Published September 1973
There is little question that the increasing energy demand of industrialized nations will drive crude oil prices upward and consequently the cost of energy will increase worldwide. No industrialized nation faces steeper increases in the cost of energy than does the United States. This is particularly true for the US chemical industry, which has enjoyed natural gas prices of 20–30¢/million Btu both directly, for steam generated in its own plants, and indirectly, for electricity generated by power companies using gas.
As the scarcity of natural gas began to develop in the United States during the past few years, the price of natural gas from intrastate sources started to creep upward. It is said that some companies are paying as much as 60¢/million Btu at the US Gulf Coast for intrastate gas. The price of gas sold in interstate commerce is controlled by the Federal Power Commission (FPC). During the recent past the FPC displayed a willingness to grant significant increases in wellhead gas prices. The most significant decision is the recent approval of gas sales at 45¢/million Btu in Louisiana.
The objective of this treatise is to discuss what effect the increasing fuel prices will have on the cost of utilities (steam and electricity) used by chemical producers. The bases for the discussions are the projected prices of major fuels in the United States. The projections for hydrocarbon and coal-based fuels were prepared by SRI’s Energy Economics and Energy Technology Department, respectively. The price projections of LSFO and of SNG from straight run naphtha are based on assumptions regarding the price of Middle East crude oil.
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