Energy prices

Price per unit of magnetic energy = price per unit weight x density / (BH d... 

State Energy Price and Expenditure Report 1990, DOE/EIA-0376(90), U.S. Departmeat of Eaergy, Eaergy Information Administration, Washiagtoa, D.C.,Sept. 1992. 

Whereas the manufacturing cost is strongly influenced by energy prices, cost of money, and capital investment, ammonia selling prices are usually deterrnined by supply and demand. Therefore, the profitabiUty of ammonia plants is deterrnined by the margin between cost of production and ammonia price. 

Fig. 1. Effect of energy use on total cost where total cost is the sum of capital and energy costs for the lifetime of the plant, discounted to present value. Point D corresponds to the design point if the designer uses an energy price that is low by a factor of four in projected energy price. Effects on costs of (a) pressure drop in piping, (b) pressure drop in exchangers, (c) heat loss through insulation, (d) reflux use, and (e) energy recovery through waste-heat boiler...

In 1980, >1 one million ts of sodium sulfate were consumed in the United States, but this had declined to <600, 000 t by the end of 1994. The decline is partly a result of higher energy prices and more efficient use of Na2S04 by the paper industry. At one time the kraft paper industry consumed two-thirds of sodium sulfate production. Pressures on paper producers to clean effluent streams and reduce energy forced improvements in internal processes and recycling of sodium sulfate (11,12). 

The U.S. chemical industry achieved an annual reduction of 4.2% in energy input per unit of output for the period 1975—1985 (2). This higher reduction resulted from cost optimization, the tradeoff of increased capital for reduced energy use, that was driven by energy prices (4). In contrast, from 1985 to 1990, the energy input per unit of output has been almost flat (2) as a consequence of falling prices. The average price the U.S. chemical industry paid for natural gas fell by one-third between 1985 and 1988 (1,5). 

Cost Indices The value of money will change because of inflation and deflation. Hence cost data can be accurate only at the time when they are obtained and soon go out of date. Data from cost records of equipment and projects purchased in the past may be converted to present-day values by means of a cost index. The present cost of the item is found by multiplying the historical cost by the ratio of the present cost index divided oy the index applicable at the previous date. Ideally each cost item affected by inflation should be forecast separately. Labor costs, construction costs, raw-materials and energy prices, and product prices all change at different rates. Composite indices are derived by adding weighted fractions of the component indices. Most cost indices represent national averages, and local values may differ considerably. 

FIG. 25-66 Waste -to-energy price index. National index, September 1994, 57.49/ton. Data from Solid Waste Digest, -ool. 4, no. 9, Sept. 1994. Fuhlished hy Chatiwell Information Publishers, Alexandria, VA. )... 

LCCg = present value of energy cost Q = yearly energy consumption q = present energy price p = expected annual rise of energy price n = calculation period in years i = interest rate... 

See also Aircraft Aviation Fuel Efficiency of Energy Use, Economic Concerns and Engines Kerosene Subsidies and Energy Costs Supply and Demand and Energy Prices Transportation, Evolution of Energy Use and. 

Each investment metric has strengths and limitations. For example, the simple payback time indicates the time required to recover the investment, hut it ignores any benefits that may occur after the payback time, so measures offering many years of benefits appear no better than short-lived ones. A common drawback of these investment metrics is that the price of energy must be assumed. If the energy price changes, then the payback time must be recalculated. 

The supply cuiwe is useful because it shows which measures should be selected first—the ones on the left—and the cumulative energy savings. Measures with CCEs less than the price of the saved energy are cost-effective. In the example, an energy price line has been drawn to show the cut off point those measures below the energy price line are cost-effective. 

A micro supply curve of conserved energy for a large commercial refrigerator. Each step represents a conservation measure. The numbers above the steps are keyed to the measure descriptions in the legend. Note that measures 1-4 are cost-effective because the cost of conserved energy is less than the energy price. If energy prices rise, then measures 6 and 7 may also become cost-effective. 

While this example is constructed to be an extreme case, It illustrates the importance of not being misled that a long-lasting stream of returns necessarily means that a capital investment will be profitable. Returns from energy savings to be received far in the future will have a low present value unless some mechanism works persistently to raise future energy prices at a rate that is commensurate with, or exceeds, the discount rate. 

After the average crude oil price increased from 3.18 per barrel in 1970 to 21.59 in 1980, many analysts forecast skyrocketing energy prices for the remainder of the centuiy. The middle price path of the U.S. Energy Information Administration in 1979 projected a nominal price of 117.50 per barrel in 1995 Such forecasts seemed to be soundly based not only in recent experience but also in the economic theoiy of exhaustible resources. As a consequence, U.S. industries invested heavily in energy conseiwa-tion measures, with the result that industrial consumption of energy decreased from 31.5 quads in 1973 to 27.2 in 1985. Some of this investment was probably not warranted on economic efficiency gi ounds because prices ceased to rise after 1981, and even plummeted to 10 per barrel in 1986. 

International Energy Agency. (1999). Energy Prices and Taxes Quarterly Statistics, Second Quarter 1999. Paris OECD Publications. 

Production in Industiy and Business, Productivity and Energy Efficiency in Supply and Demand and Energy Prices. 

See also Cogeneration Demand-Side Management Engines Hydroelectric Energy Market Transformation Supply and Demand and Energy Prices Turbines, Gas Turbines, Steam. 

Additionally, as a response to rising energy prices and uncertainty of supply, several states adopted appliance efficiency standards. At the federal level, the National Appliance Energy Consei vation Act of 1987 established the first national standards for refrigerators and freezers, furnaces, air conditioners, and other appliances. The Energy Policy Act of 1992 added national standards for incandescent and fluorescent lights, small electric motors, office equipment, and plumbing products. 

---