A Unique Approach to Estimating Future Energy Requirements
Authors: Bickel H.J. , Burdine F.B. 
Published: December 2007

This paper is concerned with general concepts and statistical devices used in projecting over-all energy requirements. Particular emphasis is given to the use of individual end-use markets as an approach to developing future overall energy requirements, and translating these requirements into fuel consumption.

Introduction

There have been a great many energy projections in recent years so many, in fact, that one can easily find support for almost any preconceived notion about the nation's future energy requirements. why should there be such a variety of answers? The differences, for the most part, occur because of the differing concepts and methodology employed by energy analysts. Therefore, whether the energy student is to make an original forecast or choose one from the vast number of those already made, he should know something about the various methods which can be employed to arrive at end numbers. The best advice to the forecaster would seem to be study the methods available, employ those which appear most sophisticated and accept the results derived therefrom; or, to one choosing between existing forecastsaccept the forecast which was apparently derived from the most sophisticated method. In a study released in 1961, Texas Eastern Transmission Corp. has estimated future United States energy requirements and fuel consumption. This study had two purposes:to develop an integrated method from which U. S. energy and fuels could be seen in perspective; andto actually provide the company management with useful estimates of future energy requirements and fuel consumption.

This paper is based on the authors' experiences with that study. It is concerned with concepts and techniques that can be used in forecasting energy requirements and fuel consumption. The authors believe that the general approach used in the study has merit, but they realize already that there is room for improvement.

Concept and Method

Fuel consumption is a function of, and not the origin of, the economy's energy needs. Therefore, it is necessary to develop "needs" first and then translate these into fuel consumption not vice versa. Many studies dealing with future energy requirements ignore this fundamental distinction by arriving at "energy requirements" through summing separate fossil-fuel and water-power projections. The quantities thus developed may be short or in excess of the economy's actual needs for Btu needs which arise from and vary with the basic economic forces of our system. As a practical matter, one could not expect to get an accurate forecast of the 1980 automobile market by summing the individual sales expectations of the "Big Three". Each may assume the same over-all market, but each may also assume that it will have captured 90 per cent of that market by 1980.A sound approach is one which incorporates basic market research concepts. Working within the framework of a number of energy "markets" (the Texas Eastern study used four), the determinants of the ultimate need for heat and power (gross Btu) in each market are first established. Then, from these determinants, projections of end-use energy requirements are developed for each market. End-use energy requirements are those quantities of energy which pass through the consumer's meter (a theoretical meter, of course, in the case of oil and coal). Relative utilization efficiencies of the energy sources are difficult to treat and were not considered in our development of energy market requirements. These energy market requirements provide a framework within which individual fuel projections will subsequently be made; but by first establishing the ultimate market, a degree of discipline is introduced. The sum of the individual fuel (and electricity) projections cannot exceed the market potential, and changing any one of the components can only be done by making compensating changes among the other components. A method of analysis and functional distinction between energy requirements and fuel consumption is depicted in the schematic diagram of Fig. 1.In developing a market concept from which evolve individual fuel projections, it is necessary to make a distinction between energy requirements and fuel consumption. Energy requirements are viewed from an end-use standpoint.

JPT

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