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 ,i;fe e e S ^ ^ ^ CS15J OOOOOOl-OOOOOOOOOOOOOOO ^e COt^^005COiCOO(NQOOC005003i-0 03iOOOi-0 ^^ (N.-H(N.00O = ^~* g,'^ (N (N O CCiCOCO CC CO ^ y-i ^ ^ lO •a . ^ '^^ . ^ r^ (^ /^s __* /^l r^ rr^ 1"^ i»^ »^ l'^ ^^ t^- r^ n/^ rO /^l . f^ r^, wM ^M -^b 005>-i(NOO02COi-Oi.0^t^OQOcD(N,-iOcC-^T}< o a. C ^ occOOOi'fOSOOO— iOOOOC005iO>OTfiCt^(NOi0500 " ^^.'"'^(N'-lOO^t^CTlrHTtO'OlOt^O'O.-Hrt.-HOS'O,-! ll_ J.SO'-ii-i0:i0(NC0T}<-<}irt(NC0-*O00C^O<35i-iCCi05 ji I |»i I .ill ill ■^o 0'-|(^^l^o■*koco^^ooo50^(N^5■*lOco^-ooo5 Sj; (N(N^incDCDOOiC isge o>cooocO'-i0503-C'-(00>0 ^ S 2^^ (MTt*TjC0iOi-((NTf< 'Tf CO 0> CO t>^ (N IC 5 '^^'S t^00cOO51M.-H00t^ o Set QC)?ocD05i-icoi>-i©;o-*<©cocoTtf<:i«--H-t^i^-<^oi^oo5eoi>OTt<«NT)<.-HC5ioioa> es-,< l>(N00iOf000C^t>C0(MiO0000!NI>;O0^ O O jj^_^ OOcOCDOlt^.-iOOiOCOOiOOl^t^i-HCD-^-^cqcO'-H O t^ (©(MiCC^OlCOOlOS-^lNiO— i>-HTtCD(N'-HCOCO . li.ll^lll blllJll Ilsillllll|ii.l!lril«'^ .S| S3 « " O X> O O 'S dC" Oi-HiNecTttiocot^oooiO^fNco-^iccot^ooo S S" (N(N(N(N(N(N(NlN(NC.OC0eO O tJ^tHic ^io 10 35 >_ o a> H- a r'Si?^ Oo>i-H00oo^ooooioeooo>0'-H^o^»o feSgiiOO— iT}OCO>OfOO bq S.S 00iOt0f000i0Tj<05T-iOTt<(M(N ^ OiOCOOOiiO^-^OOOi-O 05 OOCOfNCOCOOOOOTfiCTfOO (N 0005->*t^OOO'-i»OOOOC005>OiO-^i0 1^(NOi0500 t^0005C5^000CC'O^CO(NiOiO^CO'<*<-^fOt^OO ■..-(0-<^OOC5iOOOt^C^ . ^ so ' ' w. ...-,. , . . . w . _ w. w. -. ->, . - , ►2fc2^ (Nt^^(N(N050-<*t^Ot^t^C4-HCOI^-*T}<^00 <5'~' 0«00>0(N001^(Nt^O(N(NCOt^'OCO-Tt<^(NfO(N^^fO(MCDTtiiOC^iO iNOO lis III O to ■2 "? to « ^J H^ 3 2 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 X o « a> «- -^ _ a^ I- ^ 3 « e 8 aj 3 .^> «h^ ^ 2 a O p eS *? S 2 gf^ oj Ph fii <5 H E-i "Co 0^(NfO' 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. 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