gas obtained under an industrial interruptible contract. The introduction of the Diesel locomotive in 1940 effected a gradual but meas- urable change in type of fuel consumption by railroads as shown in table 11 . Coal consumption decreased from a peak of 139 million tons in 1944 to 2 . 1 million tons in 1960; fuel oil declined from a peak of 116 million barrels in 1933 to 5.6 million bar- rels in 1959. Meanwhile, diesel fuel consumption climbed from 41 million gallons in 1940 to 3,759 million gallons in 1960. Annual increase in consumption was rapid un- til 1955 after which year railroad fuel consumption stabilized at about 3,600 million gallons per year. In short, the introduction of the diesel locomotive has brought about a virtual displacement of coal as a fuel and replaced it almost exclusively with distillate. Future increases in consumption of distillate will be very modest. Quantities of oil fuels used in the agricultural, construction, and mining industries are difficult to estimate. 12 ILLINOIS STATE GEOLOGICAL SURVEY CIRCULAR 358 TABLE 10 - FUELS AND MANUFACTURING - SIX STATE AREA 1947, 1954, and 1958 (thousands) *Fuel Oil: 4.400 BBL = 1 ton of coal. Source: Census of Manufactures, U. S, Tons Equivalent Percent Percent Fuel Year of Coal of Total Cost of Total Coal 1958 18,880 35.8 $141,337 20.4 1954 20,605 27.5 145,382 23.3 1947 25,632 34.8 145,504 30.8 Coke 1958 10,142 19.2 288,797 41.6 1954 10,614 14.2 209,307 33.5 1947 12,373 16.8 174,520 37.0 *Fuel oil 1958 7,219 13.7 103,004 14.9 1954 6,885 9.2 98,506 15.8 1947 6,844 9.3 88,140 18.9 Gas 1958 16,448 31.2 160,349 23.1 1954 36,813 49.1 170,799 27.4 1947 28,822 39.1 63,458 13.4 Total 1958 52,689 $693,487 1954 74,917 623,994 1947 73,671 471,622 Department of Commerce TABLE 11 - FUEL USED BY RAILROADS Year Thousand tons Thousand barrels Coal Fuel Oil 2,101 7,088 3,193 5,613 4,171 5,775 8,625 6,774 12,921 10,715 15,886 14,867 16,732 15,863 28,998 27,646 39,092 39,935 55,874 54,424 64,855 60,386 66,920 63,158 102,256 89,722 112,373 96,745 110,385 98,442 124,220 111,966 138,808 113,314 133,174 115,563 128,308 99,652 107,628 80,725 91,726 65,198 Million gallons Diesel Fuel 1960 1959 1958 1957 1956 1955 1954 1953 1952 1951 1950 1949 1948 1947 1946 1945 1944 1943 1942 1941 1940 3,759 3,688 3,519 3,704 3,718 3,527 3,231 3,141 2,841 2,459 1,979 1,535 1,207 800 560 454 331 231 186 121 81 Source: U. S. Bureau of Mines Illinois State Geological Survey Circular 358 12 p., 11 tables, 1963 Printed by Authority of State of Illinois, Ch . 127, IRS, Par. 58.25 CIRCULAR 358 ILLINOIS STATE GEOLOGICAL SURVEY URBANA UNIVERSITY OF ILLINOIS-URBANA 3 0112 050755013