Statistical Analysis of Energy Consumption in US Manufacturing

Abstract

This study examines aggregate energy consumption data from the US manufacturing sector to identify drivers of energy efficiency in industrial processes. In particular, the study explores whether the presence of high regional electricity prices induces decision-makers to operate more efficiently. Regional energy utilization intensity (EUI) figures indeed indicate a correlation between energy efficiency and electricity prices, but several outliers defy this trend and provide insights into the idiosyncrasies of certain industries which insulate them from internalizing the financial impact of excessive energy consumption, even in the presence of high electricity prices. Namely, high EUI figures are correlated with onsite generation and processes reliant upon fuels as opposed to electricity. Location along the supply chain also impacts apparent energy consumption with low-margin commodities resulting in higher EUI due to their lower denominators in the determining formula (MJs per dollar of product shipped) and vice versa for higher-margin products. In addition to this mathematical quirk, the study identifies other shortcomings of the data, discussing their implications and options for their rectification.