Energy Use in Manufacturing – 1998 to 2002 

Energy Use in Manufacturing provides information related to energy consumption changes within 

the U.S. manufacturing sector between 1998 and 2002. This report addresses both 

manufacturing energy consumption and characteristics of the manufacturing economy related to 

energy consumption. In addition, special sections on fuel switching capacity and energymanagement activities between 1998 and 2002 are also featured in this report. All consumption 

data in this report comes from the Manufacturing Energy Consumption Surveys (MECS). 

This is a follow-up of the Energy Use in Manufacturing: 1994 to 1998 report. 

Characteristics of the US Manufacturing Economy

Gross Domestic Product (GDP) 

Value of Shipments 

Capacity Utilization

Energy Consumption by the Manufacturing Sector

Cost of Energy 

First Use Consumption 

Energy Consumed as Fuel

Nonfuel Use of Energy

End Uses of Energy 

Electricity Consumption and Onsite Generation 

Byproducts Consumed as Fuel 

Wood Products Consumed as Fuel

Special Topics

Fuel Switching Capacity

Energy Management Activities 

Contact Information
Characteristics of the Manufacturing Economy, 1998 and 2002 

Between 1998 and 2002 the overall manufacturing sector and its major energy-intensive 

subsectors showed varying amounts and directions of change with regard to major economic 

indicators. 

Gross Domestic Product 

Table 1. Real Value Added by Industry between 1998 and 2002 (percent 

increase in chained constant dollars) 

311 -- Food -6.2 

322 -- Paper -9.5 

324 -- Petroleum and Coal +21.1 

325 -- Chemicals +10.7 

331 -- Primary Metals -6.3 

Manufacturing Total +6.0 

 Notes: Nominal Value Added comes from the 1998 values in the 2001 Annual Survey of Manufacturers 

(ASM). The 2002 nominal values come from the 2004 ASM (released 12/14/2005). The 3-digit level NAICS 

value added numbers are deflated using BEA chain-type indices for value added (released 12/15/2005). 

 Sources: U. S. Census Bureau, Annual Survey of Manufacturers. 2001 and 2004; U. S. Bureau of 

Economic Analysis, Gross Domestic Product-by-Industry Accounts, Chain-Type Price Indexes for Value 

Added by Industry. 

Gross Domestic Product (GDP) is a measure that can be used as an indicator of the economic 

health of a group of related businesses. It is the sum of the value added of the members of the 

group. While GDP alone cannot tell the whole story of the economic prosperity for a group, it is a 

commonly used indicator. Overall, there was a 6 percent increase in total value added in the 

manufacturing sector from 1998 to 2002 (see Table 1). However, among the subsectors that 

consumed the most energy1

, listed in Table 1, only the chemicals and petroleum and coal groups 

showed an increase in real value added. The chemicals and petroleum and coal industries, along 

with other groups that are not among the largest users of energy, drove up real value added to 

the 6 percent growth between 1998 and 2002. 

Value of Shipments 

Table 2. Real Value of Shipments by industry between 1998 and 2002 (percent 

increase in constant dollars) 

311 -- Food + 4.1 

322 -- Paper - 7.0 

324 -- Petroleum and Coal + 6.4 

325 -- Chemicals + 2.8 

331 -- Primary Metals - 12.2 

Manufacturing Total 0.0 

 Notes: See sheets "A" (nominal value of shipments) and "C" (price deflators) in the Industry Shipments by 

NAICS worksheet on the Industry Economics Accounts page of the Bureau of Economic Analysis site. Percent 

change in real value of shipments is calculated by first computing the constant dollar value of shipments for 

each manufacturing sub-industry and then aggregating into 3-digit NAICS groups. 
 Source: U. S. Bureau of Economic Analysis, Gross Domestic Product-by-Industry Accounts, 

GDPbyInd_SHIP_NAICS. Released 12/15/05. 

Output measures based on value of shipments have been shown to be the most useful indicator 

when comparing manufacturing energy consumption from one year to another.2

 Among the 

manufacturing industries that have traditionally used the most energy, it has been found that the 

change in energy consumed from one period to another is positively correlated with the change in 

real value of shipments between the two periods. If the real value of shipments increases by 

some percentage between years, it is expected that energy consumption increases by 

approximately that percentage. A discrepancy indicates that there may have been a change in 

energy intensity in the industry. One common measure of energy intensity is consumption per 

dollar value of shipments. 

Overall, as can be seen in Table 2, the real value of shipments was flat from 1998 to 2002 for the 

manufacturing sector. Among manufacturing industry groups that traditionally consume the most 

energy there were mixed results. Petroleum and coal, food, and chemicals had small increases 

and paper had a small percentage decrease in real value of shipments. The primary metals 

industry, however, had a more significant percentage decrease in real value of shipments. 

Capacity Utilization 
Figure 1 contains the percent of production capacity utilized3

 in the manufacturing industries 

which traditionally consume the most energy as well as the sector as a whole for 1998 and 2002. 

With the exception of the petroleum and coal group, all of the highlighted industries in 2002 

operated under the percent capacity levels of 1998. Primary metals was down nearly 10 percent. 

This, along with the decline in real value of shipments, suggests that the primary metals industry 

struggled between 1998 and 2002. 

Energy Consumption

Cost of Energy 

It is difficult to isolate the affect the increase in the cost of energy had on the manufacturing 

economy from 1998 to 2002, but it certainly tightened operating margins. For example, had the 

sector maintained the same level of natural gas use in 2002 as was used in 1998, the 42 percent 

increase in cost would have to have been absorbed. However, first use consumption of natural 

gas fell by 13 percent between 1998 and 2002. Still, the sector-wide expenditures on natural gas 

increased by nearly 30 percent--over $5.75 billion (nominal). 
First Use Consumption of Energy 

While there was in increase in average cost per unit for all of the major sources of energy used 

(see Figure 1), it was clearly the increase in the cost of natural gas that hit the sector the hardest. 

In terms of Btu for first use, natural gas stands out as the energy source used most widely used 

among manufacturing industries. Natural gas is a relatively low emission fuel and is an 

irreplaceable feedstock in several major chemical sub-industries. 
The chemical industry is the largest user of natural gas within the manufacturing sector. Chemical 

manufacturing establishments used over two and a half times as much natural gas as 

establishments in the second largest user industry, petroleum and coal products. Other industries 

that consume significant quantities of natural gas include primary metals, paper, food, and 

nonmetallic minerals. These industries have traditionally been the heaviest users of energy in the 

manufacturing sector. 

Energy Consumed as Fuel 

Other than liquefied petroleum gasses and natural gas liquids (LPG/NGL), fuel consumption by 

energy type for the manufacturing sector in 1998 and 2002 is not substantially different than what 

is found in Figure 2 above. The chemicals industry makes extensive use of natural gas as a 

feedstock. Thus, the percent of natural gas utilized by the chemicals industry is higher in Figure 3 

(35 percent) than in Figure 5 (28 percent). 

Nonfuel Use of Energy 

A few manufacturing industries use a large amount of combustible energy sources as a feedstock 

in their production processes. 

Nearly one hundred percent of coal used as a feedstock has traditionally been used in iron and 

steel mills (NAICS 331111). This industry makes and uses coke (made from coal) in blast 

furnaces. In 2002, however, 40 percent of the total coal used as a feedstock was used in other 

industries. This is in part due to the recent emergence of synfuel plants, which are part of the 

petroleum and coal industry. Synfuel plants apply a chemical treatment to coal and resell it. 
The nitrogenous fertilizer industry (NAICS 32531) uses the most natural gas as a feedstock, 

followed by other basic organic chemicals (NAICS 325199), plastics materials and resins (NAICS 

325211), and iron and steel mills (331111). In 1998 more natural gas was used for nonfuel 

purposes than in 2002. However, there were no major changes in the percent shares that each of 

these industries accounted for of the total natural gas for nonfuel purposes. 
There was a substantial increase from 1998 to 2002 in LPG/NGL use as a feedstock. The total 

rose over 1.2 quadrillion Btu. Most of the use occurred in the plastics materials and resins group 

(NAICS 325211). Other big users of LPG/NGL include petrochemicals (NAICS 325110) and other 

basic organic chemicals (NAICS 325199). Note: It is suspected that instead of this being a 

completely meaningful increase, LPG/NGL use as a feedstock was underreported in the chemical 

industry prior to the 2002 MECS. 
End Uses of Energy in Manufacturing 

As in previous years, manufacturers allocated their uses of major purchased fuels to end-uses. 

The end-uses are subsets of boiler fuel, direct process use, and direct nonprocess use. 

Manufacturers were not asked to estimate end-use of less generally used energy sources such 

as major byproducts, wood, and waste. The amount of fuel for which end-uses were not allocated 

has not changed significantly since 1998 (35 percent in 1998 and 37 percent in 2002). 

Table 1. Manufacturing End-Use Breakouts for Commonly Used Energy Sources for 1998 and 

2002(Trillion Btu) 

 

Fuel Total1 Net 

Electricity

Residual 

Oil 

Distillate 

(and 

Diesel) Oil

Natural 

Gas LPG Coal 

 1998 2002 1998 2002 1998 2002 1998 2002 1998 2002 1998 2002 1998 2002 

Total Fuel 

Consumption 11,447 10,267 3,035 2,840 357 208 133 141 6,644 5,794 135 103 1,143 1,182 

 Indirect 

Uses-Boiler 

Fuel

3,635 3,110 19 12 246 127 38 25 2,538 2,162 24 8 770 776 

 Conventional 

Boiler Use -- 1,679 -- 9 -- 76 -- 25 -- 1,306 -- 8 -- 255 

 CHP and/or 

Cogeneration 

Process 

-- 1,443 -- 4 -- 51 -- 10 -- 857 -- 0 -- 521 

 Direct UsesTotal Process 6,325 5,722 2,408 2,218 103 60 37 43 3,361 2,956 78 64 338 381 

 Process 

Heating 4,055 3,595 352 343 97 58 20 24 3,187 2,742 68 60 331 368 

 Direct UsesTotal 

Nonprocess 

1,330 1,124 538 514 8 4 52 50 673 513 29 24 30 19 

 Facility 

HVAC 692 697 271 262 4 3 6 5 403 417 4 5 4 5 

 End Use Not 

Reported 157 300 70 96 1 17 7 12 72 162 4 6 3 6 

 -- = Data not available. 

 Sources: Energy Information Administration, Manufacturing Energy Consumption Survey -- Table 5.2: Energy Consumed as a Fuel by 

End Use By Manufacturing Industry with Net Electricity 1998 and 2002. 

The pattern of end-uses for the generally used fuels in the table above has remained remarkably 

stable over the years. In 2002, 30 percent of total fuel for end-use was used in boilers, 56 percent 

was used directly in the manufacturing process, 11 percent was used in direct nonprocess use, 

and 3 percent was not reported. Each of the percentages for 1998 is less than 2 percent different 

from those given for 2002. 
Byproducts in Fuel Consumption 

The primary metals industry (NAICS 331) declined in its share of byproduct use relative to other 

industries between 1998 and 2002. Almost all of this byproduct use was coke oven and blast 

furnace gas in the Iron and steel industry. This decline mirrored an overall decline in production in 

the steel industry, as well as a continuing shift away from the integrated steel mill into the electric 

arc furnace. 

The chemical industry continued to grow in the use of waste gas for fuel -- 416 trillion Btu in 1998 

to 483 trillion Btu in 2002. Waste gas in 2002 accounted for 12.8 percent of the total fuel used in 

the chemical industry. 

Table 2. Selected Byproducts in Fuel Consumption, 1998 and 2002 

(Trillion Btu) 

 1998 2002 

Total 4,538 4,267 

Blast Furnace/Coke Oven Gases 369 297 

Waste Gas, Still Gas 1,837 1,887 

Petroleum Coke 703 679 

Pulping Liquor/Black Liquor 903 820 

Wood Chips/Bark 684 542 

Oils, Tars, Waste Material 43 41 

 Source: Energy Information Administration, Manufacturing Energy Consumption Survey -- 
Table 3.5: Byproducts in Fuel Consumption by Manufacturing Industry and Region, , and 

. 

1998

2002

While fuel consumption declined between 1998 and 2002, the proportion of fuel use that the 

byproducts listed in Table 2 account for was unchanged from 1998 to 2002. Waste gas, including 

refinery still gas, was again the most widely used of the selected byproducts. The petroleum and 

coal group (NAICS 324) was the primary user of waste gas (1,396 trillion Btu) and petroleum 

coke (565 trillion Btu) in 2002. 

Wood-Related Products in Fuel Consumption 

Table 3. Selected Wood-Related Products in Fuel Consumption in the 

US (Trillion Btu) 

 1998 2002 

Pulping or Black Liquor 903 820 

Biomass

 Agricultural Waste 43 40 

 Wood Harvested From Trees 58 35 

 Wood and Byproducts from Mill Processing 626 507 

 Wood and Paper-Related Refuse 15 12 

 Sources: Energy Information Administration, Manufacturing Energy Consumption Survey -- 

Table 3.6: Selected Wood and Wood-Related Products in Fuel Consumption, 1994, 1998, and 

2002

The use of wood related products dropped between 1998 and 2002, but its percent share in the 

mix of fuel used in manufacturing remained steady. Pulping or black liquor made up 35 percent of 

the total fuel used in the paper industry (NAICS 322) in 2002. Biomass made up about 4 percent 

of the total fuel use in manufacturing in 2002. These percentages were not more than a percent 

or two different in 1998. 
Total Consumption and Onsite Generation of Electricity 

Manufacturing as a whole is both a major user and producer of electricity. Although total 

consumption of electricity did decline approximately 6 percent, there appeared to be little change 

in the make-up of manufacturing electricity use and production between 1998 and 2002. In fact, 

the relative shares of electricity consumption among the three component parts, purchases, 

transfers in, and the net of generation minus sales and transfers out are identical, according to 

the MECS data (87, 1, and 11 percent in 2002, respectively). Similarly, three industry subsectors, 

chemicals, primary metals, and paper, accounted for 48 percent of total consumption of 

electricity, approximately the same share as in 1998. 

Electricity Purchases 

Although total electricity consumption has shown stability, restructured energy markets have had 

an effect on choices made by electricity purchasers. While it is difficult to know whether the 

changes were due to growth in access to nonutility suppliers or a greater interest in them by 

manufacturers, clearly more of the electricity purchases were from sources other than the 

manufacturer’s local utility. 

Figure 14 shows those changes. The overall amount of electricity purchased from nonutility 

suppliers2

 increased from 8.7 percent of the total in 1998 to 12.4 percent in 2002. Not only did the 

share of total purchases change, but the amount of nonutility purchases of electricity by 

manufacturers actually increased by 27 billion kilowatthours, even though total purchases of 

electricity declined. 
Table 4. Utility and Nonutility Purchases of Electricity by Manufacturers 

in 1998 and 2002 (Million Kwh) 

 1998 2002 

 Total 

Purchases Utilities Nonutilities Total Purchases Utilities Nonutilities 

Total 892,011 814,622 77,389 844,583 739,921 104,662 

Percent 

of Total 

 100 91.3 8.7 100 87.6 12.4 

 Sources: Energy Information Administration, Manufacturing Energy Consumption Survey -- 

Table 11.1: Electricity: Components of Net Demand, 1998 and 2002. 

Three industry subsectors, chemicals, paper, and petroleum and coal products, accounted for 89 

percent of the total onsite generation less sales and transfers out. Of the total onsite generation in 

manufacturing in 2002 (134,268 million kilowatthours), 93 percent was from a cogeneration or 

combined heat and power (CHP) process, 2 percent was from a renewable energy source 

(hydropower, wind, solar, or geothermal), and 6 percent was from other processes including 

conventional fossil fuel generators, often used as backup. That breakdown is almost identical to 

what was found in 1998. 

Larger establishments are responsible for producing most of the on-site generation. In examining 

manufacturing establishments by employment size categories, 73 percent of the total generation 

came from establishments with 500 or more employees. According to the U.S. Census Bureau's 

Economic Census—Manufacturing3

, only 2 percent of manufacturing establishments in the MECS 

population have as many as 500 employees. Approximately 90 percent of the generation is in 

establishments with 250 or more employees, which account for 5 percent of the MECS 

population. From these results, it is clear that for the most part only the largest establishments will 

find it economically feasible to generate electricity.

4

Special Topics 

Manufacturing Fuel-Switching Capability 

Many manufacturers have the ability to substitute the consumption of one fuel for that of another 

when the economic conditions call for making such a change. The ability to switch can be limited 

not only by the technical considerations of onsite boilers and heaters, but also the practical 

considerations of 

 Federal, state, and local environmental restrictions; 

 Available supply and transportation of the fuel; 

 Contracts in which the manufacturer is committed to purchasing a certain amount of the 

fuel, regardless of what has transpired since the contract was agreed upon. 

The Manufacturing Energy Consumption Survey (MECS) measures fuel-switching capacity by 

asking manufacturers to account for both technical and practical considerations simultaneously. 

Manufacturers were not to consider the relative prices of the fuels when they reported their 

switching capability. They were instructed to limit their ability to what can be done within a timeperiod of 30 days and without major modifications to their existing equipment. 
A fuel may be completely or partly nonswitchable. In the case of it being completely 

nonswitchable, it often means that the configuration of the plant’s equipment would not allow 

another fuel to be used in place of the one currently being consumed. Even when an 

establishment has the ability to switch a portion of its consumption from one fuel to another, it 

could have a certain amount for which it cannot substitute. The term used to describe both types 

of situations is, “nonswitchable minimum requirement.” For example, a plant may use natural gas 

in both a boiler and specialty oven used to dry paint. In the boiler, all fuels used may be 

completely interchangeable. However, in the oven, using something other than natural gas may 

alter the pigment of the paint. In that case, the natural gas would be nonswitchable. Other 

reasons a fuel may be partly nonswitchable are the practical considerations such as in-place 

take-or-pay contracts with a supplier or environmental restrictions that limit the amount the 

establishment can consume during a specified time. 

The MECS measured fuel-switching capability of a selection of the most common purchased 

energy sources (Figure 1). The total fuel consumption accounted for by those energy sources 

was 10,512 trillion Btu, approximately 65 percent of all fuel use in manufacturing. Most of the 

fuels for which the MECS did not measure fuel-switching were byproducts, waste products, and 

otherwise rarer substances. The interest in measuring an establishment’s ability to switch out of 

those substances is minimal as many of those fuels are produced on-site or acquired through 

means other than open-market purchases. 

Because of the relatively higher amount of not-ascertained switching in 2002 compared to 1994 

(18 percent to 6 percent), comparisons are problematic. However, the ratio of total switchable fuel 

consumption to the sum of all ascertained switchable and nonswitchable fuel of all measured 

fuels allows a useful comparison without the not-ascertained amount. In 1994, that ratio was 25 

percent while in 2002, the ratio apparently dropped to 20 percent. While not entirely conclusive, 

this result indicates that there may have been some decline in fuel-switching capability between 

1994 and 2002.1
Table 1. Fuel Switching Percentages Based on Total Consumption and Sum of Switchable 

and Nonswitchable Amounts, 1994 and 2002 

 Year 

Total 

Consumed

 

Switchable 

Not 

Switchable 

Not 

Ascertained 

 

Switchable Not Switchable 

 

(Trillion 

Btu) 

Percentages Based on Total 

Consumption) 

Percentages Based on 

Sum of Switchable and 

Nonswitchable Amounts) 

Electricity 2002 2,918 2.7 78.2 19.1 3.4 96.6 

Received 1994 2,742 1.9 93.4 4.7 2.0 98.0 

Natural 2002 5,805 18.8 62.7 18.5 23.1 76.9 

Gas 1994 6,135 27.8 64.8 7.4 30.0 70.0 

Distillate 2002 142 20.1 55.7 24.2 26.5 73.5 

Oil 1994 152 18.0 68.2 13.8 20.9 79.1 

Residual 2002 208 41.4 44.6 14.0 48.1 51.9 

Oil 1994 441 45.2 51.3 3.4 46.9 53.1 

Coal 2002 1,356 30.2 58.0 11.8 34.2 65.8 

1994 1,218 46.1 52.3 1.6 46.8 53.2 

LPG 2002 96 22.8 32.6 44.5 41.2 58.8 

1994 94 41.8 52.1 6.1 44.5 55.5 

Total 2002 10,525 16.3 65.7 18.0 19.9 80.1 

1994 10,781 24.0 70.1 6.0 25.5 74.5 

 Note: Values in the table are compiled from fuel switching tables 10.2-10.12 

(http://www.eia.doe.gov/emeu/mecs/mecs2002/data02/shelltables.html) and converted to Btu.

 Sources: Energy Information Administration, Manufacturing Energy Consumption Survey -- Tables 10.2, and 

; 10.4, and ; 10.6, and ; 10.8, and ; 10.10, and ; 10.12, and . 

1994

2002 1994 2002 1994 2002 1994 2002 1994 2002 1994 2002

Referring to both Figure 1 and Table 1, natural gas, as the fuel with the most total consumption, 

accounts for most of the switchable consumption on a Btu basis in 2002. However, all but one of 

the energy sources measured (electricity) has higher rates of switchability on a percentage basis. 

Electricity and natural gas have the highest non-switchable percentages and also account for the 

greatest share of the nonswitchable total among all fuels. 

Nonswitchable Minimum Requirements, Maximum Possible, and Discretionary Fuel Use 

The MECS measured the nonswitchable minimum requirements of a fuel and the maximum 

possible if all possible switching into that fuel took place. By comparing those limits with actual 

consumption, one can compute a measure of discretionary fuel use. The discretionary-use rate is 

a measure, in percent, of the extent to which manufacturers elected to consume discretionary 

quantities of a given energy source. That is, manufacturers will consume certain fuels above the 

absolute minimum nonswitchable consumption. A measure of discretionary fuel use can be 

defined as: 

where 

USE is the discretionary-use rate of a given energy source; 

ACT is the actual consumption of that energy source; 
MIN is the minimum consumption, which would have been achieved if all ascertained switching 

from that type of energy had occurred, and 

MAX is the maximum consumption, which would have been achieved if all ascertained switching 

into that type of energy had occurred. 

The higher the ratio USE is, the closer the actual consumption was to the maximum possible 

consumption of that fuel, given all possible fuel-switching into the fuel and the same level of 

operations. Thus discretionary fuel consumption is a measure of preference for one fuel over 

another. 

Table 2. Discretionary Fuel Use Rates and Ratios of Minimum to 

Maximum Consumption, by fuel, 2002 and 1994 

 Discretionary Fuel 

Use Rate (Percent) 

Minimum/Maximum 

(Percent) 

Energy Source 1994 2002 1994 2002 

Electricity Receipts 25.2 37.1 92.8 93.0 

Natural Gas 73.4 69.5 65.6 75.0 

Distillate Fuel Oil 3.1 5.0 12.2 16.5 

Residual Fuel Oil 19.8 20.9 19.3 22.9 

Coal 80.3 87.0 48.5 67.7 

LPG 5.3 5.0 6.9 14.4 

 Note:Values in the table are compiled from fuel switching tables 10.2-10.12 

(http://www.eia.doe.gov/emeu/mecs/mecs2002/data02/shelltables.html) and converted to Btu.

 Sources: EIA, Manufacturing Energy Consumption Survey -- Tables 10.2, and ; 

10.4, and ; 10.6, and ; 10.8, and ; 10.10, and ; 

1994 2002

1994 2002 1994 2002 1994 2002 1994 2002
10.12, 1994 and 2002. 

As can be seen in Figure 2 and Table 2, the discretionary fuel rate for coal and natural gas are 

quite high, indicating strong preferences for those fuels. Conversely, Table 2 shows a strong 

reluctance to use distillate fuel oil and LPG. The pattern of discretionary fuel use rates among the 

fuels in 2002 is markedly similar to the pattern found in 1994. However, it does appear that 

preferences for electricity receipts and coal have increased since 1994. In the case of electricity 

receipts, the increase in the discretionary fuel use rate mirrors the decrease in ratios of electricity 

generated onsite to electricity receipts (15.7 percent in 2002, down from 17.7 percent in 1994)2

. 

The increase in preference for coal may be a direct result of the rise in prices of other energy 

sources. 

Although the discretionary fuel rates have not changed substantially in most cases, it appears 

that the discretionary ranges themselves have decreased (Table 1). This finding is verified by the 

fact that the ratios of the switchable amounts to the nonswitchable have decreased for the total 

and all the fuels, except distillate and residual fuel oil (See data table below Figure 1). 

Fuel-Switching Flexibility 

Another measure that is useful in evaluating fuel-switching capacity is flexibility. Flexibility in fuelswitching is a measure of redundancy in the alternatives available to a manufacturer to switch out 

of a fuel. Flexibility will always be measured as percentage greater than 100 as it is defined as 

the sum of the quantities of alternative fuels, divided by the total amount of switchable fuel. For 

example, an establishment reports that it consumes 15,000 thousand cubic feet (MCF) of natural 

gas, and that the equivalent of 10,000 MCF of which could have instead been consumed as other 

fuels. The establishment also reports that 7,500 MCF could have been switched into residual fuel 

oil, and 5,000 MCF could have been switched into LPG. If no other alternatives were reported, 

than the establishment’s flexibility in switching to natural gas was 125 percent (computed as 

(7,500 + 5,000) ÷10,000). The establishment essentially has flexibility in choosing how it would 

use residual fuel oil and LPG to substitute for natural gas over the year if it chose to do so. 
Table 3 shows the measures of flexibility of energy sources over all manufacturing in 2002 and 

1994. 

Table 3. Fuel Switching Flexibility by Fuel Type, 1994 and 2002 

Energy Source Flexibility (Percent) by Year 

1994 2002 

Natural Gas 126.27 116.37 

Electricity Receipts 145.17 136.48 

Coal 152.13 127.81 

Residual Fuel Oil 152.90 129.23 

Distillate Fuel Oil 138.74 143.33 

LPG N/A3

 N/A3

 Note: Values in the table are compiled from fuel switching tables 10.2-10.12 

(http://www.eia.doe.gov/emeu/mecs/mecs2002/data02/shelltables.html) and converted to 

Btu. 

 Sources: Energy Information Administration, Manufacturing Energy Consumption 

Survey -- Tables 10.2, and ; 10.4, and ; 10.6, and ; 10.8, 

 and ; 10.10, and ; 10.12, and . 

1994 2002 1994 2002 1994 2002

1994 2002 1994 2002 1994 2002

As can be seen in Table 3, flexibility has decreased for all fuels since 1994, except distillate fuel 

oil. Put together with the decrease in the overall ability to switch fuels and the smaller 

discretionary ranges, it does appear that manufactures have reduced their capacity to switch 

fuels from 1994 to 2002. 

Possible reasons for the observed decrease in switchability since 1994 are: 

• The use of long-term contracts in natural gas purchasing; 

• Continuing concerns about complying with environmental laws, both in storage of fuel oil 

and LPG and in emissions, have continued to favor the use of natural gas over other 

combustible fuels; 

• An overall decline in the use of fuel oils for fuel, while relatively unswitchable electricity 

receipts account for a greater share; 

• The relative inexpensiveness of natural gas for most of the period between 1994 and 

2002, coupled with its more desirable environmental characteristics. 

As energy prices have risen dramatically since 2002, it will be interesting to see whether 

manufacturers have increased their ability to switch fuels in response. 

Other Observations 

• Examination of fuel-switching capability of natural gas in 2002 by value of shipments 

categories and employment size show that the ability to switch increases on average 

from smaller to larger establishments until the final category when there is a sharp drop 

off. Thus, fuel switching capability out of natural gas seems to correlate with size, 

regardless of industry. 

• The relative inability of chemical companies to switch4

 may be due indirectly to their 

heavy use of natural gas as a feedstock. It might not be worthwhile for them to invest in 

capacity to switch out of gas since their operations are so dependent on it. Further, those 

manufacturers usually get lower-than-average prices due to their large usage. 
• example, there is a fairly wide distribution of alternatives available for natural gas: 38 

percent can be switched to distillate fuel oil, 34 percent to LPG, and 22 percent to 

residual fuel oil. Yet, for residual fuel oil, 81 percent was switchable to natural gas, 

distillate fuel oil could replace 24 percent, and no other alternative could replace more 

than 10 percent of the total. 

Energy Management Activity, 1998 and 2002 

Manufacturing Establishment Participation in Energy Management Activities by Program 

Type 

Associated with the increased cost of energy between 1998 and 2002 is a general increase in 

participation in energy management activities by manufacturing establishments. 

Figure 1 shows that for virtually all of the programs listed, there has been an increase in 

participation from 1998 to 2002 by manufacturing establishments. When the cost of inputs to 

production processes, such as energy sources, undergo percentage increases greater than that 

of the price of the manufactured product, profit margins are squeezed. Responses to this 

condition can include initiating an effort to improve energy management. 
More manufacturing establishments, in an effort to improve energy efficiency, installed new or 

retrofit equipment in 2002 than in 1998. In Figure 2, as in Figure 1, the increase is in both 

percentage and establishment count. 

Forty percent of manufacturing establishments participated in an energy efficiency program1

 or 

equipment upgrade to improve energy efficiency in 2002. This was up 7 percent from 1998. 
Manufacturing Establishment Participation in Energy Management 

Activities by Industry 

Industry groups that traditionally consume the most energy2 participated in some kind1 of energy 

management activity at a higher percentage than the sector overall. Each of the subindustries 

listed in figure 2 participated well above the sector-wide levels for both 1998 and 2002 (33 and 40 

percent, respectively). In each of these groups, except for primary metals, the participation 

percentage increased from 1998 to 2002. 

In terms of percentage of establishments, energy-intensive industries2

 participated in energy 

audits, steam production system upgrades, and machine drive efficiency upgrades more than the 

manufacturing sector overall. Figures 4, 5, and 6 contain the percentage of establishments 

participating in the respective program by industry. For each industry, it also gives the percent of 

establishments participating in the program type that were funded completely in-house and the 

percent that used at least some funds from other sources (such as government or an energysupplier program). 

Each of the subsectors listed in the three figures above had significantly more participation, led by 

the petroleum and coal industry, in each of the three program types, than the overall sector. Each 

of these five industries also had a higher percentage of the programs completely funded by the 

establishments themselves than was the case in the sector overall. It should be noted that the 

"other" category includes instances where some in-house funding was used. Total dollars spent 

on energy management is not available. 

While the relationships in Figures 4, 5, and 6 are similar in terms of energy-intensive industry 

participation relative to the manufacturing sector overall, there are some notable differences in 

other regards. The percentage of establishments fully funding energy audits is significantly lower 

than the percentage of establishments fully funding efficiency upgrades in machine drive and 

steam production systems. The percent participation also varies between the three programs in 

these figures. A much lower percentage of establishments made efficiency improvements to their 

steam production systems than they did for machine drive systems, and for most industries the 

percent participation in machine drive efficiency upgrade programs was lower than the 

percentage of establishments conducting an energy audit. 
Table 1. Manufacturing Industries with 80 Percent or More Establishments Participating 

in One or More Energy Management Activity, 2002 

NAICS Industry Number of 

Establishments 

Percent Participation in One or More 

Energy Management Activity3

311-339 Manufacturing - Total 200,710 40

311221 Wet Corn Milling 49 86 

322110 Pulp Mills 34 91 

322121 Paper Mills, Except 

Newsprint 323 93 

322130 Paperboard Mills 210 83 

324110 Petroleum Refineries 215 85 

325110 Petrochemicals 37 87 

325193 Ethyl Alcohol 48 83 

327211 Flat Glass 38 92 

327213 Glass Containers 61 80 

331112 Electrometallurgical 

Ferroalloy Products 15 80 

336112 Light Trucks and Utility 

Vehicles 42 88 

 Notes: "One or More Energy Management Activity " refers to the programs in MECS Table 8.1 and not the programs 

listed in Figure 1 and Figure 2, which are subsets of the energy management programs that can be found in table 8.1. 

There are programs in the 1998 table that are not in the 2002 table and vice versa. These were excluded from the figures 

in this report. 

 Source: Energy Information Administration, 2002 Manufacturing Energy Consumption Survey -- Table 8.1: Number of 

Establishments Participating in Energy Management Activities. 

Several manufacturing industries in 2002 had very high percent participation in one or more 

energy management activity. The industries listed in Table 1 all had 80 percent participation or 

more, which was more than twice the percentage of the manufacturing sector overall. Most of 

these industries come from industry groups listed in figures 4, 5, and 6 above, which are the most 

energy-intensive industries in the sector. 

These figures imply that participation in energy management activities has been on the rise and 

that industries that use the most energy lead the sector overall in participation. This is not 

surprising as establishments in these industries have the most to gain from energy management. 

Endnotes 

Characteristics of the Manufacturing Economy 

1

 In terms of first use of energy sources (energy used for all purposes), the subsectors in Table 1 

accounted for 83 percent of the total Btu's used in the manufacturing sector in 2002. 

2

 See "Measures of Output" section of MECS Survey Design, Implementation, and Estimates, 

1994 . Publication DOE/EIA-0552 discusses how value of shipments mirrors physical output more 

closely than value added when value added is variable relative to value of shipments for an 

industry between comparison years. 

3

 Industrial Production Capacity is an index released currently on a monthly basis by the Federal 

Reserve Board. 
Energy Consumption 

1 “Total” includes only energy sources listed in the column headings. It excludes fuel use of 

unallocated energy sources (6,248 trillion Btu in 1998 and 6,006 trillion Btu in 2002). 

2

 These are brokers, marketers, independent power producers, cogenerators from other 

companies, marketing subsidiaries of other utilities, and any other entities that are not local 

utilities for a given establishment. 

3

 U.S. Department of Commerce, U.S Census Bureau, 2002 Economic Census-Manufacturing, 

General Summary 2002, Washington, DC, October 2005, page 54 

4

 The MECS population are those establishments that cover at least 97 percent of the total 

energy use in U.S. manufacturing. Only the smallest establishments are excluded. See U.S. 

Energy Information Administration, 2002 Manufacturing Energy Consumption Survey 

Methodology and Data Quality: Survey Design, Implementation, and Estimates (internet report), 

“Methodology” subsection 

Fuel Switching

1

 The assumption used here is that the not-ascertained amount would breakout in the same 

proportions as the fuel consumption that was actually measured as switchable or nonswitchable. 

As the not-ascertained amount increases, so does the potential for bias and the uncertainty of 

that assumption. 

2

 MECS Tables, Electricity: Components of Net Demand, 2002 and 1994.

3

 Some of the necessary data was unpublished because of large sampling error.

4

 MECS Table 10.2 Capability to Switch Natural Gas to Alternative Energy Sources, 2002

Energy Management Activities

1

 "Any Program" refers to the programs in MECS table 8.1 and not the programs listed in Figure 1 

and Figure 2. This set of programs is a subset of the energy management programs that can be 

found in table 8.1. There are programs in the 1998 table that are not in the 2002 table and vice 

versa. These were excluded from the figures in this report. 

2

 In terms of first use of energy sources (energy used for all purposes), the subsectors in Figure 3 

accounted for 83 percent of the total Btu's used in the manufacturing sector in 2002. 

3

 Refers to the set of activities in MECS table 8.1 
Contact 

William Gifford 

william.gifford@eia.doe.gov 

Mathematical Statistician 

Phone: 202-586-5931

Fax: 202-586-0018 

Robert Adler robert.adler@eia.doe.gov

Survey Manager

Phone: 202-586-1134

Fax: 202-586-0018 

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