An Energy Demand and Generalized Fuel Choice Model for the Primary Metals Industry

The primary metals industry is defined by the Bureau of the Census as the Standard Industrial Classification (SIC) 33. In terms of both absolute amount of energy use and energy intensiveness, SIC-33 is large relative to other industries.' This paper estimates essential energy demand relationships for this important sector. Although there are basically four energy sources used in the primary metals industry (fuel oil, natural gas, coal, and electricity), the response to changes in own price and cross price is dampened as a consequence of technology, plant vintage, and historical growth in the industry. Forecasts of future energy demand hinge on these price elasticities and on assumptions about future energy prices.