Fuel Interchangeability - Measuring Its Extent in U. S. Energy Markets

Of increasing importance to the student of fuels economics has been the extent to which different primary energy sources can substitute for each other in the various energy markets of the nation. Knowledge of the nature and extent of fuel interchangeability can aid the fuels economist in projecting trends of energy utilization, as well as giving him a better understanding of the past and present conditions of fuel markets. It is also important to the consumer to know just how much flexibility he can maintain in his energy consuming operations. And, finally, various governmental bodies show keen interest in the degree of energy substitutability in determining public policies concerning the fuels industries. The presence of excess fuel production capacity in the United States during the early 1960's indicates that fuel interchangeability should become more prevalent in the increasingly competitive energy markets of the nation. Discussion of fuel intercompetition is almost always restricted to qualitative terms-because of the lack of comparable statistical data, between the different energy sources in geographic or "type-of-use" fuel, markets. There are exceptions, of course, such as, the excellent fuel consumption data which are available on steam electric generating plants throughout the nation. In other sectors, statistics are at best incomplete.' Inmost instances, indirect fuel consumption indicators, such as sales of fuel burning equipment, are extensively used to measure market shares of a particular fuel; however, these indicators are hard to evaluate precisely without prior knowledge of the total competitive market.