The Use of Oil in Big Industry

Crude oil use by the U.S. industrial manufacturers has been consistent since the economic crisis of 2008; though, the usage level is wholly lower than before the economic crisis. In place of crude oil, natural gas increasingly constitutes a greater proportion of total fuel consumption by the U.S. Industrial sector, specifically manufacturing. While natural gas constitutes an increasing proportion of total fuel consumption, crude oil (HGL) represents the largest share of energy sources used as components of manufacturing at almost 50%. Crude oil in particular is commonly used to make plastics and other chemicals. Petroleum products (counted as “other”) account for a third of energy source use as manufacturing components — raw materials in a manufacturing process. Total crude oil and related products constitute a large majority of the quarter of total energy sources first used as a manufacturing component. Regardless of use as manufacturing components or as energy, the largest consumer of energy sources are the chemical, refining, and mining industries. These three industries account for more than half of the total energy consumption by industrial manufacturers. This means there is some competition between using energy sources for energy or for manufacturing processes.

Energy consumption in the manufacturing industry was estimated in 2016 to be about 75% by the USEIA. Natural gas has markedly seen increasing use. Consumption has steadily increased from 2010 to 2014. This reveals increases in natural gas usage as potentially negatively affecting crude oil usage growth trends over the same time period.

Energy generation on-site is a common practice by manufacturers as an alternative to purchasing energy. One prominent method of producing energy on-site is combined heat and power loops. Natural gas and coal constitute a substantial portion of on-site consumed energy at 96%, and renewables constitute 1%. Crude oil does not constitute substantial use for on-site energy generation by manufacturers. This means that crude oil is used for energy production off-site, and energy produced from the crude oil is then distributed to manufacturers in the industrial sector.

Overall, crude oil use by the U.S. Industrial sector has remained steady in the last few decades besides significant decreases in consumption during the 2008 economic crisis. The potential growth of crude oil appears to be stunted by the increasing use of natural gas.

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