Open Collections

UBC Theses and Dissertations

UBC Theses Logo

UBC Theses and Dissertations

Energy mix of Western Canada 1951-1960 : a geographic study of competitive factors Young, James Walton 1965

Your browser doesn't seem to have a PDF viewer, please download the PDF to view this item.

Item Metadata

Download

Media
831-UBC_1966_A8 Y6.pdf [ 12.27MB ]
Metadata
JSON: 831-1.0104740.json
JSON-LD: 831-1.0104740-ld.json
RDF/XML (Pretty): 831-1.0104740-rdf.xml
RDF/JSON: 831-1.0104740-rdf.json
Turtle: 831-1.0104740-turtle.txt
N-Triples: 831-1.0104740-rdf-ntriples.txt
Original Record: 831-1.0104740-source.json
Full Text
831-1.0104740-fulltext.txt
Citation
831-1.0104740.ris

Full Text

THE ENERGY MIX OF WESTERN CANADA 1951 - I960: A GEOGRAPHIC STUDY OF COMPETITIVE FACTORS by JAMES WALTON YOUNG Sc. (Economics), The U n i v e r s i t y of London, 1955 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS i n the Department of GEOGRAPHY We accept t h i s t h e s i s as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA November, 1965 In presenting t h i s t h e s i s i n p a r t i a l f u l f i l m e n t of the requirements f o r an advanced degree at the U n i v e r s i t y of B r i t i s h Columbia, I agree that the L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e for reference and study. I furth e r agree that per-mission for extensive copying of t h i s t h e s i s for s c h o l a r l y purposes may be granted by the Head of my Department or by hi s representatives. I t i s understood that copying or p u b l i -c a t i o n of t h i s t h e s i s for f i n a n c i a l gain s h a l l not be allowed without my wr i t t e n permission. Department of &-c*<j ' "^•^•w^Lvy  The U n i v e r s i t y of B r i t i s h Columbia, Vancouver 8, Canada. Date i i ABSTRACT There i s a growing need f o r geographic studies of energy to focus on consumption patterns rather than on energy production. Studies focused on production have tended to treat each energy source i n d i v i d u a l l y , yet technological developments are increasingly bringing energy sources into competition with one another. Excluding those energy demands which are s p e c i f i c to one energy source, markets f o r heat and power are supplied by a mixture of energy sources which are competing to r e t a i n or enlarge t h e i r respective shares of the market. A detailed energy consumption estimate f o r each of the four Western Provinces shows considerable v a r i a t i o n of the energy mix i n both space and time. Examination of the energy mix of each province i n r e l a t i o n to the d i s t r i b u t i o n of energy production and to hypothetical transport costs suggests that l o c a t i o n i s the primary f a c t o r i n accounting f o r areal v a r i a t i o n s of the energy mix. Vari a t i o n i n time appears to be accounted f o r by changes i n the l o c a t i o n of markets a r i s i n g from the construction of o i l and gas pipelines from Alberta to the other provinces. Nevertheless, i t i s recognised that each p r o v i n c i a l market exhibits several unique c h a r a c t e r i s t i c s . The hypothesis posed i n t h i s study i s that l o c a t i o n i s the primary f a c t o r determining the areal pattern of the energy mix, but that the mix i s modified by i n t e r - p r o v i n c i a l differences of market structure, areal concentration of the Intra--i i i p r o v i n c i a l market, and h i s t o r i c a l legacies ( i . e . i n e r t i a ) . These three fa c t o r s , together with the l o c a t i o n factor, are un i v e r s a l i n that they apply to a l l provinces and a l l energy sources. This hypothesis provides a framework fo r an examination i n turn of each major energy source, f u e l wood, coal, petroleum, natural gas, and e l e c t r i c i t y . For each energy source the areal patterns and trends of p r o v i n c i a l sales are sub-divided into two or three market sectors (domestic, i n d u s t r i a l , and railway locomotive), and sales are related to the supply patterns of the energy source i n p a r t i c u l a r , and also to the other three universal factors and factors s p e c i f i c to the energy source concerned. By proceeding from the more passive to the more active competing energy sources the competitive pattern i s established and evaluation of the four universal factors can be made. The l o c a t i o n of markets i n r e l a t i o n to energy supplies i s the primary f a c t o r accounting f o r v a r i a t i o n s i n the energy mix at the i n t e r - p r o v i n c i a l l e v e l . The energy mix of the locomotive sector has an unique areal pattern, but t h i s i s the r e s u l t of an energy supply pattern which d i f f e r s from that of other market sectors. However, the energy mix at any point i n time i s modified by the legacy of previous consumption patterns because there i s a delay before consumers change from one energy source to another. This h i s t o r i c a l legacy f a c t o r i s the key modifier of the energy mix and was -iv p a r t i c u l a r l y prominent i n the areal pattern of the I960 mix because large quantities of gas only became available outside Alberta af t e r 1956. Nevertheless, the h i s t o r i c a l legacy f a c t o r i s secondary to the l o c a t i o n factor, because f i r s t l y competition of the energy sources i s directed towards bringing the mix into equilibrium with the l o c a t i o n f a c t o r , and secondly the delay i n making gas available i n a l l the major energy consuming centres outside Alberta i s rooted i n l o c a t i o n . The distances from Alberta's gas f i e l d s to other p r o v i n c i a l markets necessitated large throughput pipelines, and these pipelines could only be b u i l t when markets external to Western Canada were r e a l i s e d . F i n a l l y , t h i s study suggests further research into the p o s s i b i l i t y of an energy region being nodal and research into the cartographic d e l i m i t a t i o n of the competitive f r o n t i e r s of the various energy sources. V TABLE OF CONTENTS CHAPTER PAGE I. INTRODUCTION 1 Geography of Energy 2 Selection of the Topic 5 Terms of Reference 7 Approach to the Problem 10 Appraisal of the Data 13 Measurement of Energy 15 II . CONSUMPTION AND SUPPLY OP ENERGY IN WESTERN CANADA 1951 - 1961 17 Demand f o r Heat and Power 17 Energy Mix 23 Supply of Energy 28 Competitive Factors i n the Energy Mix 32 Summary 41 I I I . FUEL WOOD 43 A v a i l a b i l i t y of Fuel Wood 43 Domestic Market 47 Forest Products Industry of B.C 54 Conclusion 58 IV. COAL 61 A v a i l a b i l i t y of Coal 61 Production of Coal 61 Movements of Coal 65 Consumption of Coal 70 Coal Use i n Locomotives 71 Domestic Market 75 Indus t r i a l Market 81 Conclusion 88 V. PETROLEUM PRODUCTS 92 A v a i l a b i l i t y of Petroleum Products 93 Crude O i l Supplies to Refineries 95 D i s t r i b u t i o n of Refineries 100 Inte r - p r o v i n c i a l Balance of Petroleum Products 105 Consumption of Petroleum Products 109 Railway Locomotives I l l Domestic Market 119 Ind u s t r i a l Market 126 Conclusion 131 v i CHAPTER PAGE VI. NATURAL GAS 136 A v a i l a b i l i t y of Natural Gas 137 Consumption of Natural Gas 147 Domestic Market 147 Industrial Market 157 Conclusion 163 VII. ELECTRICITY 167 Demand f o r E l e c t r i c i t y 168 Industrial Market 168 Domestic Market 172 Supply of E l e c t r i c i t y 178 Role of Hydro Power 178 Fuel Mix of Thermal Power Production 184 Conclusion 190 VIII. EVALUATION OP THE COMPETITIVE FACTORS 194 Location of Markets and Energy Production 195 Location i n the Framework of R a i l Movements . 195 Impact of Pipelines 201 Market Structure 206 Areal Concentration of Markets 210 H i s t o r i c a l Legacies 212 Conclusion 214 Further Research Problems 216 SELECTED BIBLIOGRAPHY 219 APPENDICES 227 A. Energy Conversion Factors 228 B. Thermal E f f i c i e n c i e s of Energy Use 229 C. V a l i d i t y of the Energy Consumption Estimate 230 ID. Cost of Transporting Energy 233 E. Estimated Energy Consumption 234 v i i LIST OF TABLES TABLE PAGE I. Energy Consumption i n Western Canada 18 I I . Percentage D i s t r i b u t i o n of Energy Consumption and Population 20 I I I . Decline i n Domestic Consumption of Fuel Wood 1951-1960 51 IY. Consumption of Coal i n Industry 82 V. Relationship of Refinery Capacity to Population, by Province 102 VI. Changes i n the Quantities of Various Fuels Consumed i n the Domestic Market 121 VII. Changes i n the Quantities of Various Fuels Consumed by Industry 128 VIII. Price Gradient f o r Natural Gas i n Western Canada I960 145 IX. Domestic Consumption of Natural Gas 148 X. Changes i n Fuel Consumption i n the Domestic Market 150 XI. I n d u s t r i a l Consumption of Natural Gas 158 XII. Changes i n Fuel Consumption i n the In d u s t r i a l Market 158 XIII. I n d u s t r i a l Consumption of E l e c t r i c i t y 170 XIV. Index Numbers of E l e c t r i c i t y Sales and Costs i n the Domestic Market, 1951 and I960 173 XV. Fuels Used i n Thermal Power Stations 185 XVI. Fuel Costs of U t i l i t y Steam-Electric Stations 1958. 187 v i i i LIST OF FIGURES FIGURE PAGE 1. Percentage Distribution of Energy Consumed i n each Market Sector and of Population 22 2. Provincial Energy Mix, by Market Sector 25 3. Major Production Centres of Energy 1951-60 • 29 4. Bulk Fuel Costs, Circa 1955 31 5. Hypothetical Delivery Costs of Selected Alberta Fuels 33 6. Major Sawmills i n lestern Canada 1951 • 44-7. Dwellings Heated Principally by Wood, or Sawdust, by Census Division 48 8. Domestic Consumption of Fuel Wood 50 9. Coal Production i n Western Canada 1951 and I960 .. 62 10. Coal Movements i n Western Canada 66 11. Coal Consumption i n Domestic Markets ............. 76 12. Oi l , F i e l d s , Pipelines, and Refineries I960 97 13. Crude Petroleum Balance 99 14. Output and Balance of Petroleum Products 106 15. Effective Use of Energy by Locomotives 112 16. Major Gas Fields and Pipelines 138 17. Natural Gas Balance 142 18. Principal E l e c t r i c Generating Stations I960 179 19. Expansion and Substitution of Energy Sources 204 ACKNOWLEDGEMENTS Dr. J.D. Chapman and Dr. A.L. Farley devoted considerable time and e f f o r t to commenting on various drafts of t h i s study and f o r t h e i r help I am gra t e f u l . I am p a r t i c u l a r l y indebted to Dr. J.D. Chapman f o r introducing me to the p o s s i b i l i t i e s of geographic research i n energy studies. Also I am grateful to my wife f o r her constant patience and encouragement during the preparation of t h i s manuscript. 1 CHAPTER I INTRODUCTION In response to expansion of the whole economy, energy consumption in Western Canada has increased at an average of just over 3 per cent per annum i n recent years. Within this framework of rising demands for energy significant changes have occurred i n the energy mix. The energy mix i s comprised of quantities of various energy sources, such as fuel wood, coal, petroleum, natural gas and hydro power, which together are the energy input f u l f i l l i n g a market's demand for heat and power. Within Western Canada the ^ expanding energy sources, petroleum, natural gas, and hydro power,. increased their share of the energy mix from 50 per cent i n 1951 to just under 75 per cent i n I960. To the extent that consumers of heat and power are not technically limited to one energy source, the changes i n the energy mix point to competition among the energy sources. In Western Canada this competition has exhibited marked areal characteristics. The competitive status of each energy source w i l l always di f f e r areally because of differences i n the location of markets to those sources. Since 1951 the areal relationships of Western Canada's markets have been highly dynamic, mainly because of an expanding network of inter-provincial o i l 2 and gas pipelines. As a result of these changes, the energy mix of each province has been i n a high state of flux, with o i l and gas being the major active competitors among the energy sources. A study of the areal aspects of competition within the energy mix i s relevant to the geographer and provides a basis for study of similar problems elsewhere in the world. GEOGRAPHY OP ENERGY Prior to World War Two the literature on energy was largely restricted to discussion of the various energy sources treated i n isolation from one another. This was not surprising for three reasons: 1. Coal dominated world energy production, accounting for 60 per cent in 1929. 2. Petroleum was largely orientated to motor transport, a market specific to petroleum. 3. Only rarely were hydro and thermal power stations part of the same power distribution network. Consequently, any competition of one energy source against another was quite limited. In Canada competition hardly extended beyond the expansion of petroleum at the expense of coal. During the last twenty years competition among the energy sources has increased considerably. Technical and economic barriers to the interchange of energy sources have diminished so that f i n a l consumers of energy have a greater 3 choice of sources for heat and power needs. At the same time the rapidly growing consumption of the economically advanced countries has given rise to concern for future energy supplies. Because of these trends there i s an ever growing body of literature treating energy as one complex. In substantive writings on energy, economists have 1 made notable contributions. On the Canadian scene Davis and 2 Nolan are major contributors. Both writers analysed past and present energy patters with a view to prediction future trends. Except for "Geographie de L'Energie" by Pierre George , a work which was largely descriptive, economic geographers neglected the f i e l d of energy studies unti l recently. In Canada published contributions by geographers do not extend much further than three papers dealing with limited aspects of energy. Two of these papers focused on markets for Western Canada's petroleum and natural gas, while Chapman was concerned with the electric power industry i n British Columbia. T John Davis, Canadian Energy Prospects, Royal Commission on Canada's Economic Prospects (Hull: Queen's Printer, 1957). D^.M. Nolan, The Demand for Energy i n the Atlantic Provinces. 1950-1980; Information Bulletin MR 57 (Ottawa: Queen's Printer, , 1962). 3 - -^Pierre George. Geographie de L'Energie, (Paris: Libraire de Medicis, 1950). ^"Benoit Brouillette, "L'approvisionnement regional du Canada en -combustibles: houille, p£trole, gaz naturel", L'Actualite Economique, Vol. XXXVI, No. 4 (janvier-mars, 1 9 6 1 p p . 575-643. ^Robert Theriault, "Le pipeline Edmonton-Montreal", B'Actualite  Economique, Vol. XXXVI, No. 1 (avril-juin, I960) pp. 5-43. 6J.D. Chapman, "The Ele c t r i c i t y Industry of British Columbia", Abstract, Annals of the Association of American Geographers. Vol. 54, No. 3 (September, 1964J, p. 417. \ 4 7 In 1961 Chapman pointed out the need and opportunities for geographers to study energy. In particular, Chapman called for increased attention to: 1. Treatment of the energy complex as a whole, rather than that of isolated energy sources. 2. Study orientated to energy transfer and energy markets rather than energy production. A recent substantive contribution to the f i e l d has been the 8 work by Manners. This book i s an extension of Chapman's paper insofar that i t i s concerned with the factors to be taken into consideration i n the study of energy. The geographer's view-point permeating the book i s how the areal pattern of energy supplies i s affected by transport, market, and p o l i t i c a l considerations. Two lines of thought dominate the methodology of geography: 1. Integration - the inter-relationships of diverse phenomena at one particular place. 2. location - the areal relationships of one distribution or one place to another distribution or other places. The study of location i s the approach of the geographer i n arriving at the integration. By focusing on the problem of location, a study of competition among the energy sources can 7 J.D. Chapman, "A Geography of Energy: An Emerging Field of Study, "Canadian Geographer. Vol. V, No. 1 (Spring, 1961), pp. 10-15. 8 Gerald Manners, The Geography of Energy (London: Hutchinson University Library, 1964). 5 be geographic. The energy mix of a market reflects areal relat-ionships of the market and the production pattern of the various energy sources, providing that the sources can be substituted one for another. Selection of a large market area permits a sub-division into regional markets. The approach of relating the energy mix of each regional market to the overall distribution of energy production enables one to present some evaluation of location as a factor i n the energy mix. This i s the purpose of this thesis. SELECTION OF THE TOPIC Western Canada i s a sufficiently large area that one can expect location to the an important factor i n the energy mix of the regional markets. Ontario, west of Lake Superior, had to be excluded because of lack of data, despite the fact that this area has become increasingly orientated towards energy supplies originating i n Western Canada. Within the four Western Provinces the study of the energy economy i s simplified by the fact that the supply of energy i s increasingly from sources within Western Canada. Significant energy imports only occur at the margins of B.C. and Manitoba, and such imports only totalled 9 per cent of Western Canada's estimated energy consumption i n 1951 and 3 per cent i n I960. On the other hand, the rise of exports of petroleum and natural gas from Western Canada has been of the utmost signif-icance i n making available certain production and transport 6 f a c i l i t i e s within Western Canada. Study of the energy economy of this area i s simplified further i n that much of the energy supplies originating in Western Canada come from Alberta. Hence, for the analysis of the energy mix i t proved feasible to put forward a crude hypothesis i n which markets i n Alberta acted as a norm. In Alberta energy production and markets are i n juxtaposition and factors other than the areal relationships are of prime importance i n accounting for the energy mix. In a l l other market areas of Western Canada location relative to Alberta supplies i s an additional factor and possibly an over-riding factor i n the energy mix of those markets. A study of the years 1951-1960 reveals a highly dynamic energy economy i n Western Canada. In this decade energy consumption expanded at an average rate of 3*2 per cent per annum. In the same time period notable changes occurred i n the energy mix. Petroleum, natural gas, and hydro< power consumption expanded at average rates of 5, 17, and 9 per cent per annum respectively. On the other hand, fuel wood consumption remained virtually stable and coal declined at an average rate of over 11 per cent per annum. Growth and changes of these proportions i n the energy mix were not confined to Western Canada, similar changes were taking place i n q the total energy mix of Canada. Q Average percentage growth rates per annum of energy consumption, 1950-1960: petroleum 9.0; natural gas 18.6; hydro power 7.3; coal and coke -7.0; fuel wood -4.7; total 3.3. Source: Short-Term Energy Forecast 1960-1966. Canada, National Energy Board, Starr Keport, June, 1963 (Ottawa: Queen's Printer, 1963). 7 In both cases a dominating feature was the increasing role of petroleum and natural gas. The widespread availability of these fuels depended on the construction of pipelines. Therefore, 1951 was a decisive year because i t marked the open-ing of the western section of the Inter-Provincial pipeline, the f i r s t major trunk pipeline i n Western Canada. For this reason, as well as the availability of 1951 census data, 1951 i s the starting point of the analysis. The latest energy consumption estimate provided by this study i s I960. By that date a l l major pipelines serving Western Canada were in operation, and therefore drastic changes i n the energy mix were no longer anticipated. In addition, I960 was the latest year for which complete data were available. However, when data are available and when i t proves appropriate, mention i s made of post-1960 changes. Having selected the area and time period of this study, several sources of energy such as nuclear fission are irrelevant. Only five sources, fuel wood, coal, petroleum, natural gas, and running water are significant to the energy economy of Western Canada. The f i r s t four sources are classified as fuels. Running water i s differentiated because i t i s overwhelmingly used i n the form of power; thus the term hydro power. TERMS OP REFERENCE This study, i n focusing on areal relationships affecting competition among the energy sources, had to take certain aspects of the energy economy as given. The distribution of the demand 8 for heat and power i s not analysed i n detail. It has been established 1 0 that normally the factors behind the demand pattern are external to the energy economy. Exceptions to this rule do exist. Certain demand centres i n Western Canada have arisen as a result of relatively cheap energy producing sites attracting industry e.g. the aluminum plant at Kitimat. As far as possible these components of demand, when significantly large, are excluded from the energy consumption estimates of this study. Such demand centres are specific to one energy source and there-fore irrelevant to competition among the energy sources. Likewise, the demand patterns of several other consumers of energy such as motor transport do not directly affect the competitive pattern because they are limited i n practice to one energy source. However, these consumption patterns, specific to one energy source, can be of indirect significance to the competitive pattern in that they assist in making available certain energy production and transfer f a c i l i t i e s . To f u l f i l the energy demands of Western Canada a network of transport f a c i l i t i e s must be available for the movement of energy. The availability of road and r a i l transport i s i n response to factors outside the energy economy, therefore they are taken as given. Pipelines could not be taken as given because they are Davis, 0 £ . c i t . . pp. 20-21. 9 buil t i n response to anticipated demands for petroleum and natural gas. However, for the major trunk pipelines the bulk of these anticipated demands lay outside of Western Canada. This point i s substantiated i n the discussion of petroleum and natural gas, and thereafter the trunk pipeline network i s taken as given. In addition to accepting the availability of tbe modes of transport, the areal pattern of transport costs i s taken as given. These costs are notably influenced by pricing policies of energy distributors and of government bodies, but this study focuses on the results of these policies, i e . their role i n altering areal relationships and hence the energy mix, rather than on the reasons for such policies. The distribution of energy production centres, given a demand for the product, i s largely controlled by the physical occurrence of the energy sources and therefore i t i s not analysed. On the other hand the factors behind the distribution of processing plants, such as o i l refineries, are relevant because market considerations do enter into decisions of where to locate such plants. In sum, the factors behind the demand pattern of heat and power, the costs of transport, and the distribution of energy production, require only some substantiation. The focal point of this thesis i s how the above patterns combined to create an energy mix varying from province to province. 10 A P P R O A C H T O T H E P R O B L E M T h e f i r s t t a s k i s t h e e s t a b l i s h m e n t o f t h e v a r i o u s c o m p o n e n t s o f t h e d e m a n d f o r e n e r g y a n d o f t h e s u p p l y p a t t e r n . S o m e n o t e c a n b e m a d e o f t h e g e n e r a l i m p a c t o f t h e v a r i o u s f a c t o r s o n t h e e n e r g y m i x , b u t e v a l u a t i o n o f t h e s e f a c t o r s r e q u i r e s a m o r e d e t a i l e d a n a l y s i s . T h e p r o c e d u r e i s a n e x a m i n a t i o n o f e a c h e n e r g y s o u r c e i n t u r n . T h e o r d e r i n w h i c h t h e e n e r g y s o u r c e s a r e t r e a t e d w a s d e t e r m i n e d b y t h e o v e r a l l c o m p e t i t i v e s t a t u s o f e a c h . F u e l w o o d i s t h e m o s t p a s s i v e c o m p e t i t o r , w h i l s t n a t u r a l g a s a n d e l e c t r i c i t y a r e t h e m o s t a c t i v e . E l e c t r i c i t y i s a s e c o n d a r y f o r m o f e n e r g y w h i c h c a n b e p r o c e s s e d f r o m a n y o f t h e e n e r g y s o u r c e s . T h i s c h a r a c t e r i s t i c i s i n c o n t r a s t t o t h e f u e l s , e a c h o f w h i c h u s u a l l y h a s a n e x c l u s i v e s e t o f s e c o n d a r y f o r m s . B e c a u s e o f t h i s c h a r a c t e r i s t i c o f e l e c t r i c i t y a n d b e c a u s e t h i s s t u d y i s c o n c e r n e d w i t h e n e r g y a s i t r e a c h e s t h e f i n a l c o n s u m e r , e l e c t r i c i t y i s a n a l y s e d s e p a r a t e l y . F o r e a c h e n e r g y s o u r c e t h e a n a l y s i s f o c u s e s o n t w o p r o b l e m s . T h e l o c a t i o n o f t h e p r o d u c t i o n c e n t r e s i s e x a m i n e d i n o r d e r t o e v a l u a t e i f t h e r e i s c o m p e t i t i o n b e t w e e n t h e c e n t r e s o r i f e a c h c e n t r e s u p p l i e s a n a r e a l l y d i s t i n c t m a r k e t . H a v i n g e s t a b l i s h e d t h e a r e a l p a t t e r n o f s u p p l y t h e n e x t s t e p i s t h e e s t a b l i s h m e n t a n d e v a l u a t i o n o f c o m p e t i t i o n b e t w e e n t h e e n e r g y s o u r c e u n d e r d i s c u s s i o n a n d o t h e r e n e r g y s o u r c e s . B y w o r k i n g f r o m t h e m o s t p a s s i v e t o t h e m o s t a c t i v e c o m p e t i n g e n e r g y s o u r c e s , t h e a n a l y s i s o f t h e s e c o n d p r o b l e m i s p e r m i t t e d t o m o v e f o r w a r d i n a s e r i e s o f s t e p s t o w a r d s t h e f i n a l e v a l u a t i o n . 11 Though numerous factors influence the competitive status of energy sources, the method of comparing and contrasting the p r o v i n c i a l markets f o r each energy source eliminates those factors which are a r e a l l y constant. The areal pattern of delivery prices of each energy source i s important to the energy mix pattern. Delivery prices are a compound of production costs, transport costs, various processing and handling charges, and p r i c i n g p o l i c i e s . Several of these items exhibit only minor areal variations which become i r r e l e v a n t to the areal pattern of delivery prices when one allows f o r l i m i t a t i o n s on the p r e c i s i o n of p r i c i n g data. Even production costs are a r e a l l y constant to the extent that Alberta i s the only supply centre. Consequently, the method f a c i l i t a t e s evaluation of those factors, transport costs i n p a r t i c u l a r , which create areal v a r i a t i o n s i n the delivery prices of each energy source. Two important market factors vary areally, the structure of the p r o v i n c i a l markets and the degree of areal concentration of the markets. Analysis of the f i r s t f a c t o r requires a sub-d i v i s i o n of each p r o v i n c i a l market into three sectors, domestic ( r e s i d e n t i a l and commercial), i n d u s t r i a l , and transport. Comparison of the r o l e of the energy source under discussion i n the consumption patterns of the various sectors enables one to appraise t h i s f a c t o r . Likewise, the sub-division of p r o v i n c i a l ' domestic consumption into metropolitian/non-metropolitan or xnto urban/rural components aids evaluation of the degree of market concentration as a f a c t o r . 12 Energy factors operate i n time as well as i n space. Consumption patterns do not immediately make f u l l adjustment to r e l a t i v e changes i n the delivery p r i c e s of energy sources. F u l l adjustment, i e . equilibrium, i s only achieved with the passage of time. In the case of consumers contemplating a change i n the energy source u t i l i s e d , considerations of 'convenience' and of the c a p i t a l cost of new conversion equipment delay the impact of d e l i v e r y p r i c e s . This delaying f a c t o r i s c a l l e d i n e r t i a or 11 the h i s t o r i c a l legacy. Even though the delaying action may operate f o r a constant number of years i t i s an important consideration i n t h i s study. This f a c t o r can create areal differences i n the energy mix because the time period i n which fuels such as natural gas have been available, varies s p a t i a l l y . Attention has been drawn to the more important factors i n the areal pattern of the energy mix i n Western Canada. The approach has been designed to eliminate those factors which are a r e a l l y constant and reduce the complexity to four key f a c t o r s : (1) transport costs, (2) market structure, (3) market concentration, and (4) the h i s t o r i c a l legacy. Transport costs are the expression of l o c a t i o n of the markets r e l a t i v e to energy supplies. The other three factors vary s p a t i a l l y and are modifiers of the areal pattern of the energy mix. F i n a l assessement of the role of those f a c t o r s can only be q u a l i t a t i v e because of data l i m i t a t i o n s . 11 The term h i s t o r i c a l legacy was introduced by Manners, op. c i t . . PP. 36-37. 13 APPRAISAL OP THE DATA The sources of data were largely of a s t a t i s t i c a l nature, for the major task was the compiling of an estimate of energy consumption for selected years. Most of the data were drawn from publications of the Dominion Bureau of Statistics (D.B.S.), supplemented by s t a t i s t i c a l data of provincial 12 publications. A paper by 0'Brian i s the only source giving a detailed estimate and description of energy consumption i n Western Canada and his estimate does not extend beyond 1954. Inadequacies of the above s t a t i s t i c a l sources limited four major considerations of this study: (l) the areal unit, (2) specific energy sources, (3) transfer of energy, and (4) pricing of energy. Most of the data were restricted to provincial units and the use of four large areal units hindered evaluation of a l l factors, although the division of several consumption patterns into metropolitan/non-metropolitan or into urban/rural components reduced this restriction i n some instances. The accuracy of the quantities consumed of the various energy sources differed. E l e c t r i c i t y was the most accurate, fuel wood the least. Domestic fuel wood consumption had to be estimated by applying an average consumption figure per household 12 C.L. O'Brian and A.W. Lovett, "Energy i n Western Canada," Transactions of the Canadian Institute of Mining and Metallurgy. Vol. LIX (1956;, pp. 289-304. 14 heated by fuel wood. Even i n the case of elec t r i c i t y some discrepancies existed between apparent consumption and available supplies. Use of different data sources was usually the reason for discrepancies between consumption and supplies. One energy source was excluded on grounds of lack of data. This was the 13 expanding market for petroleum gases and natural gas liquids. Frequently there was a problem of linking consumption and production centres because data of inter-provincial movements of energy were lacking. In several cases the problem was solved by assuming such movements when total consumption of the four provinces approximately balanced production of the single producing centre. In the case of multiple producing centres i t was not possible to quantify the inter-provincial transfers of energy i n the absence of published s t a t i s t i c s . Note of errors arising as a result of this problem i s made i n the various provincial energy estimates. lastly, data were lacking on the pricing of energy. Relative prices were required for areal markets as large as provinces. Often a sufficient degree of exactitude of the spatial price pattern was obtained by assuming that the only variable i n space and time was transport costs. Use was made of dated delivery 14 price data provided by Davis , supplemented by later data of "^This market was s t i l l minor dn I960. The writer estimates that propane, which f u l f i l l e d much of the energy demands for petroleum gases or natural gas liquids, only totalled about 1 per cent of Western Canada's energy consumption. 14 Davis, 0 £ . c i t . , p. 61. 15 production and transport costs and of average delivery prices to manufacturing industry and thermal power stations. The weakest p r i c i n g data were that of refined petroleum products. In addition to the above problems, the data placed l i m i t s on the measurement of energy. A l l these l i m i t a t i o n s ensured a f i n a l evaluation of the areal pattern of the energy mix i n q u a l i t a t i v e rather than quantitative terms. MEASUREMENT OF ENERGY For purposes of comparing diverse forms of energy, the common denominator i s usually the i n t r i n s i c heat value of the form. Heat values are expressed i n B r i t i s h Thermal Units (B.t.u.), of which one ton of bituminous coal contains twenty-seven m i l l i o n . A larger u n i t i s easier to v i s u a l i s e , therefore t h i s study has converted the heat values of a l l energy forms into the heat value 15 of a ton of bituminous coal ; hence the term coal equivalent ton (C.E.Ton). The value of the above common unit i s l i m i t e d by two considerations. F i r s t l y , Man i s only able to convert a portion of the i n t r i n s i c heat content of an energy source into heat and power. This portion, termed the thermal e f f i c i e n c y , varies accord-in g l y with the energy source and the conversion equipment used. 16 Whilst some data of thermal e f f i c i e n c i e s are provided the complexity of the problem precludes any quantitative assessment For conversion values see Appendix A. Appendix B. 16 of competition of energy sources i n terms of costs of heat and power outputs. Secondly, an even more elusive energy change i s that of the economic e f f i c i e n c y of conversion. This change i s defined as the r a t i o of the input of raw energy to the output of goods and services. This r a t i o i s so i n t r i c a t e that i t has been excluded from t h i s study despite the f a c t that savings i n c a p i t a l equip-ment must a f f e c t energy decisions by consumers. r 17 CHAPTER II CONSUMPTION AND SUPPLY OP ENERGY IN WESTERN CANADA 1951-1960 Competition of the energy sources takes place within the framework of the total demand for heat and power. Once the framework i s established the study can proceed to analyse the energy mix which f u l f i l l s that demand. The location of markets and energy supplies, expressed i n terms of transport costs, i s a prime factor i n accounting for the overall areal pattern of the energy mix. However, several aspects of the energy mix are not explained by this factor. Other factors are noted, but evaluation cannot be made at the generalised level of this chapter. DEMAND FOR HEAT AND POWER The demand for energy i s estimated from published data of accounted energy consumption. Discussion of the validit y of the energy consumption estimate i s provided i n the appendix.1 Energy consumption by province for three selected years i s shown i n Table I. The year 1956 was selected as the intermediate point because i t was the last year before changes i n the natural gas pipeline network made notable alterations i n the energy mix of two of the provincial markets. Appendix C 18 TABLE I ENERGY CONSUMPTION IN WESTERN CANADA8, B.C. ALBERTA SASKATCHEWAN MANITOBA TOTAL Thousands of coal equivalent tons 1951 8,867 7,047 4,870 4,292 25,076 1956 10,824 8,946 5,365 4,938 30,073 I960 11,791 10,950 5,189 4,971 32,901 Annual percentage rates of change 1951-•56 3.4 3.7 1.9 2.8 1956--60 2.2 5.2 -0.9b 0.1 Includes loss i n thermal power stations and energy use i n the energy production industries. Because of improved thermal efficiencies, inputs of energy by f i n a l consumers may not rise i n accordance with expanding demands for heat and power. The above estimate represents these inputs and a slow rate of expansion, or even a decline, can appear when an energy economy i s becoming rapidly orientated to o i l and gas which usually have relatively high thermal efficiences. 19 The outstanding feature of the energy consumption pattern (Table I) i s that consumption i s unevenly d i s t r i b u t e d . In 1951 the combined energy consumption of Saskatchewan and Manitoba was approximately equal to only one-third of the t o t a l f o r Western Canada. The rates of annual change i n energy consumption point to energy demands over the decade becoming more heavily weighted towards B.C. and Alberta. Though thermal e f f i c i e n c i e s did improve, the main reason f o r the general decrease i n the rates of expansion of consumption i n the second part of the decade was a decline i n the growth rate of the whole economy. The i n t e r - p r o v i n c i a l pattern of energy consumption acts as a framework to the energy mix because the pattern i s derived from factors external to the energy economy. Davis has presented evidence that external f a c t o r s control the demand f o r heat and 2 power i n Canada and other countries. In order to establish that t h i s i s the case i n Western Canada, a comparison i s made of the percentage d i s t r i b u t i o n of energy consumption and of population (Table I I ) . A close r e l a t i o n s h i p exists between the two d i s t r i b u t i o n s , f o r a change i n eithe r d i s t r i b u t i o n of some 6 or 8 per cent could bring about a perfect c o r r e l a t i o n . The co r r e l a t i o n i s as close as can be expected i n view of possible areal v a r i a t i o n s i n market structure and thermal e f f i c i e n c e s . Hence, t h i s study i s j u s t i f i e d i n accepting the demand pattern as being created independently of energy supply patterns. p Davis, op_. c i t . , pp. 20-21. 20 TABLE II PERCENTAGE DISTRIBUTION OP ENERGY CONSUMPTION AND POPULATION B. C • ALBERTA SASKATCHEWAN MANITOBA TOTAL 1951 Consumption 35.4 Population 31.4 28.1 25.3 19.4 22.4 17.1 100 20.9 100 1956 Consumption 36.0 Population 32.9 29.7 26.4 17.9 20.7 16.4 20.0 100 100 I960 Consumption 35.8 Population 34.2 33.3 27.3 15.8 19.4 15.1 19.1 100 100 21 Examination of energy consumption by market sector^ (Figure l ) shows that the c o r r e l a t i o n of t o t a l energy consump-t i o n and population would be much higher i f i t were not f o r the uneven d i s t r i b u t i o n of i n d u s t r i a l demands. The areal pattern of consumption of both the domestic and transport sectors agrees c l o s e l y with that of population. A perfect c o r r e l a t i o n of these sectors with population i s extremely u n l i k e l y f o r several reasons. Domestic demands are p a r t l y dependent on standards of l i v i n g and on climate because these factors do a f f e c t standards of space heating, the major component of domestic demands. Energy demands by the transport sector are related to the amount of t r a f f i c which i s influenced by variables such as the per capita number of automobiles, the i n t r a - p r o v i n c i a l d i s t r i b u t i o n of population, and the type of economic a c t i v i t y . Lastly, because thermal e f f i c i e n c i e s were not taken into account i n the compilation of the energy consumption estimate, a p r o v i n c i a l energy mix orientated to f u e l wood and coal can appear over-weighted compared with an o i l and gas orientated energy economy. The d i s t r i b u t i o n of i n d u s t r i a l consumption hardly correlates with that of population (Figure I ) . A test was made on the c o r r e l a t i o n of i n d u s t r i a l consumption with that of the d i s t r i b u t i o n of i n d u s t r i a l a c t i v i t y , expressed i n values of out-put. The c o r r e l a t i o n hardly improved on that of i n d u s t r i a l -'The d e l i m i t a t i o n of the three sectors i s not s t r i c t l y f u n c t i onal. Because of data problems, the transport sector includes non-motive f u e l s used by the railways. On the other hand, transport functions closely associated with i n d u s t r i a l plants have been included i n i n d u s t r i a l consumption. Also, i t was usually not possible to exclude use of energy sources as raw materials from i n d u s t r i a l energy consumption. BRITISH MANITOBA SASKATCHEWAN ALBERTA COLUMBIA 2 3 consumption and population. Hence, there i s no simple explanation for the distribution of industrial consumption. However, this study has taken the distribution of industry as given, despite the fact that a number of industrial plants make intensive use of energy and have located with reference to energy supplies. Usually these plants are geared to one specific source of energy, and consequently they do not directly affect competition among the energy sources. Because of these energy-intensive plants, plus varying thermal efficiencies, the values of industrial outputs bear a poor relationship to industrial energy consumption. Consequently, i n the absence of a detailed analysis of industrial consumption, the general pattern (Figure 1) can only be accepted i n qualitative terms. The pattern i s valid i n showing a considerable quantity of industrial consumption i n such provinces as B.C., despite the fact that the low thermal efficiency of large inputs of fuel wood over-weight that particular province. The more agricultural orientated economies of Manitoba and of Saskatchewan especially are reflected by relatively limited industrial demands for energy. ENERGY MIX In 1951 coal and petroleum dominated the energy mix of Western Canada, accounting for at least 60 per cent of the energy supplies of any province. 4 Fuel wood, natural gas, and ^The role of a l l fuels i s under-estimated i n calculations of the energy mix. Inputs into public u t i l i t y thermal power stations have to be excluded i n order to prevent double-counting of el e c t r i c i t y outputs which are treated as a separate source of energy. e l e c t r i c i t y , as individual items, were under 10 per cent of any provincial energy mix, except i n two instances. About one-third of the energy supplies of Alberta and B.C. were comprised of natural gas and fuel wood respectively. By I960 the energy economy of a l l provinces was becoming orientated to petroleum and natural gas. E l e c t r i c i t y expanded but did not total more than 12 per cent of the mix of any province. Fuel wood and especially coal had declined i n a l l provinces. Coal remained a major energy source only i n Manitoba, accounting for 15 per cent of the energy supplies, whilst fuel wood s t i l l f u l f i l l e d more than a quarter of the energy demands of B.C. The energy mix of each province i s the sum of the mix of the three market sectors. The patterns of the three sectors vary so much that further discussion of the inter-provincial energy mix i s only meaningful i n terms of these sectors. Figure 2 ill u s t r a t e s the percentage sub-division of each provincial market into the three market sectors and the energy mix of each of these sectors. Therefore, only relative proportions are shown and the diagram does not emphasise that the energy patterns of B.C. and Alberta, because of the size of these provincial markets (Table I), are of more significance to the total of Western Canada than are those of Saskatchewan and Manitoba. Whilst the inter-provincial patterns of the energy mix of the domestic and industrial sectors are somewhat similar, 26 the transport sector of each province i s i n almost complete contrast to the other two sectors. The transport sector accounts 5 for at least one-third of- the energy consumption of any province and by I960 this sector had become limited i n practice to petroleum. Road transport has always been virtually restricted to petroleum; the consumption of coal i n the transport sector arose from the use of coal-fired locomotives. The problem of this sector i s not so much the elimination of coal-fired locomotives as i t i s why the elimination proceeded west to east. Alberta and B.C. railways were largely dependent on petroleum even by 1951. In general, the patterns of the energy mix i n the domestic and industrial sectors of each province are similar. The most notable exception i s that fuel wood has persisted i n supplying much of the industrial demands of B.C. i n contrast to the declining role of this fuel i n the domestic sector. There are differences between the domestic and industrial sectors of each of the provinces such as the minor role of coal i n the industrial markets of Alberta and Saskatchewan, but most of these differences appear to be of secondary importance at the level of generalisation of Figure 2. It i s the inter-provincial differences i n the energy mix of the domestic and industrial sectors that are so apparent 5 The relative decline of energy consumption in the transport sectors (Figure 2) i s largely a result of marked improvements i n thermal efficiences as coal and o i l - f i r e d steam locomotives were replaced by diesel locomotives. 27 (Figure 2). Natural gas was a major fuel i n Alberta even by 1951, but did not make an impact elsewhere before I960. Petroleum has been a key competitive fuel yet, when transport demands are excluded, petroleum has been of minor significance i n Alberta. In I960 petroleum continued to expand relatively i n Manitoba, but sales of this fuel had become stabilised or had declined relatively in B.C. and Saskatchewan. Consumption of coal and fuel wood declined i n a l l provinces between 1951 and I960, but coal retained a stronger hold i n Manitoba's markets and fuel wood was s t i l l of considerable significance i n the domestic, as well as the industrial sector of B.C. Because the inter-provincial differences dominate the energy mix, the mix exhibits a relationship to the supply of energy i.e. the distribution of production and the consequent movements of energy. There i s one qualification to the above statement. A l l market sectors contain a component of energy demands which are specific, technically or i n practice, to one energy source. These components have not been excluded from Figure 2 because, on prior knowledge, they are not large enough to invalidate the general areal pattern of the energy mix. Even though the transport sector has become specific to petroleum, this sector had an unique areal pattern of the use of coal-fired locomotives. 28 SUPPLY OP ENERGY Movements of energy to markets originate from the d i s t r i b u t i o n of energy production (Figure 3). The map i s made up of a l l production centres which have been major importance f o r at l e a s t part of the time period 1951-1960. Generally, the active energy competitors have been more ar e a l l y r e s t r i c t e d i n t h e i r production patterns than have the more passive competitors. Natural gas production has been very l i m i t e d outside of Alberta and hydro power i s v i r t u a l l y r e s t r i c t e d to the C o r d i l l e r a region, within which B.C. l i e s , and to the Shield area of Manitoba. Petroleum i s produced i n a l l three P r a i r i e Provinces, but production declines towards the eastern section of the P r a i r i e s . On the other hand, whilst production centres of coal are few i n number, the major bituminous and sub-bituminous centres of the Rockies and Alberta, i n combination with the l i g n i t e source at Estevan i n southeast Saskatchewan, are i n a favourable l o c a t i o n to supply the whole Western Canadian market. Fuel wood production i s concentrated i n B.C., the province which contains the bulk of the sawmilling industry. Not shown i n Figure 3 i s the e s s e n t i a l l y non-commercial production of f u e l wood from farmers' woodlots dispersed throughout the forested areas of B.C. and along the northern and eastern forested margins of the P r a i r i e s . C O A L F I E L D O I L F I E L D G A S F I E L D <3> H Y D R O - E L E C T R I C S I T E A R E A L C O N C E N T R A T I O N O F S A W M I L L S Note (1) All production centres which have been important for all or part of the years 1951-60 are shown. (2) Significant imports of energy are shown (3) Sawmills only account for part of fuel wood production. Not shewn is production from farmers' wood lots which are dispersed throughout populated parts of the forested regions. Most of this fuel wood is for non-commerctal use. (4) The map is a somewhat simplified compilation of data obtained from Atlas of Canada Bank of Commerce, Oil and Gas Fields in Western Canada 1959-60 Department of Northern Affairs and National Resources, Bulletin 2722. SCALE 0 300 MILES ro The distribution of energy production does not require detailed explanation for i t i s primarily related to the physical occurrence of the energy sources. Instead, attention i s focused on the considerable movements of energy which must arise from the uneven distribution of production i f the more dispersed demands for heat and power are to be met. It i s the patterns created by these movements that express the areal relationships of markets to production centres. The major feature of the movement pattern i s one of outward movements of energy from Alberta, a pattern which could be anticipated from the energy production map. The distribution of bulk fuel costs (Figure 4) demonstrates that Alberta has been the major energy supply centre of Western Canada. Costs of fuels generally rise with increasing distance from Alberta as transport costs are added to the costs of production. In the middle of the decade, the date of the fuel cost map, coal and petroleum were major components of the inter-provincial movements of energy. By I960, natural gas and petroleum dominated the movement pattern, but the areal pattern of fuel costs remained much the same. Imports of energy into Western Canada have occurred (Figure 3), but the bulk fuel cost pattern points to the secondary role of these imports. The only distortions to the pattern of costs increasing outwards from Alberta are lower fuel costs on the coast of B.C. because of petroleum imports, and lower costs i n southeast Saskatchewan, the production centre of lignite coal. K X 8 0 - 1 3 S 0 9 . 4 5 - K X 8 0 8 . 1 0 - 9 - 4 5 6.75 - 8 . 1 0 BULK F U a COSTS, CIRCA 1955 D O L L A R S P E R C O A L E Q U I V A L E N T T O N VA 5 . 4 0 - 6 7 5 l l i l 4 . 0 5 - 5 4 0 2 .7D - 4 . 0 5 Saarcai Mm Davis, Canadian Ewgy Protpacts, 1957, p.6). SCALE O 3CO MILES 32 Having established the areal patterns of the energy mix and of energy supplies, discussion turns to the factors behind these patterns. At t h i s l e v e l of generalisation, the analysis can only serve as a framework i n which to examine each energy source i n d e t a i l . Because the general pattern of the energy mix (Figure 2) i s not invalidated by s p e c i f i c demands, the pattern i s the expression of competitive factors i n the supply of each energy source. COMPETITIVE FACTORS IN THE ENERGY MIX Energy production i s a r e a l l y concentrated to a much greater degree that i s consumption. Therefore, i t i s postulated that transport costs are a prime fa c t o r behind the areal pattern of the energy mix. Having a r e l a t i v e l y simple energy supply pattern whereby the bulk of the energy supplies originate i n Alberta, a graph of generalised energy costs (Figure 5) was constructed i n the expectation that such a graph would have some v a l i d i t y i n explaining the energy mix. I t i s recognised that the addition 6 of production and transport costs can only serve as a guide to the delivery costs of the various energy sources. There i s no allowance on the graph f o r differences, a r e a l l y and between the energy sources, i n handling charges or i n p r i c i n g p o l i c i e s For calculations see Appendix D HYPOTHETICAL DELIVERY COSTS OF SELECTED ALBERTA FUELS D O L L A R S P E R C O A L E Q U I V A L E N T T O N v N o t e (I) S a s k a t c h e w a n l i g n i t e ts s u o e r i m p o s e d o n t h e g r a p h (2) D i s t a n c e s f r o m m a j o r A l b e r t a p r o d u c t i o n c e n t r e s t o t h e i n d i c a t e d m a r k e t s v a r y s o m e w n a t f o r e a c h f u e l T h e g r a p h o n l y s h o w s ' h e a v e r a g e d i s t a n c e t o e a c h m a r k e t S o u r c e J o h n O a v . s C a n a d i a n E n e r g y P r o s p e c t s 1957 P r o d u c t i o n c o s t s a r e f r o m p a g e s 35 i r s , a n d ! 6 3 T r a n s p o r t c o s t s a r « f r o m T a o t e 7 W h e r e t n e t a b l e s h o w s a r a n g e o f t r a n s p o r t c o s t s f o r a p a r t i c u l a r f u e l t h e a v e r a g e h a s b e e n s e l e c t e d T r a n s p o r t c o s t s o f s u o - b ' t u m m o u i a n d l i g n i t e c o a l s h a v e b e e n a d j u s t e d t o a l l o w f o r F o w e r c a l o r i f i c v a l u e s t h a n t h a t of b i t u m i n o u s c o a l / 34 of various public and private bodies. Therefore, the graph does not establish the cheapest f u e l i n a l l cases. Costs of f u e l wood and e l e c t r i c i t y are not shown. These energy sources are r e l a t i v e l y immobile because t h e i r costs of transport are 7 approximately three times that of rai l - h a u l e d bituminous coal. Within Alberta competition i s based on the costs of production of each energy source because distances to markets are l i m i t e d . Natural gas has the cost advantage and the energy mix (Figure 2) i l l u s t r a t e s the dominant p o s i t i o n of gas i n I960. However, the problem remains of why t h i s f u e l did not make a greater impact on Alberta's markets during the early part of the decade. Petroleum has played a minor r o l e i n the domestic and i n d u s t r i a l markets of Alberta and Figure 5 points to t h i s f u e l being undercut i n costs by coal as well as natural gas. The low production costs of natural gas, combined with a r e l a t i v e l y low price gradient f o r gas moving through pipelines, place t h i s f u e l i n a strong competitive p o s i t i o n i n a l l the provinces of Western Canada. Only l i g n i t e coal i n parts of Saskatchewan and Manitoba i s able to undercut the price of gas (Figure 5). The cost advantage of natural gas i s r e f l e c t e d by sales r i s i n g r a p i d l y i n the l a t e r part of the decade (Figure 2). Thus, a key problem concerning natural gas i s the delay i n the advent of t h i s f u e l i n areas outside of Alberta. The low costs of l i g n i t e coal appear to o f f e r some explanation of the hold of coal i n domestic and i n d u s t r i a l markets of Manitoba Ibid. 35 (Figure 2). However, l i g n i t e costs do not explain the former emphasis on coal i n the railway markets of Saskatchewan and Manitoba f o r these markets r e l i e d on bituminous coal. When natural gas has been v i r t u a l l y absent from a p r o v i n c i a l energy mix, petroleum has appeared as a strong competitor (Figure 2). Petroleum has the unique combination of high production costs and an extremely low price gradient f o r transport through p i p e l i n e s . This combination places petroleum i n a stronger p o s i t i o n v i s - a - v i s Alberta coal on the margins of Western Canada than i n Alberta (Figure 5). The former railway pattern (Figure 2), of extensive use of coal i n Saskatchewan and Manitoba contradicts these price patterns. Possibly, there are contradictions i n the other market sectors, but only detailed analysis can e s t a b l i s h i f such contradictions do e x i s t or i f p r i c i n g p o l i c i e s invalidate the above areal patterns of coal and petroleum price r e l a t i o n s h i p s . Petroleum's share of domestic and i n d u s t r i a l markets i s a combination of expansion into former coal and f u e l wood markets and of losses to natural gas. Figure 2 i s too generalised f o r these two components to be separated. Fuel wood and e l e c t r i c i t y are l a r g e l y Immobile because of t h e i r high transport costs and thus the major component i n the cost of these energy sources i s production costs. Fuel wood and the hydro power segment of e l e c t r i c i t y are produced i n areas somewhat remote from other energy sources (Figure 3 ) . Therefore, other energy sources bear the burden of transport costs, i n addition to production costs, i n competing with wood and hydro power. Consequently, i t can be anticipated that f u e l wood and e l e c t r i c i t y would be of more significance to the energy mix of B.C. and Manitoba than that of Alberta (Figure 2). However, juxtaposition of f o r e s t and market combined with distance from Alberta does not explain the considerable dependence on f u e l wood i n B.C. markets, f o r Manitoba has si m i l a r areal r e l a t i o n s h i p s . Nor do areal relationships account f o r f u e l wood being of equal significance i n the domestic markets of Saskatchewan and Manitoba. Saskatchewan i s more exposed to Alberta f u e l s and forested areas are more remote from population centres than i s the case i n Manitoba. In the case of e l e c t r i c i t y , the f a c t that sales are expanding i n a l l provinces, whether thermal or hydro sources are u t i l i s e d , points to an o v e r - s i m p l i f i c a t i o n i n attempting to account f o r e l e c t r i c i t y consumption patterns s o l e l y i n terms of costs. Transport costs appear as an important f a c t o r i n accounting f o r the general areal pattern of the energy mix. However, a number of s i g n i f i c a n t features of the energy mix have not been explained. I t may be established that some of these features are accounted f o r by transport costs when more detailed analysis introduces modifications of the generalised cost graph (Figure 5). In the meanwhile, given the l e v e l of generalisation, only three other universal factors are noted, universal i n the sense that they perta i n to a l l areas and a l l energy sources. These factors are the size of markets, the degree of are a l concentration of markets, and the h i s t o r i c a l legacy. 37 Size of market influences the energy mix insofar as the economies of scale of production, processing, and transfer vary with the energy source. On p r i o r knowledge, only the economies of scale of p i p e l i n e s may require markets the size of any of the p r o v i n c i a l markets (Table l ) . However, the decisions made by energy producers and d i s t r i b u t o r s rest on the si z e of the anticipated market f o r t h e i r p a r t i c u l a r product. The anticipated market w i l l be smaller than the t o t a l p r o v i n c i a l market, f o r the competition of other energy sources and degree of market concentration w i l l l i m i t sales of petroleum and gas. Comparing petroleum and natural gas, the former f u e l has the advantage of large quantities of guaranteed sales i n the trans-port sector (Figure 2). Whilst the greater s i z e of the a n t i c i p a t -ed markecbs f o r petroleum may not explain petroleum pipelines proceeding those of gas by several years, transport demands are of importance to the d i s t r i b u t i o n of petroleum r e f i n e r i e s . I t has been pointed out that the degree of i n t r a -p r o v i n c i a l market concentration a f f e c t s the r e l a t i o n s h i p between size of t o t a l markets and size of anticipated markets. The market concentration of the i n d u s t r i a l and transport sectors i s not considered i n t h i s study. A measurement of the areal concentration of i n d u s t r i a l demand would be of very l i m i t e d value. I t i s more pertinent to discussion of the energy mix to draw attention to p a r t i c u l a r i n d u s t r i a l locations. Normally,' industrial demand w i l l not be so dispersed as that of population distribution, though B.C. may be an exception. In the case of transport demands, the intra-provincial distribution of demand w i l l approximate that of population. Differences in the energy mix of the domestic and industrial sectors of each province may be indications of the variable impact of the more dispersed domestic sector on the competitive status of each energy source., The more dispersed domestic markets should present considerable handicaps to natural gas and electricity, which require the construction of special distributional f a c i l i t i e s . Like fuel wood and coal, petroleum products are distributed by road and r a i l , but a con-centrated population distribution notably reduces the costs of transport for petroleum products i n that refineries can be established at major centres with crude petroleum brought in by pipeline. Whilst the energy mix pattern (Figure 2) does indicate that in some provinces electricity and petroleum had made greater gains i n industrial markets relative to the gains i n domestic sectors, the inclusion of specific demand components prevents any conclusions being drawn at this stage of the study. On the other hand, Figure 2 -clearly shows natural gas i n Saskatchewan, and i n the 1951 and 1956 patterns of Alberta, making greater gains in industrial markets than i n domestic markets. In contrast to these provinces, this does not appear to have been the case i n B.C. or Manitoba. This contrast agrees with inter-provincial differences i n the degree of urbanisation of their populations, because the more urbanised a province i s the more l i k e l y i t i s that the degree of concentration of domestic and industrial sectors are similar. In.B.C. and Manitoba urban populations are over 60 per cent of the total populations. In fact, the picture may be reversed in these provinces with the industrial sectors suffering the handicap of relative dispersal, because the domestic sectors are notably concentrated in the Lower Mainland and Winnipeg areas respectively. Whilst Alberta's urban population reached the 60 per cent mark at the end of the decade, Saskatchewan remains relatively rural with over 50 of the population i n rural l o c a l i t i e s . Areal patterns of urbanisation also influence the energy mix i n that abandonment of rural dwellings, which are usually wood or coal heated, reduces the barrier of histor i c a l legacies of former energy consumption patterns. In g establishing a new dwelling , the dweller i s not hampered i n the selection of the energy source by considerations of old 8 " The migrant to the city does not necessarily occupy the new dwelling but, providing that provincial populations have not declined, the end-result i s that new dwellings are built and occupied. 49 conversion equipment which could s t i l l perform i t s functions. Though there are areal differences in the relative importance 9 of abandoned dwellings , they do not appear to affect the patterns of the energy mix at the level of generalisation of Figure 2. The impact of historical legacies on the energy mix i s greatly influenced by the framework of the expansion of the demand for heat and power. In the construction of new homes and industrial plants there i s no need to consider out-moded conversion equipment. Examination of the rates of expansion of energy consumption (Table 1) points to B.C. and Alberta, because of higher growth rates, having a greater f l e x i b i l i t y i n the selection of energy sources. Thus, the legacies of out-moded equipment delaying the expansion of petroleum, natural gas, and e l e c t r i c i t y have probably been of less significance in these two provinces. On the other hand, such expansion has been particularly inhibited i n Saskatchewan because of a slow growth rate of energy consumption. The energy mix pattern (Figure 2) does not necessarily show clear indicat-ions of this pattern of h i s t o r i c a l legacies because of the influence of the other factors. Evaluation of h i s t o r i c a l legacies as a factor can only be made by detailed analysis which separates the expanding sales of an energy source into the two components of actual substitution of other sources and of expansion arising from new demands for heat and power. q Percentages: Saskatchewan 13; Alberta 7; Manitoba 5: B.C. 3. Calculations: 1951 farm dwellings - 1961 farm dwellings 1951 total dwellings 41 SUMMARY A framework f o r a detailed examination of the energy-mix has been provided. The areal patterns of the demand f o r heat and power, including i t s s t r u c t u r a l sub-division, and of the production of energy have been established. For the purpose of t h i s study, these patterns are taken as given because they are not influenced by the competition of energy sources. The f o c a l point of t h i s study, the p r o v i n c i a l patterns of the energy mix sub-divided i n t o market sectors, has been presented and the major variations i n i t noted. The unique pattern of the transport sector served to emphasise the importance of market structure as a f a c t o r i n the energy mix of any province. D e t a i l s of factors p a r t i c u l a r to one energy source or area, such as s p e c i f i c demands and p r i c i n g p o l i c i e s , have not been discussed. Instead, attention was focused on four universal f a c t o r s , transport costs, market s i z e , market concentration, and h i s t o r i c a l l egacies. P a r t i c u l a r emphasis was placed on the areal pattern of transport costs. Whilst l i m i t a t i o n s to generalising such costs were recognised, these costs appeared to be the key f a c t o r accounting f o r the o v e r a l l areal pattern of the energy mix. Exceptions i n the energy mix were noted, pointing to the influence of other factors. Certainly conclusions as to the impact of these other universal factors on the energy mix cannot be drawn from a study of the energy mix i n the generalised terms of t h i s chapter. However, discussion of these factors did e s t a b l i s h that the framework of market siz e , degree of concentration, and ' of rates of expansion varies from province to province. Note was taken of how, given t h i s framework, size and concentration of markets and h i s t o r i c a l legacies could a f f e c t the energy mix because t h e i r impact i s variable according to energy source. Only d e t a i l e d analysis can permit evaluation of these four factors which, by a f f e c t i n g the competitive status of energy sources, can create the areal v a r i a t i o n s of the energy mix. Subsequent chapters constitute an examination of each energy source, proceeding from the passive to the active energy competitors. In t h i s manner the study builds towards an evaluation of the above fa c t o r s . c '45 CHAPTEH III FUEL WOOD During the time period 1951-60 fuel wood was a significant energy contributor in the domestic markets of a l l four provinces and in the forest products industry of B.C. Use of fuel wood by railways and i n the general industrial markets of Western Canada was so minor that these uses are not considered. The rate at which domestic consumption of fuel wood declined was similar for a l l provincial markets. This suggests that similar competitive factors applied to a l l of Western Canada. On the other hand, the considerable inputs of fuel wood into the forest products industry of B.C. are unique i n that they do not apply to other provinces and that they have risen absolutely since 1951. AVAILABILITY OP FUEL WOOD The extent of the forested areas and of the parkland belt of Western Canada (Figure 6) indicates that ample supplies of fuel wood are available. Therefore, the only restraints on the production of fuel wood are the demand for this energy source and the competing demands of non-energy uses of wood. The supply of fuel wood i s dominated by two types of production units. One i s farmers cutting on their own woodlots without the aid of hired labour. The second unit i s 4 3 that of the sawmill where f u e l wood i s produced as a by-product of operations directed at the markets f o r lumber. The areal pattern of production units varies as between the P r a i r i e s and B.C. In the P r a i r i e s , production i s from woodlots found throughout the parkland be l t and the settl e d parts of the forested region, and from a sawmill industry comprised of small, dispersed u n i t s . Within B.C. the size of the sawmill industry ensures that t h i s production u n i t w i l l dominate the supply pattern of f u e l wood. Attention i s drawn to the major concentrations of sawmills i n southwest B.C. (Figure 6 ) , the area of large population concentrations. Estimations of costs by producers of f u e l wood are l i k e l y to be extremely low. Labour i s a large cost item i n any logging operation but, i n the case of the woodlot, i t i s doubtful i f farmers make a f u l l or even p a r t i a l cost assessment of t h e i r labour or of the value of the woodlot put to other uses. In the sawmill industry costs are assessed, but fu e l wood i s viewed as a residual and does not cover i t s share of the costs of production. In most cases, the only c a l -culated cost of f u e l wood i s the cost of disposing of i t i n a waste burner i f markets are not found. From the viewpoint of the sawmill operator, f u e l wood i s a low grade use of residue and e f f o r t s are being made to upgrade the use of t h i s residue. Sawmill residue, consisting 46 of slabwood, trim and sawdust totals about one-third of the log. Yet, i n the B.C. coastal industry of 1951, this residue only came to 4 per cent of the value of the log, and over 75 per cent of this residual value was derived from the sale of pulp chips. 1 Consequently, the avai l a b i l i t y of fuel wood from sawmills i s dependent not only on the size of the industry but also on the existence of alternative markets for residue. These alternative markets for residue are important i n the coastal area of B.C. where size and areal concentration of sawmills (Figure 6) encourages the establishment of plants manufacturing building boards, pulp etc. Only i n this area i s there the possibility that supplies of fuel wood have been restricted despite the expansion of the sawmill industry. Elsewhere, the pattern of small, dispersed sawmills inhibits the establishment of plants converting residue to non-energy uses and therefore fuel wood supplies have probably been rising i n accordance with the expansion of sawmilling. It i s apparent from the discussion of fuel wood production that supplies of this energy source are generally available at demand prices. In pointing out that the non-energy uses of sawmill residue are more attractive to the industry, i t i s implied that fuel wood commands a low price only. The low price indicates that fuel wood only supplies limited markets, limited because alternative energy sources are preferred. .^W. Guernsey, The Value of Surveys and Research i n Wood  Utilization, Transactions of the Seventh British Columbia  Natural Resources Conference, 1954, p. 90. 47 Because the markets for fuel wood f a l l into the two very-distinct sub-divisions of domestic markets and of the forest products industry of B.C., i t i s within the framework of these sub-divisions that consumption patterns are examined. DOMESTIC MARKET No sta t i s t i c s of actual consumption are available. Wood consumption i s calculated at two hundred million B.t.u. per year for each occupied dwelling heated principally by wood. 2 3 4 This value was adopted by O'Brian and by Nolan . Davis used the figure of one hundred and seventy-five million B.t.u., but he made an additional calculation of fuel wood used for non-residential heating. The maps of fuel wood consumption (Figure 7) show a close spatial association of consumption with the forested areas. Fuel wood consumption i s a feature of rural settlement, especially the farming element, except i n the case of B.C. In B.C. urban and rural markets of the Lower Mainland and Vancouver Island regions accounted for 70 per cent of the total provincial consumption i n 1951. Markets for fuel wood are restricted to forested regions because, despite the estimated low costs of production, transport costs prevent extensive movements. It i s estimated that transport costs of fuel wood are some three times that of rail-hauled coal. ^O1 Brian and Lovett, cp_. c i t . , p. 289. 3Nolan, oj>. c i t . , p. 55. ^Davis, 0 £ . c i t . , p. 267. <K5 DWELLINGS HEATED PRINCIPALLY BY WOOD OR SAWDUST, BY CENSUS DIVISION TOTAL OCCUPIED DWELLINGS In Thousands 100 and over 40 100 Q 15 40 O 55 15 O LS 55 — 1 SCALE C; CO 200 300 MILES FOREST PARKLAND • •• • 3 PROPORTION HEATED BY WOOD OR SAWDUST Note (1) Wood heated d w e l l i n g s t o t a l l i n g l e s s than 1 0 0 are not recorded (2) Proportion is c a l c u l a t e d from actual number of t o t a l occupied dwellings and t r a n s p o s e d to the class c i r c l e Sources Census of Canada 1951 and 1961 Atlat of Canada Figure 7 4 § Evidence of the limited movements of fuel wood i s not confined to Figure 7. Since 1951 the quantities of fuel wood moved by r a i l have never been more than 5 per cent of the estimated consumption of any province. Though i n B.C. major energy markets and forested areas are i n juxaposition, the main reason for fuel wood sales being so large i n urban communities i s the location of the sawmilling industry. Major mills are to be found even within the Vancouver metropolitan area. These mills make both hog 5 fuel and especially sawdust available to domestic consumers. Therefore, because a large proportion of the provincial population could obtain fuel wood without the burden of heavy transport charges, fuel wood consumption i n 1951 accounted for over 40 per cent of domestic energy consumption i n B.C. In the other three provinces the proportion was 25 per cent or less. The market trends of each of the provinces (Figure 8) exhibit a close uniformity i n the rate of decline of fuel wood consumption. With B.C. being by far the largest market in 1951, the f a l l i n consumption i n absolute terms was considerably larger i n that province (Table III). The similar rates of decline of a l l provincial markets suggest that the same factors applied i n a l l the market areas. Hog fuel i s produced by feeding that portion of sawmill residue unsuited for conversion into pulp chips into a hogger i n order to reduce the pieces to a smaller size and to reduce the water content. 'The interpolations from Census data have been accepted. 50 DOMESTIC CONSUMPTION OF FUEL WOOD BC SASKATCHEWAN MANITOBA ALBERTA 1 ss X • s I S -•sr.. s. N N. X > > * \ S X X _^ N S V \ s N * — \ \ \ \ X, v. V THOUSANDS OF CORDS 2 0 0 0 1500 1 0 0 0 5 0 0 1O0 1951 1956 1961 Note Consumption is calculated by multiplying data of the number of wood heated dwellings by an average annual consumption figure of 200,000,000 B t u (10 cords) Sources The dashed lines are based on D B S Household Facilities and Equipment, Annual, 1953-60 The solid lines are an interpolation from Census of Canada, 1951 and 1961 Figure 8 5t TABLE III DECLIKE IN DOMESTIC CONSUMPTION OP FUEL WOOD 1951-60 B.C. Alberta Saskatchewan Manitoba •000 cords 718 196 239 174 •000 Coal 531 145 177 128 Equivalent tons Source: Interpolated lines of Figure 8. 5% Price relationships of fuel wood and alternative energy sources are l i k e l y to be similar throughout the fuel wood market areas of the Prairie Provinces. These markets, of the northern and eastern fringes of settlement (Figure 7), are dispersed and penetration of other energy sources i s costly because of the scattered nature of the market rather than that of distance to the production centres of these sources. The pattern of bulk fuel costs (Figure 4) shows price gradients rising u n t i l costs are approximately the same throughout the fuel wood market areas of Figure 7 . However, the 1951 fuel wood market of Alberta was smaller than that of the other two Prairie Provinces (Figure 8) and Alberta's market declined at a faster rate. Comparison of the energy production map (Figure 3) with the maps of fuel wood consumption establishes the point that both petroleum and natural gas i s produced i n the fuel wood market areas of Alberta. However, the similarities of the Prairie Provinces do not l i e just in price relationships. Perhaps more important i s the fact that the his t o r i c a l legacy factor, which i s areally constant, has stabilized fuel wood consumption to some degree. A major component of Prairie fuel wood consumption i s the farmer cutting on his own woodlot. This pattern i s not li k e l y to breakdown rapidly for there are considerations of finding the capital for new conversion equipment and of overcoming traditions of cutting wood which i s 'free'. The reduction of this 53 stabilizing element of fuel wood consumption may well be more dependent on rates of farm abandonment than on price relation-ships. In B.C. i t i s estimated that up to 38 per cent of the decline i n rural consumption could be accounted for by farm 7 abandonment. A similar proportion may well apply to a l l fuel wood consumption i n the Prairie Provinces because virtually a l l these fuel wood markets are rural. It i s a coincidence that the rate of decline of fuel wood consumption in B.C. i s similar to that of the other provinces. Figure 7 shows that the drop i n consumption was concentrated i n southwest B.C. Consequently, to obtain a provincial rate of decline similar to that of the other provinces, fuel wood consumption i n the Interior must have shown above average stability. This stability does not appear to have been the result of inaccessibility to other energy sources. The pattern of bulk fuel costs (Figure 4) suggests that alternative energy sources could penetrate the Interior easier than the fuel wood areas of the Prairies. It i s suggested that reasons for the sta b i l i t y of fuel wood i n the Interior perhaps l i e i n the expanding sawmill industry of this area, an area where non-energy markets for saw-mill residue have, until very recently, been lacking. 7 Calculated from the decrease in number of farm dwellings 1951-61. It i s assumed that a l l these dwellings were heated by fuel wood. There i s a problem of classification of farm and non-farm dwellings, and the decrease in number of farm dwellings does not necessarily indicate abandonment of the dwelling. 54 Fuel wood consumption declined more ra p i d l y i n the urban markets of southwest B.C. than i n any other area. These urban markets are highly accessible to petroleum, and also natural gas i n the case of the Lower Mainland centres. However, given the demand p r i c i n g p o l i c y of sawmills, a f a l l i n f u e l wood consumption i s l i k e l y to r e f l e c t non-price preferences of 'convenience' etc. f o r a l t e r n a t i v e f u e l s . Insofar as cash personal incomes are generally higher i n urban centres, i t i s easier f o r the urban consumer to replace the wood-burning furnace. Yet, conclusions cannot be drawn u n t i l the forest products industry i s examined. Fuel and non-energy demands f o r sawmill residue by the industry may have lim i t e d supplies to the domestic market, thus preventing the continuation of a demand p r i c i n g p o l i c y . FOREST PRODUCTS INDUSTRY OF B.C. In the forest products industry of Western Canada, f u e l wood consumption i s only s i g n i f i c a n t m the B.C. section. In B.C. not only i s the industry larger, but i t i s more developed r e l a t i v e to that of the P r a i r i e s i n that a consider-able number of plywood, veneer, pulp, and paper m i l l s have been added to the basic sawmilling industry. These additional processes have raised energy demands considerably f o r they require heat i n addition to some power, heat requirements of g pulp m i l l s being p a r t i c u l a r l y high. Thus energy demands of the Q Trends i n pulp production have been i n the d i r e c t i o n of chemical processes, which require heat, rather than of the older mechanical process. 55 B.C. industry are much, higher than those of the Prairies' industry. However, the main reason for the minor consumption of fuel wood i n the industry of the Prairies i s that mills are relatively small and less l i k e l y to be located at permanent sites. Consequently, energy requirements are small, and flexible i n location, and diesel engines or purchased ele c t r i c i t y are used. In contrast, mills in B.C. are generally larger, usually located at permanent sites, often remote from public power lines u n t i l recently, and owned by large companies with capital finance available. Thus, power requirements can be met by thermal plants at the mill, plants which can use fuel wood. It i s estimated that 50-60 per cent of the fuel wood inputs of 1951-60 were used i n power plants. To establish the consumption of fuel wood a survey was made of a l l the major forest products mills. It i s estimated that this survey provided data, of varying degrees of r e l i a b i l i t y , for over 90 per cent of the total consumption of the industry. Prom the data, consumption i s estimated to have been two and a half million cords i n 1951, rising to three million i n 1956, and three million seven hundred thous-and cords i n I960. Considerable uncertainty exists over these figures. One problem was the conversion of the unit, a cubic measure used i n the B.C. industry, to the cord. Part of the limited data of the average B.t.u. content of the unit indicated 56 a content equal to only 60-80 per cent of the twenty m i l l i o n B.t.u. content of the cord. However, i n the compilation of the consumption estimate of this study, the unit and cord are taken as being equivalent because the data of lower B.t.u. content of the unit appear to incorporate an allowance f o r thermal e f f i c i e n c y . Likewise, uncertainty exists over the conversion of black l i q u o r , a by-product of the k r a f t pulp process, into B.t.u.'s and from that into equivalent cords of f u e l wood. Thus, the absolute figures of f u e l wood consumption incorporate possible errors a r i s i n g from convers-ions into common uni t s , inaccuracies of the data provided by the survey, and the incomplete coverage of the survey. However, from the viewpoint of competition of energy sources the r i s i n g trend of f u e l wood consumption i s f a r more s i g n i f i c a n t than the absolute figures. Expansion of the forest products industry has created a r i s i n g demand f o r heat and power and, at the same time, increasing supplies of sawmill residue. In addition, expansion of the k r a f t pulp industry has raised outputs of black l i q u o r . The l a t t e r has no alternative market, therefore there i s every incentive to use i t to meet f u e l demands of the m i l l . On the other hand, there i s the p o s s i b i l i t y of the expanding supplies of sawmill residue f i n d i n g markets other than the energy demands of the industry. One alternative market i s the domestic sector. If supplies of fuel wood were limited, the industry had the choice of satisfying i t s own energy demands from alternative energy sources and continuing sales to domestic consumers or, reduc-ing such sales and u t i l i z i n g the fuel wood at the m i l l . The r e t a i l and industrial prices of fuel wood are based on the prices of competing fuels, and the r e t a i l price i s some four times higher than the industrial. Consequently, the profit incentive of the industry i s to s e l l fuel wood on the domestic market i f possible. It follows than, that the f a l l i n domestic consumption of fuel wood was not the result of limited quantities of fuel wood, but a consequence of the preferences of domestic consumers for alternative fuels. The result was that available supplies of sawmill residue expanded as a result of the f a l l i n 9 domestic sales as well as expansion of the sawmilling industry. In the ligh t of this considerable rise i n the supplies of saw-mi l l residue, i t i s not surprising that the second alternative market, that of the non-energy uses of residue, failed to keep pace with supplies of residue despite the expansion of this market. Being faced with increasing quantities of both sawmill residue and black liquors, neither of which had alternative-markets, the industry has ut i l i z e d such quantities to meet i t s own expanding energy requirements. The f a l l i n domestic sales 1951-60 would account for one quarter of the rise i n industrial consumption of fuel wood. 58" CONCLUSION Because transport costs of f u e l wood are so nigh, consumption i s r e s t r i c t e d to the supply areas. The l a t t e r are dispersed throughout the high energy cost areas of Western Canada, pointing to severe handicaps on alternative fuels i n the f u e l wood markets. The supply of f u e l wood i s from either farmers' woodlots or from sawmill residue and these production patterns encourage no p r i c i n g p o l i c y or a demand p r i c i n g p o l i c y . With p r i c e s of f u e l wood being f l e x i b l e , the l o c a t i o n of any market to alternative f u e l supplies i s almost discounted because f u e l wood prices can be adapted to meet competition. This has not prevented the decline i n f u e l wood consumption i n the domestic sector, but i t has made the rate of decline more uniform. Domestic f u e l wood consumption has declined i n response to fa c t o r s which are a r e a l l y constant; non-price factors such as the convenience of alte r n a t i v e f u e l s or, the external f a c t o r of the decline i n the number of farmers. Likewise, s t a b i l i z i n g elements i n domestic consumption are a r e a l l y constant. The major elements are the dispersed nature of the market and the h i s t o r i c a l legacy aspect of the farmer cutting h i s own timber, plus the major h i s t o r i c a l legacy that v i r t u a l l y a l l consumers of f u e l wood i n the l a s t decade would have had the wood-burning unit i n s t a l l e d before 1951. The pattern i n coastal B.C. d i f f e r s considerably from that of elsewhere i n that f u e l wood i s a s i g n i f i c a n t element i n the energy mix of major urban centres and i n the forest products industry. This pattern exists because of a con-centration of sawmilling a c t i v i t y i n these centres, and thus large quantities of sawmill residue are highly accessible. Also, the development of large m i l l s has permitted the construction of f a c i l i t i e s f o r supplying heat and power within the m i l l from i t s own residual wood supplies. Domestic sales i n the Lower Mainland region have declined more markedly than elsewhere i n Western Canada. The s t a b i l i z i n g elements of a dispersed market and of farmers are l a c k i n g i n t h i s region. The forest products industry has taken up the slack i n the supplies of f u e l wood r e s u l t i n g from the decline i n domestic sales and from the increased supplies made available by the general expansion of the industry. The decline of f u e l wood consumption i n the domestic markets of Western Canada from 1951 to I960 indicates an apparent s u b s t i t u t i o n of a l t e r n a t i v e f u e l s to the extent shown i n Table I I I . However, the actual substitution may only be to the extent of two-thirds of these quantities because of thermal e f f i c i e n c y g a i n s . 1 0 A complicating feature of the substitution i s that not a l l of i t w i l l have taken place i n the same dwelling. There i s an element, of unknown size, of abandonment of r u r a l dwellings and r e - l o c a t i o n of the population elsewhere. As f o r the r i s e i n f u e l wood consumption i n the f o r e s t products industry, 10 Appendix B. 66 f u e l wood has competed successfully against alternative f u e l s i n that, without the increased supplies of f u e l wood, substitute fu e l s would have had to be u t i l i z e d . To the extent that f u e l wood i s av a i l a b l e , the industry's demand i s s p e c i f i c to that f u e l . iSCL CHAPTER IV COAL The consumption of coal i n the four Western Provinces declined from a total of over ten million tons i n 1951 to four million tons in I960. The relative decline in coal's share of the energy market was even more prominent because the energy market expanded. As was the case with fuel wood, the decline was not related to any shortage of supplies, but to the general i n a b i l i t y of coal to compete with petroleum and natural gas. The areal patterns of coal supply and consumption differed from those of fuel wood and resulted i n coal being more vulnerable to the competitive pressures of alternative energy sources. AVAILABILITY OP COAL Coal supplies are made up of three ranks of coal, bituminous, sub-bituminous, and l i g n i t e . In terms of British thermal units, sub-bituminous and lignite coal are equivalent to only 70 and 59 per cent respectively of the heating value 1 of bituminous coal. These three coal ranks differ i n costs of production and of movement, and they tend to supply markets differing areally and functionally. Production of Coal The production of coal (Figure 9) i s centred on the more accessible coal deposits and, whatever the c r i t e r i a Appendix A. F I G U R E 9. C O A L P R O D U C T I O N IN W E S T E R N C A N A D A 1951 A N D I 9 6 0 63 2 adopted, the reserves of coal are generally ample. However, the degree of physical accessibility to coal seams varies with the coal rank and this was the major determinent of variation i n production costs. Labour costs are normally a major item i n the costs of production, consequently mechanisation i s the only solution to preventing coal from being priced out of energy markets. Mechanisation did succeed i n almost stabilising coal prices f.o.b. the mine between 1951 and I960, but the degree of mechanisation varied with the coal rank. Mechanisation i s far easier to apply to the f l a t - l y i n g seams of the sub-bituminous and lignite f i e l d s than to the dipping seams of the bituminous fields of the Rockies or to the faulted seams of Vancouver Island. Often, the lower c a l o r i f i c seams are close to the surface and permit stripping operations. A l l of the lig n i t e coal i s strip-mined and strip-mined sub-bituminous coal accounted for 64 per cent of the total output in I960, compared with 37 per cent in 1951. The poor quality of sur-face seams limit stripping of bituminous coal and, prior to 1958, underground mechanisation was handicapped by the lack of a continuous miner designed specifically for dipping seams. The result of the varying degrees of mechanisation was that the average price per short ton f.o.b. the mine i n I960 was about 1.80 dollars for li g n i t e , 4.50 dollars for sub-bituminous, and six dollars for the bituminous coal of the 2 » Only on Vancouver Island has there been a problem of coal reserves. The Nanaimo coal f i e l d ceased production i n 1953 because of this problem. Rockies. In terms of coal equivalent tons, the average p r i c e s of l i g n i t e and sub-bituminous r i s e to 3 and 5.50 d o l l a r s per ton respectively. Sub-bituminous coal appears to have l i t t l e p r i ce advantage over bituminous coal but, when strip-mined, the former coal could usually be offered at a price of under 3 d o l l a r s per short ton. Because of lower production costs, the lower c a l o r i f i c coals were better f i t t e d to r e s i s t the inroads of alternative energy sources and production of the lower c a l o r i f i c coals did not decline to the same extent as that of bituminous coal (Figure 9). Within the sub-bituminous production pattern, the decline of the Drumheller underground f i e l d c l e a r l y shows the s h i f t i n production to strip-mines. S p a t i a l l y , the production of coal was concentrated i n southeast B.C. and Alberta (Figure 9). The only s i g n i f i c a n t coal centre outside of t h i s area was the l i g n i t e source i n Saskatchewan f o r coal production on "Vancouver Island was of minor proportions. Thus, to supply energy needs across Western Canada, indigenous coal would have to move outwards from Alberta. The r e s u l t i n g s p a t i a l p r i c e pattern of coal would therefore be one of p r i c e s increasing towards the peripheries of Vancouver and Winnipeg, a pattern which would favour the importation of coal into Western Canada. However, the actual movements of coal cannot be summed 65: up i n a simple generalisation derived from the production pattern. The supply pattern of coal to Western Canada's markets was complex because not only did costs of production of the coal ranks differ, but their costs of movement differed also. Movements of Coal The major spatial feature of the coal movement pattern (Figure 10) was the movement of coal east and west from the area of southeast B.C. and Alberta. Most of this coal was destined for markets within Western Canada. The most persistent export market has been that to the metallurgical industries of the northwest U.S.A. but, supported by a subsidy of 4.50 dollars per ton , substantial exports of coking coal to Japan commenced i n I960. Temporal changes of the coal movement pattern were dominated by the decline of bituminous shipments. This decline occurred because most of the bituminous shipments of 1951 were destined for coal-fired locomotives, a market which had almost ceased to exist by I960. In the movement of coal out from the area of southeast B.C. and Alberta, bituminous coal had a lower price •^Eoyal Commission on Coal 1959-60, Report (Ottawa, Queen's Printer I960) p. 43, states that the subsidy i s viewed as an incentive for the coal industry to reduce production costs. Dominion Coal Board, Annual Report 1962-63 (Ottawa, Queen's Printer, 1963) p. 15, reports some success for the subsidy was reduced to 3.63 dollars per ton for that f i s c a l year. 66 F I G U R E 1 0 . C O A L M O V E M E N T S I N W E S T E R N C A N A D A THOUSANDS OF SHORT TONS 25 TO 99 100 TO 349 350 TO 999 1000 AND OVER 0 100 200 300 KMLE8 '67 gradient than that of sub-bituminous (Figure 5). Consequently, bituminous tended to supply the more distant markets and sub-bituminous markets were more areally restricted. This feature appears in the I960 pattern of shipments; prior to that date the locomotive coal market, which was specific to bituminous coal, obscured the areal differentiation of bituminous and sub-bituminous markets. Within Alberta i t s e l f , sub-bituminous ooal had a relative advantage over bituminous i n that the production centres of the former were often very close to major markets (Figure 9). It i s estimated that 75 per cent of the domestic sub-bituminous sales consisted of coal trucked from the mine to the consumer. Whilst the area of southeast B.C. and Alberta was the major production centre of coal consumed i n Western Canada, three other production centres were of some importance. These three centres were the bituminous fields of Vancouver Island and Pennsylvania, and the lignite f i e l d of Saskatchewan. The production centre with the most limited impact on coal supply patterns i n Western Canada was that of Vancouver Island. Despite the availability of relatively cheap water transport, high production costs and reserve problems ensured that Vancouver Island coal, whilst f u l f i l l i n g coal needs on the Island, only penetrated the Mainland i n very limited quantities (Figure 10). Therefore, the rise of coal prices outwards from Alberta, a price pattern dictated by coal moving out from that area, ceased at Vancouver where a coal p r i c e -shed existed. In contrast to Vancouver Island coal, Pennsylvania coal was instrumental i n ensuring that the eastern price-shed f o r coal generally lay i n Manitoba rather than at Port William. Imports of Pennsylvania coal were a prominent feature of the coal supplies of Western Canada (Figure 10), f o r t h i s coal could be moved from the mine to Fort William at a cost of under s i x d o l l a r s per ton compared with r a i l rates f o r Western bituminous of over s i x d o l l a r s per ton to Winnipeg and eight d o l l a r s to Fort William. Higher production costs of Canadian bituminous placed t h i s coal i n a weak competitive p o s i t i o n east of Saskatchewan and bituminous coal only moved east of that province with the aid of subvention payments ( i . e . Federal Government subsidies). Cross-hauling of bituminous coal appeared i n the Manitoba area (Figure 10) because the l o c a t i o n of the coal price-shed varied with the p a r t i c u l a r market served. The t h i r d production centre was the l i g n i t e f i e l d of southeast Saskatchewan. Most of t h i s coal had to move by r a i l because the l o c a l market was very l i m i t e d u n t i l thermal power stations expanded at the coal f i e l d s i t e . The hypothetical 6 9 costs of Figure 5 suggest that, despite the relatively high price gradient, low production costs would ensure that this coal dominated coal markets east of Alberta. Whilst l i g n i t e coal did dominate i n Saskatchewan and Manitoba markets, sub-bituminous and bituminous coals remained significant energy contributors. This i s shown in the I960 coal supply pattern of Figure 10, a pattern which i s not over-shadowed by the bituminous locomotive market. Limitations on l i g n i t e markets appeared because, f i r s t l y , r a i l rates for lignite were higher than those indicated in Figure 5. This was a result of the policy of raising t a r i f f s by means of f l a t increases, a policy which tended to penalise the short-distance shipper. Thus, the I960 r a i l t a r i f f for lignite from Estevan to Winnipeg per coal equivalent ton was almost the same as that of bituminous coal from the Crow's Nest Pass to Winnipeg. A second limiting factor on lignite markets was that large scale lignite production appeared later than production of bituminous and sub-bituminous coals and therefore l i g n i t e had to penetrate established coal markets. The success of lignite's penetration was qualified by the historical legacy of conversion equipment designed for other coal ranks and by the relatively unfavourable physical characteristics of l i g n i t e , characteristics which were noted by the domestic consumer i n particular. 7$> Though the presence of multiple coal production centres tended to give r i s e to a r e a l l y d i f f e n t i a t e d markets, any i n t r a - c o a l competition i s judged to have been minor a f t e r 1951. Intra-coal competition would have tended to reach equilibrium because of the r e l a t i v e l y long existence of the supply pattern, and because prejudice and equipment legacies hindered a change to another coal rank. In contrast, nowhere was coal i n equilibrium with petroleum and natural gas and the competition of these f u e l s explains the decline i n coal consumption. But, prejudice and legacies did not apply to the competition of Canadian and U.S. bituminous coal i n Manitoba and adjacent areas, and the h i s t o r y of the subvention payments, shows a continual need to adjust to an active competitive s i t u a t i o n by readjustment of the amounts paid. CONSUMPTION OP COAL Only three market sectors w i l l be examined, railway locomotives, domestic, and i n d u s t r i a l including thermal power stations. Coal was consumed by the coal mining industry, but the amounts consumed were generally a function of the size of the industry. Considerable quantities of sub-bituminous and 4 l i g n i t e coals were used by the railway companies , presumably i n space heating, but thi s market i s not analysed. Data f o r Appendix E, Table VII. 71 this market are lacking for other energy sources and besides, the areal pattern of coal consumption i s reminiscent of that of the domestic sector, suggesting that the same competitive factors applied in both markets. Finally, the coal bunkering market i s not examined for only a remnant of some fifteen thousand tons of coal remained on the West coast i n 1951. Coal Use i n Locomotives The elimination of a coal market of over three million tons within ten years i s not surprising for diesel locomotives have a thermal efficiency of 25 per cent compared with 4 per cent for coal-fired locomotives. The delimitation of the areal pattern of the process of eliminating coal-fired locomotives and the relationship of this pattern to that of coal supplies i s examined i n this section. Locomotive consumption of bituminous coal i n thousands of tons i s shown below: 1951 1956 I960 B.C. -T72 ~T3 ~ 5 ~ Alberta 838 154 2 Saskatchewan 1,319 593 5 Manitoba 1,064 623 5 Total energy consumption i n locomotives was approximately the same i n each province , therefore, the above inter-provincial variations i n coal consumption demonstrate that 5 This i s demonstrated i n Figure 15. 72 i n B.C., and to a lesser degree i n Alberta, the numbers of coal-fired locomotives had already been markedly reduced by 1951. This pattern of the reduction of coal-fired locomotives continued after 1951, resulting i n the last stronghold of these locomotives being Saskatchewan and Manitoba. Prior to 1956 much of the competitive pressure on coal came from o i l - f i r e d locomotives. Fuel o i l does not offer any great gain over coal i n thermal efficiency, i t being only 2 per cent higher, but one ton of fuel o i l has a heating value almost double that of a ton of coal. Con-sequently, considerable gains could be made i n the tonnage of fuel hauled to the various fueling points on the network. Substitution of o i l - f i r e d locomotives i s the cause of coal-fired locomotives being reduced in number long before 1951. In B.C. the 1912 Railway Act increased railway responsibility for lineside f i r e s and, secondly, the steeper grades demanded maximum power, power which was not always guaranteed by the quality of the coal used. Finally, U.S. fuel o i l had long been available i n the coastal area of B.C. The histor i c a l emphasis on replacing coal-fired locomotives i n B.C. was related to the coal supply pattern i n that the coastal area was a price-shed for coal. However, the pattern of fuel o i l and diesel locomotives spreading from west to east tends to contradict the coal supply pattern. From the viewpoint of coal costs, these costs could have been reduced more quickly i f coal consumption had been reduced on the eastern price-shed f i r s t and i n Alberta last. The relative stability of coal east of the Manitoba price-shed f i t s the coal supply pattern i n that coal prices declined towards the Lakehead whereas fuel and diesel o i l price gradients would continue to rise, providing the o i l came from refineries in Manitoba or further westward. However, the persistence of coal-fired locomotives i n Saskatchewan and Manitoba i s not explained by coal supply patterns. Seasons for this persistence either l i e i n the supply pattern of fuel and diesel o i l or, because a l l problems of fuel supply of locomotives were simplified i f , once have started to change the fuel mix i n B.C., the companies continued to move along the network in a west to east pattern. Coal consumption trends i n the eastern part of the Prairies were related to coal supply patterns only i n that C.N.R. was more active than C.P.R. i n reducing the number of coal-fired locomotives, and had in fact eliminated these locomotives by 1956. Coal prices for C.N.R. were relatively high i n this region because i t s coal sources, west of Edmonton (Figure 9), lay about one hundred and twenty-five miles further west than the Crow's Nest Pass f i e l d , the source of coal for C.P.R. Consequently, the eastern price-71 shed on the C.N.R. network lay within Saskatchewan and i t was i n response to C.N.R. demands that U.S. coal entered that province (Figure 10). After 1956, the reduction of coal consumption was entirely the result of the dieselisation programme of C.P.R. Fuel costs did not enter into the programme for diesel locomotives were distributed "with a view to obtaining the 7 greatest advantage for the capital expended". This policy resulted i n coal-fired locomotives being relegated to secondary t r a f f i c and the policy was geared to ensure that i n a l l provinces coal-fired locomotives were virtually eliminated by I960. There has been l i t t l e locational basis to locomotive fuel consumption patterns insofar as coal supplies were concerned. The spatial price pattern of coal appears to have only been significant i n that C.N.R. eliminated use of coal f i r s t , and that coal was f i r s t replaced on the coal price-shed of coastal B.C. However, the locational factor cannot be dismissed for the coal price-sheds may not indicate the areas of greatest fuel cost savings obtained by changing to petroleum. If petroleum supplies from refineries i n B.C. and Manitoba were limited, then the relatively low price ^In 1956 U.S. coal entered Saskatchewan again, for C.ST.R. s t i l l retained the coal-fired locomotives on a standby basis and apparently had to use them to handle the bumper wheat crop of that year. Canadian Pacific Railway Company, Annual Report (Montreal, 1952) p. 18. gradient of crude o i l would not apply and the price differences between the o i l s and coal may not have been more marked i n B.C. and Manitoba than elsewhere. Pinal evaluation of the locomotive market sector cannot be made u n t i l this problem i s examined i n the next chapter. Domestic Market The quantities and trends of coal consumption are illustrated i n Figure 11. The decline in coal consumption prior to 1956 was somewhat more severe than the graph suggests because coal consumption became almost stabilised i n 1955 and 1956 on account of severe weather on the Prairies. The graph shows not only trend differences between bituminous and lower c a l o r i f i c coals but, a tendency towards spatial differentiation of the markets of these two coal groups. Only i n Manitoba were both bituminous and lower c a l o r i f i c coals major contributors to the energy market. Elsewhere, lower c a l o r i f i c coals dominated i n Alberta and Saskatchewan and bituminous coal dominated in B.C., a pattern dictated by the differing r a i l rates of the two coal groups. The decline in coal consumption i s summed up i n the following figures which show the f a l l i n coal consumption i n B.C. Alta. Sask. Man. 1951-56 79 229 389 208 1956-60 315 169 323 306 Total 394 398 712 514 77> thousands of coal equivalent tons. Except for a minor quantity which could be accountable to abandonment of rural dwellings, the above figures indicate the inroads of alternat-ive energy supplies. In quantitative terms the replacement of coal has been greatest i n Saskatchewan and least i n B.C. and Alberta. Sub-division of the decline of coal sales into two time periods points to markei temporal changes in three provinces, B.C. i n particular. The subsequent analysis i s focused on the extent to which these consumption patterns were related to coal supply patterns. The Alberta market i s examined f i r s t because here the energy sources were competing largely on the basis of their costs of production and, secondly, a l l the energy sources were present i n the province prior to 1951. The presence of a l l the energy sources i s demonstrated by the consistent rates of the decline of coal consumption (Figure 11) for, unlike the other provinces, pipelines did not suddenly appear on the scene and require radical readjustments of the energy mix. Alberta's coal market had been exposed to the competition of petroleum and natural gas for a number of years and there-fore the market was tending to reach equilibrium. Thus, the decline in coal consumption after 1956 was smaller than i n any other province. The coal consumption graph (Figure 11) shows that sub-bituminous coal dominated the coal market of Alberta. 78 This domination was rooted i n lower production costs and in the location of sub-bituminous coal fiel d s vis-a-vis those of bituminous. Sub-bituminous fields were by and large within trucking distance of major markets and juxtaposition of mine and consumer permitted coal to be sold directly to the consumer. Direct sales accounted for at least 60 per cent of the domestic sales of sub-bituminous coal i n Alberta. These sales saved on handling charges, were some guarantee of quality and, probably indicated sales on long-term contracts to relatively large consumers such as apartment houses, commercial establishments, and government institutions. These consumers are a stabilizing influence i n the domestic market i n that they pay less attention to the 'convenience' advantages of petroleum and natural gas. That direct sales were the key to the relative stability of Alberta's coal market i s seen i n the fact that i f i t were not for the Lethbridge f i e l d , the only bituminous f i e l d adjacent to a significant population centre, bituminous coal sales would have f a l l e n by over 60 per cent. ' In the other provinces a more marked decline i n coal consumption was to be expected. Not only did coal markets have to contend with the appearance of pipelines improving the competitive status of petroleum and making natural gas available but, distances between mine and consumer tended to mitigate against the establishment of direct sales. Prior to 1956 the decline i n coal consumption was particularly-marked i n Saskatchewan and Manitoba; after 1956 coal declined by about the same amount i n a l l three provinces. The relative stability of the coal market of B.C. up until 1956 points to this market having become relatively adjusted to the long-standing competition of U.S. petroleum i n the coastal area. Figure 11 shows that bituminous sales, of which over 60 per cent occurred i n Greater Vancouver, were more stable than sub-bituminous sales. The greater part of the latter were concentrated i n the Interior, anc area which was exposed to the relatively new phenomena of expanding petroleum product outputs at Alberta refineries. Figure 11 establishes the elements in the very marked decline of coal sales i n Saskatchewan before 1956. Saskatchewan's market was largely supplied by sub-bituminous coal railed i n from Alberta. Bituminous sales dropped to minor proportions soon after 1951» and lignite coal was restricted to the southeast part of the province, accounting for only a quarter of the lower c a l o r i f i c coal sales. Lignite, however, accounted for 75 per cent of the lower c a l o r i f i c sales i n Manitoba, of which half were destined for the Greater Winnipeg area. This area also accounted for over three-quarters of Manitoba's bituminous sales and thus 8d bituminous sales were highly concentrated at the site of petroleum refineries. Therefore, bituminous sales declined more than did sales of lignite (Figure 11). However, these coal supply patterns do not account for Saskatchewan's coal market declining more so than that of Manitoba, for coal supply patterns dictated higher coal prices i n the latter province. After 1956 significant quantities of natural gas were available i n a l l provinces and coal sales i n B.C., Saskatchewan, and Manitoba declined by approximately the same amount. The impact of gas appears to have been restricted to the major urban centres for i n B.C. bituminous sales decreased more than did sub-bituminous sales (Figure 11). Bituminous sales i n Winnipeg however, proved more stable than sales of lower c a l o r i f i c coals, partly because U.S. bituminous and Saskatchewan briquettes were apparently cheaper. Only consumption of Canadian bituminous showed a marked drop. The changing areal pattern of the domestic coal market reflected the inroads of alternative energy sources. The general outline i s clear: relative s t a b i l i t y i n Alberta because of coal supply patterns plus the availability of a l l energy sources prior to 1951, and an accelerated decline i n B.C. and Manitoba after 1956 when natural gas became available. It has been established where and when the inroads of other energy sources were greatest and which coal ranks suffered. Perhaps more problems, particularly the intense competition i n Saskatchewan, than solutions have been raised, but this i s to be expected for evaluation can only come from an examination of the supply patterns of the other energy sources. Industrial Market Overall, the areal patterns of coal consumption were similar to those of the domestic sector, but two important differences form the focus of attention. Firstly, the industrial coal market was far more stable than that of the domestic sector and, secondly, the thermal power sector exhibited a rise i n coal consumption after 1956, a trend which was opposite to that of every other coal market. For this reason, the thermal power sector forms a separate section of the discussion. Coal consumption i n the industrial market, excluding u t i l i t y power stations, i s shown i n Table IV. A number of specific coal consumers are excluded from the consumption st a t i s t i c s . The gas plants at Vancouver and Winnipeg were Q significant consumers of bituminous coal, but they were closed down immediately natural gas became available. In addition, bituminous coal and coke consumption at T r a i l and Kimberly i n B.C., and at F l i n Flon in Manitoba i s 8 Coal consumption i n thousands of tons: 1951 1956 Vancouver gas plant 86 80 Winnipeg gas plant 26 25 82 TABLE IV CONSUMPTION OP COAL IN INDUSTRY8, Thousands of tons B.C. Alta. Sask. Man. Bituminous Coal (Short tons) 1951 201 62 8 154 1956 237 8 3 134 I960 66 4 2 29 Sub-bituminous and Lignite Coal (Short tons) 1951 5 67 42 138 1956 1 13 37 121 I960 1 12 30 116 Decline i n Coal Consumption (Coal Equivalent Tons) 1951-56 +37 108 10 36 1956-60 171 5 _8 111 Total 134 113 18 147 ^Jse i n coal mining, coke and gas plants, thermal power stations ( u t i l i t i e s ) , and at Tr a i l , Kimberly, and Plin Plon, i s excluded. Includes briquettes and coke. S3 9 excluded. Coal and coke at T r a i l was used as a reductant and raw material,^ and Kimberley's use of coal i s viewed as specific because of the close spatial and institutional ties with the coal producer. To what extent the use of coal at F l i n Plon was specific to the metallurgical processes i s not clear, but relatively cheap o i l was available and used at the plant, yet the use of coal persisted. The industrial market (Table IV), like that of the domestic sector, shows the influence of r a i l costs varying with the coal rank. Bituminous coal tended to f u l f i l l needs on the peripheries of Western Canada though, as i n the domestic market, lignite was an important contributor i n Manitoba. Sub-bituminous coal was areally restricted to Alberta and Saskatchewan where industrial markets for coal were limited even i n 1951. The limited size of Saskatchewan's market indicates the relatively minor size of the industrial sector i n general. On the other hand, coal in Alberta's industrial sector was reduced by the inroads of alternative energy sources more so than was the case i n the domestic sector. The use of coal by 9 Use of coal and coke i n thousands of tons: 1951 1956 Si T r a i l and Kimberley 240 271 Plin Plon b 87 138 aEstimated from data of daily consumption provided by personal communication with Consolidated Mining and Smelting Company of Canada Limited, T r a i l , 1963. ^Personal communication, Hudson Bay Mining and Smelting Company, Pl i n Plon, 1963. •^Includes use i n the making of hydrogen, a process i n which natural gas replaced coal i n 1959. 84 industry f e l l to minor proportions by 1956. The i n s t a b i l i t y of Alberta's market between 1951 and 1956 contrasts with the stability of coal markets elsewhere; almost a complete reversal of the domestic market's pattern for those years. Compared with the domestic sector a relative measure of s t a b i l i t y i n industrial coal markets could be accounted for by several factors. F i r s t l y , the industrial price of coal was lower than the domestic price and, whilst i t i s recognised that this price structure applies to a l l energy sources, the f r i a b i l i t y of coal suggests that the industrial coal price was often very low indeed. Coal producers often had an excessive quantity of the small sizes of coal and attempts to upgrade them by briquetting processes usually failed on the grounds of high costs. Thus, the smaller sizes were often sold below costs and Lang^ "*" pointed to prices of sub-bituminous coal being about 0.50 to 1.00 dollars per short ton for slack whilst prices of the larger sizes ranged upto 5 dollars or more per short ton. A second stabilising factor i n industrial coal markets was that long-term contracts prevailed and, i n the case of bituminous coal at least, a number of industrial consumers installed special conversion equipment designed to use slack. 1:LW.A. Lang, "Utilisation of Alberta Sub-bituminous Coal", Transactions of the Canadian Institute of Mining and Metallurgy, Vol. LXI (l95S7,-pT 1 2T.G. Ewart, "The Market for Western Bituminous Coal", Transactions of the Canadian Institute of Mining and Metallurgy. Vol. LIV (19517, P. 194. 85 Finally, the industrial market was more stable than the domestic because industrial consumers are far less attracted to the 'convenience' of o i l and gas. Between 1951 and 1956 industrial markets were highly stable except i n Alberta (Table IV). This contrast suggests that natural gas was the major competitor, for this fuel was available i n quantity only within Alberta. The greater measure of success of gas i n Alberta's industrial market compared with the domestic market, could be accounted for by industrial plants being areally concentrated whilst much of the domestic market lay beyond the gas pipeline network. That natural gas was the key competitor i s also borne out by the sharp decline of coal consumption i n B.C. and Manitoba after 1956 when gas became available. Attention i s drawn to the decline i n coal consumption i n Manitoba consisting almost entirely of bituminous coal (Table IV). Lignite coal proved to be highly stable for the average price of lignite used i n manufacturing industries i n 1959 was just over seven dollars per coal equivalent ton 13 compared with nearly fourteen dollars for bituminous coal. The lack of a general industrial market for coal i n AlDerta and Saskatchewan was more than compensated for by the demands of thermal power stations. These demands focused on sub-bituminous and lignite coals. Use of bituminous coal was Calculated from, D.B.S., General Review of the Manufacturing  Industries of Canada 1959 (Ottawa, Queen's Printer, 1962) Table 1. ®6 limited to two stations, located i n Alberta and B.C., and 14 the demands of these stations were minor after 1951. The inputs, i n thousands of tons, of sub-bituminous and lignite coals into u t i l i t y operated thermal power stations are shown below: 1951 1956 I960 Alberta 96 55 143 Saskatchewan 170 220 511 Manitoba — 1 32 Both before and after 1951 inputs of coal declined as stations changed to other fuels, a change usually permitted by the installation of dual-firing equipment. These power stations were located at the major urban centres of Alberta and of western and central Saskatchewan. In a l l cases, the fuel supplies had been sub-bituminous coal which was either trucked or railed from the mine. Stations located on the coal fields, at Drumheller and Estevan (Figure 9), continued to use coal. The trend of declining coal inputs was reversed i n later years. I n i t i a l l y the expansion of demand for coal was limited to Alberta and Saskatchewan where, at coal f i e l d sites, new power stations were built or existing ones expanded i n cap-acity. Strip-mined coal i s the fuel that can best guarantee 1956 I960 1 2 1 2 Consumption i n thousands of tons: 1951 B.C. 51 Alberta 47 long-term price s t a b i l i t y providing that transport costs are minimised by juxtaposition of the mine and the power station. Therefore, unlike the 1951 pattern of coal-fired stations i n Alberta and Saskatchewan, such stations i n I960 were a l l located on the coal fields. Consequently, sub-bituminous coal no longer appeared i n Saskatchewan and the lignite f i e l d became a significant contributor to the province's energy economy. Lignite was denied this role i n a l l the other market sectors of Saskatchewan because of the need to move north and west i n order to reach the consumer. Finally, a feature i n the thermal power pattern emerged just prior to I960 with the construction i n Manitoba of stations using l i g n i t e coal. The use of lignite coal was a consequence of the remoteness of Manitoba from o i l and gas sources combined with the low production costs of lignite and a special t a r i f f negotiated with the railways. In contrast to the domestic market, the industrial market was relatively stable and the thermal power sector showed a rise in coal consumption. The patterns of coal consumption both i n space and time suggest that the stability of the industrial coal market was largely a function of the presence or absence of natural gas. The only coal which was able to maintain i t s hold i n the fact of gas was lignite i n Manitoba. By I960 the thermal market appeared as the major market for strip-mined coal. Coal consumption patterns in this sector were unique because, f i r s t l y , the industry i s very much 8B concerned with long-term p r i c e s t a b i l i t y and, secondly, stations tend to be located according to energy costs and thus the l o c a t i o n of coal f i e l d s within Alberta, and es p e c i a l l y Saskatchewan, was not necessarily a disadvantage. CONCLUSION Areal r e l a t i o n s h i p s of markets and coal f i e l d s were a prominent feature of the i n t r a - c o a l consumption pattern. In the domestic and i n d u s t r i a l market sectors bituminous coal tended to f u l f i l l needs on the peripheries of Western Canada, whil s t sub-bituminous and l i g n i t e coal met demands i n Alberta and Saskatchewan. L i g n i t e coal< also penetrated into Manitoba, but the legacy factor had probably prevented any replacement of bituminous coal a f t e r 1951. Manitoba was also accessible to U.S. coal and here there was active competition with Canadian bituminous coal, p a r t i c u l a r l y i n the locomotive market. However, the dominant change i n the coal consumption pattern over time was the decline of coal, a decline r e s u l t i n g from the inroads of other energy sources and a decline with an areal pattern which was not c l e a r l y related to coal supply patterns. The l o c a t i o n of coal markets with regard to'coal f i e l d s was s i g n i f i c a n t to the competitive pattern i n some instances. Proximity of mine and consumer i n Alberta assisted i n p a r t l y s t a b i l i s i n g domestic sales by the device of d i r e c t sales, a device which was lacking elsewhere. Likewise, the 89 presence of coal f i e l d s i t e s i n Alberta and Saskatchewan was important i n permitting the expanding use of coal by-thermal power stations. F i n a l l y , the a c c e s s i b i l i t y of Manitoba to l i g n i t e coal permitted the construction of the c o a l - f i r e d power stations and, secondly, the establishment of the stable l i g n i t e component i n the general i n d u s t r i a l market f o r coal a f t e r 1956. However, the o v e r a l l coal supply pattern whereby coal prices were highest i n B.C. and Manitoba was not the key f a c t o r m the pattern of competition. The competitive pattern appears to have been strongly related to the supply patterns of o i l and gas. The market structure f a c t o r was important f o r the locomotive market d i f f e r e d from a l l other market sectors i n f i r s t l y , the areal pattern of the reduction of c o a l - f i r e d locomotives, and, secondly, the v i r t u a l complete elimination of a major coal market by I960. Domestic and i n d u s t r i a l market sectors had s i m i l a r patterns of coal supplies but, the former market proved to have a l i m i t e d v u l n e r a b i l i t y to both petroleum and natural gas whereas the l a t t e r market was highly r e s i s t e n t to petroleum yet very vulnerable to gas. The r e s u l t was that the domestic market was rather stable i n Alberta and vulnerable elsewhere, whilst the reverse was the case i n the i n d u s t r i a l market u n t i l after 1956 when natural gas became available i n a l l provinces. F i n a l l y , the coal consumption trends of the thermal power sector d i f f e r e d from those of other market sectors because of the former's concern with long-term p r i c e s t a b i l i t y , a concern which tended to favour c o a l . 90 Unlike the fuel wood markets, the areal concentration of provincial markets appears to have been submerged as a factor by other influences. By being concentrated i n the metropolitan areas of B.C. and Manitoba bituminous sales suffered markedly from the inroads of natural gas, compared with the more dispersed sub-bituminous and lignite markets. Likewise, the industrial market of Alberta was perhaps more vulnerable to gas than was the domestic market for, i n the l a t t e r market coal sales possibly retreated beyond the gas pipelines. But, the overall pattern whereby the most marked f a l l in coal sales occurred i n Saskatchewan, the least urbanised province, points to the minor role of the areal concentration factor. Finally, historical legacies appear as a factor i n competition everywhere for no energy market adjusted immediately to new arrangements of energy supply patterns. In a l l cases the replacement of coal was a process extending over a number of years. In the rate of this process differences appeared between the market sectors, i t being most rapid i n the thermal power sector and slower i n domestic and industrial sectors. Thus, a key point in the competitive patterns becomes the timing of when the other energy sources became available. Accessibility before 1951, to o i l i n B.C. and to o i l and gas i n Alberta, resulted in the replacement of coal having commenced on a large scale prior to the time period considered 91 i n t h i s study. Therefore, other market areas appeared more stable i n i t i a l l y and i n l a t e r years they appeared more vulnerable. The replacement of coal i s probably large i n the i n i t i a l years a f t e r the appearance of o i l and gas, and then the replacement decreases i n volume as equilibrium i s approached. This i s the reason f o r much of the contrast between domestic and i n d u s t r i a l coal markets i n Alberta and those of elsewhere. Examination of the coal consumption patterns has established the s p a t i a l and temporal patterns of competition i n Western Canada. Yet, t h i s examination cannot e s t a b l i s h the reasons f o r those patterns because the coal supply patterns are only one side of the competitive patterns, the other side consists of the supply patterns of the major competing f u e l s , petroleum and natural gas. 9 2 CHAPTER V 1 PETROLEUM PRODUCTS In contrast to fuel wood and coal, the consumption of petroleum products expanded by 70 per cent between 1951 and I960. Yet, this rate of expansion was only half that of the Canadian average. In Western Canada the annual growth of sales dropped from an average of five million barrels per year between 1951 and 1956, to about one and three quarters of a million barrels per year over the last four years of the period under review. Such a marked change i n the rate of growth of markets for petroleum products indicates: 1. The i n i t i a l surge i n the areal expansion of markets made possible by pipeline construction. 2 . The intense competition of natural gas i n the heating markets of petroleum products i n later years. These hypotheses were supported by a comparison of the distribution of petroleum products consumption with that of population. In 1951 a nine per cent change in either distribution was needed to ensure a perfect correlation, whereas i n I960 only a 2 per cent change was required. The closer correlation of the I960 pattern indicates, on the one hand, the decline in areal differences of petroleum 1 Products under consideration in this study are restricted to fuel o i l s Nos. 1-6, diesel o i l , gasolines, tractor fuel, kerosene, and turbo fuel. 93 av a i l a b i l i t y and, on the other hand, the impact of natural gas which i s tending to r e s t r i c t petroleum products to markets specific to petroleum. The transport market i s by far the most significant market specific to petroleum and i t has been demonstrated (Figure l ) that this market correlates highly with population distribution. AVAILABILITY OF PETROLEUM PRODUCTS Although small quantities of crude o i l are used i n pipeline pumping stations and recently C.P.R. has used such o i l on an experimental basis i n locomotives, the direct use of crude o i l can be ignored. Consequently, the immediate source of consumers' supplies i s the petroleum products of the refinery. (Petroleum products face an extremely steep price gradient. Calculations from current r a i l rates indicated a rate of at least 1.50 dollars for moving a coal equivalent ton for one hundred miles. This rate i s more than double 2 3 that of bituminous coal. ' It i s apparent that i n order for petroleum products to compete i n distant markets either the costs of production must be substantially below those of coal or, pipeline transport must be utilised.^) Low costs 2 Appendix D. ^Rail rate increases since 1951 have worsened the position of fuel o i l i n relation to coal. Rates on fuel o i l s have risen by percentage increases totalling 160 per cent. On the other hand, coal rates have usually been subjected to 'f l a t ' i n -creases, totalling 1.92 dollars per ton on a l l t a r i f f s which were above two dollars per ton i n 1951. Hence, the 'blanket-ing' effect of coal rates has been increased. 94 of production did enable lignite coal, which faced a similar price gradient, to penetrate some 200 miles east-ward into Manitoba. The Alberta well-head price of just over eleven dollars per coal equivalent ton (Figure 5) suggests that production costs of petroleum products were relatively-high. Examination of product prices reveals that whilst prices are relatively high, there i s a range i n price from at least fifty-nine dollars per coal equivalent ton for 4 gasoline to eight to twelve dollars for fuel o i l s . The price variation arises from the joint-product nature of refinery operations. The refiner remains committed to a variety of products even though advances i n refining techniques have given him some f l e x i b i l i t y over the proportionate breakdown of a barrel of crude o i l into petroleum products. In pricing these products, two considerations are of prime importance. F i r s t l y , i t i s not possible to make a precise breakdown of the costs of each product, though highly processed products such as gasolines clearly cost more than the heavier fuel o i l s which are almost in the nature of residuals. Secondly, the market structure for each product varies and hence price e l a s t i c i t i e s ' of the products vary. Thus, the policy i s to vary product prices considerably. ^Calculated from D.B.S., General Review of the Manufacturing  Industries of Canada 1959?(Ottawa, Queen's Printer, 1962) Table 1. 95 Even though there are elements of demand p r i c i n g , i t i s clear that the product prices quoted above cannot compen-5 sate f o r the high price gradient of rail-hauled products. Therefore pipelines, f o r either products or crude o i l , are essential i f the energy market of a l l Western Canada i s to be supplied by Alberta's petroleum. Given the economies of scale of pipelines, the l a r g e r the throughput, the lower the cost per b a r r e l mile. This f a c t o r favours the movement of crude o i l rather than petroleum products. The former i s a more homogeneous commodity and i s required i n r e l a t i v e l y large predictable amounts at s p e c i f i c locations. Hence, r e f i n e r i e s tend to be market orientated and the a v a i l a b i l i t y of petroleum products i s c l o s e l y associated i n space to the l o c a t i o n of the r e f i n e r i e s . Yet, s p a t i a l problems of the supply of crude o i l to r e f i n e r i e s cannot be overlooked f o r there are elements of raw material orientation and h i s t o r i c a l legacies i n the d i s t r i b u t i o n of r e f i n e r i e s i n Western Canada. Crude O i l Supplies to Refineries Transport costs determined the supply patterns of crude o i l to Western Canadian r e f i n e r i e s during the l a s t decade. There has not been any absolute shortage of crude I t i s assumed that these prices are i n d i c a t i v e of prices f.o.b. the r e f i n e r y . 96 o i l for the surplus of crude o i l producing capacity over the demand for crude o i l has necessitated a proration of Alberta's production since 1950. The distribution of refineries and of o i l fields i n I960 i s illustrated i n Figure 12. By I960 partically a l l refineries relied on pipelines for their supplies of crude o i l . The major exceptions are refineries i n the Lloydminster and Wainwright areas which have always been orientated towards an adjacent group of heavy crude o i l fi e l d s . From the catalyst of the Leduc discovery i n 1947, the discovery and production of crude o i l has spread to a l l four Western Provinces. In 1951, production was heavily concentrated within Alberta but, (this pattern was notably altered by the discovery of medium gravity crudes i n south-east Saskatchewan i n 1954.) Production i n Manitoba reached a peak of 6.1 million barrels i n 1957 and i s declining, whilst B.C. production remained significant only to the Dawson Creek refinery. T Previous to 1951, crude o i l could only be moved at low cost to refineries i n Alberta and within the vic i n i t y of Vancouver. The latter depended on ocean tankers bringing i n U.S. o i l . Saskatchewan and Manitoba refineries were supplied by rail-hauled crude o i l with a price gradient similar to that of petroleum products. Consequently, any expansion of refinery capacity within these provinces was seriously handicapped. OIL FIELDS, PIPELINES, AND REFINERIES 1960 OIL FIELD PIPELINE o REFINERY THE AREA OF THE CIRCLE IS PROPORTIONATE TO THE CRUDE OIL CAPACITY ACCORDING TO THE FOLLOWING SCALE Thousands of barrels ? 5 1 5 3 0 20 I 10 35 Sources D.B S ( T h « F*troieum Products Industry (960 Bank of Commerce,011 and Gas Fields in Western Canada I960 61 (map) 98 Because of the economies of scale of pipelines, Cthe incentives to construct the Inter-Provincial and the Trans Mountain pipelines came from a realization of markets external to Western Canada^) Figure 13 illustrates the crude o i l movements over the decade and points to the hulk of the crude o i l being destined for external markets. The 1956 exports of crude o i l were above average because of the Suez c r i s i s . These large pipelines, orientated towards external markets, have permitted Canadian refineries sited en route to reap the benefits of cheap transport (Figure 5). In contrast to other modes of transport, pipeline t a r i f f s have declined since 1951 because of throughputs rising i n response to internal and external demands. (in addition to making pipelines available, external markets have favoured the competitive position of petroleum within Western Canada i n that the well-head prices are based on the prices of competitive crudes i n external markets.^ The well-head price i n Western Canada tends to be set according to competitive prices at Sarnia, minus trans-7 port charges. (As the market area for Western crude o i l has expanded, well-head prices have dropped.^ Prices of _ ; Pipeline t a r i f f s i n cents per barrel: 1951 1956 I960 Edmonton to Gretna (Man./U.S. border) 44 36 36 " " Burnaby (Vancouver) - 45 40 7 'The well-head price i s not a simple case of demand pricing. The prorating of the supply of crude o i l from Alberta i s a complicating factor i n the setting of the well-head price. 99 CRUDE PETROLEUM BALANCE MILLIONS OF BARRELS I - .9 IX)- I 9 8J0- I5 9 I6JO - A N D OK* Noti Available supplies lepissent either crude received by refiners or cruda njn t o l a s . Soureea DAS. Raflnad Petroleum Praducts.Annual. Albtrts,01land Gaa Corrssrvatlon BoaidtOiland Gaa Industry, Annual Saekatctvjwan, Department of Mineral feMourcas, Petroleum and Natural Gas Statistics Yearbook R A Simpson at al, A Survey of the Patrolaum Industry In Canada In IMO, Mineral Information Busatm Hit S2 SCALE F i g u r e 13 -Alberta crude have been low enough for such o i l to eliminate Californian crude o i l from the Vancouver market, and even to permit Alberta o i l to surmount the ten cents per barrel U.S. t a r i f f and to penetrate markets i n Washington?) In view of this pricing policy, the dispersion of crude o i l production into southeast Saskatchewan and into Manitoba does not represent a saving i n cost of crude o i l to local refineries. Being closer to U.S. and Ontario markets, these sources of crude o i l can command higher 8 well-head prices. After 1951 the price gradient of crude o i l to a l l major refining centres i n Western Canada was far below that of rail-hauled petroleum products. Therefore, i t i s x postulated that the distribution of refineries should have become more market orientated by I960. Distribution of Refineries The highest pipeline charge for crude o i l in Western Canada i s that of Edmonton to Vancouver, a charge which amounted to less than two dollars per coal equivalent ton in 1956. When this charge i s compared with the product prices previously quoted, i t i s postulated that transport charges can be absorbed and that any spatial variation i n Q This does not necessarily apply to the large quantities of sour crudes produced i n these two provinces. However, these crudes have not found favour with Canadian refiners and production is closely linked with refineries i n the Minneapolis - St. Paul region. 101 p r i c e s f.o.b. the r e f i n e r y w i l l overwhelmingly r e f l e c t market c h a r a c t e r i s t i c s . I f such c h a r a c t e r i s t i c s are assumed to be con-stant, r e f i n e r y prices w i l l be a r e a l l y constant. The only s p a t i a l v a r i a t i o n i n p r i c e w i l l be a constant r i s e of product prices as products, moved by road and r a i l , reach into more dist a n t markets around each r e f i n i n g centre. The major r e f i n i n g centres are c e n t r a l l y located within each province (Figure 12), therefore, the market boundaries of those centres should approximate the p r o v i n c i a l boundaries. The only notable exception i s i n B.C. where the Vancouver r e f i n e r i e s are located off-centre and consequently the eastern part of the I n t e r i o r probably l i e s within the o r b i t of r e f i n e r i e s located at Edmonton and Calgary. Because market areas tend to coincide with provinces, providing the above postulates are accepted, p r o v i n c i a l data can be used to examine the s p a t i a l relationships of r e f i n e r i e s . In view of the f a c t that about h a l f the outputs of r e f i n e r i e s consist of gasolines, whose demand d i s t r i b u t i o n correlates highly with that of population, i t i s suggested that p r o v i n c i a l population t o t a l s control the i n t e r - p r o v i n c i a l d i s t r i b u t i o n of r e f i n i n g a c t i v i t i e s . For each province r a t i o s of r e f i n e r y capacity to population were calculated by d i v i d i n g the former into the l a t t e r (Table V). The r a t i o s are reversed i n that a r e l a t i v e l y high r a t i o indicates a r e l a t i v e lack of r e f i n i n g capacity.^ Interpretation of the table i s f a c i l i t a t e d by reference to Figure 12 which shows the changes i n r e f i n e r y capacities within each province. The c a l c u l a t i o n was done t h i s way i n order to obviate the rcrobleni of f r a n t i r i T i s . 102 TABLE V RELATIONSHIP OP REFINERY CAPACITY TO POPULATION, BY PROVINCE Persons per barrel/day capacity. 1951 1956 I960 B.C. 40.4 19.7 16.4 Alberta 15.5 13.4 14.5 Saskatchewan 21.6 12.2 14.4 Manitoba 38.0 27.2 27.8 Western Canada 25.1 16.5 16.7 Calculations: 'OOP's population  '000's barrels per day capacity 103 Overall, Sable V indicates a trend towards a market orientation of refineries i n that by I960, with the exception of Manitoba, the relationship of refinery capacities to population was approximately the same i n each province. Problems of the availability of crude o i l i n the early part of the decade are indicated by the relatively large con-centration of refining capacity in Alberta in 1951, compared with notable limitations on growth of refineries in Manitoba. Prior to 1951 some expansion of refining in Saskatchewan was permitted by proximity to Alberta's crude o i l f i e l d s . The most spectacular expansion of refineries has taken place i n B.C. where, despite the legacy of a high degree of accessibility to Californian crude o i l , an equal degree of accessibility to U.S. petroleum products retarded the expansion of local refineries u n t i l after 1951 (Table V and Figure 12). A further point i s brought out by examination of the average ratios for Western Canada. The competition of natural gas i s suggested by the fact that since 1956 refinery expansion has tended to move i n step with population growth. The above evidence, shows a trend towards each province relying on i t s own refineries for supplies of petroleum products. Therefore, the hypothesis that this should be the pattern, because of the central location of refineries i n each province and of the low price gradient of crude o i l , appears acceptable. Qualifications to this 104 pattern are recognized. In 1951, there was probably a considerable outward movement of petroleum products from Alberta and i n I960 the B.C. Interior and Manitoba probably continued to import petroleum products. One element of the pattern, the areal concentration of refining activity within each province, has not been accounted for. The steep price gradient for petroleum product would suggest a more dispersed pattern of refineries. In part, locations of refineries are dictated by pipelines, but the economics of refining account for the concentration i n major urban centres. Not only are there economies of scale i n refining but, significant economies are achieved i n a large heterogeneous market. Such a market i s l i k e l y to offer a demand pattern embracing significant quantities of a l l the petroleum products. It has been pointed out that the refiner only has limited production control over the proportions of the various products. Finally, the agglomeration of refineries permits the interchange of •surplu products between plants. Evidence of the factors behind the distribution of refineries has been presented. Confirmation of the postulated relationship of refineries to market areas should come from examination of the inter-provincial movements of petroleum products, but data limitations handicap the analysis. 105 Inter-Provincial Balance of Petroleum Products It i s essential to note the inadequacies of the data presented in Figure 14. In most cases, i t i s highly-probable that the inter-provincial movements have been underestimated; published data only permit a f u l l tabulation of foreign imports and exports. In several instances, including a l l movements i n 1956, the pattern has been derived from calculations of total consumption and production of petroleum products i n each province, and arriving at a net transfer figure. The basic assumption was that petroleum products moved no further than the adjacent province. Por example, movements from the west into Manitoba i n I960 have been assigned to Saskatchewan sources, even though i t i s lik e l y that some of these products came from Alberta refineries. Therefore, though the balance of petroleum products i s essentially correct, the representation of the movements in Figure 14 i s largely schematic. The market orientation of refineries i s indicated by the small volume of petroleum products moved on the inter-provincial scale relative to the movements of crude o i l (Figure 13). The largest movement has been the import of U.S. petroleum products into coastal regions of B.C. Unlike the coal pattern, Manitoba's imports from the south and east have been minor. The Suex c r i s i s created an abnormal pattern OUTPUT 75 AVAIL ABC E 177 OUTPUT 220 272 OUTPUT AVAILABLE 264 37 — / / >. W51 l ~ - I 1956 97 1 /. 131 mm mm?* i _ — • /.. I 'I960 OUTPUT AND BALANCE OF PETROLEUM PRODUCTS HUNDREDS OF THOUSANDS OF BARRELS OUTPUT i ? 3 A c 1. Fuel Oils Nos. 4,5,and 6 2.Fuel Oils Nos.2and3 IStove Oil.Kerosene.and Tractor Fuel D i e s e l a i 4. Diesel Oil | 5. Gasolines and Turbo Fuel MOVEMENTS All Fuel Oils.Kerosene.and Tractor Fuel Gasolines and Turbo Fuel No la < Outpa) It tut Quantlt, Muppoo' k> nrtmit. Tla M»aMa tmtty It output ,o*ut Import I. minui •Kporti.and is eateuMtfad tram taact fifunn. Sou KM D .M. KtlMod Mtoltum •toductt.AiaiuM. OaVJ,«.»••> TonapoM n n « , i w u i . SCALE 0 300 MILES QUANTITIES MOVED , -» » l - 4 9 = 3 5 - 9.9 K) - H.9 15 and over Figure 14 107 pattern i n 1956; the large export of gasolines, over 50 per cent being aviation turbine fuel, from B.C. to the U.S.A. was exceptional. The overall evaluation of the movements of petroleum products i s that they are i n accordance with the general bulk fuel price pattern (Figure 4) i n that the movements are directed towards high fuel cost areas. A significant exception was the east to west movements of heavy fuel o i l ^ i n 1951, but these movements were in response to railway policies. With a trend towards market orientation of refineries , the movements of petroleum products should exhibit a decline over the decade. Such a decline was not apparent except i n B.C. where expansion i n refining capacity clearly reduced foreign imports of gasolines and diesel fuel. Elsewhere, the movements of petroleum products were f a i r l y stable except insofar as railway dieselization induced large fluctuations in' the movements of heavy fuel o i l and diesel o i l . Despite the lower costs of crude o i l transport, the movements of petroleum products have, and w i l l persist because of imperfect adjustment of refineries to market characteristics. The trend towards market orientation of refineries i s largely a. trend to gasoline markets. Note has been taken of the refiner only having a limited control over the proportions of the outputs of various products. Thus, 'surplus' non-gasoline products can s t i l l be arising i f the Oils No. 4, 5, and 6 108 market structure does not reflect the f a i r l y standard product mix. Secondly, 'surplus' gasoline capacity was probably s t i l l apparent in I960 in Alberta and Saskatchewan. This would be a consequence of the historical legacy of former extensive heating and railway markets for the heavier fuel o i l s , markets large enough to influence decisions on refinery locations i n the past. i Previously, on the basis of limited evidence, i t was suggested that by I960 there was a tendency for exclusive market areas to arise centred on each of the four major concentrations of refineries. These market areas would tend to coincide with provincial boundaries except that part of B.C. would be i n the orbit of Alberta refineries and secondly, the limited refinery capacity of Manitoba would necessitate significant imports of petroleum products. If there were four exclusive market areas, then the price gradient of the four refining centres would be that of crude o i l (Figure 5) and on that pattern would be superimposed the intra-market area price gradients, resulting i n the establishment of price-sheds on the borders of these market areas. Whilst inter-provincial shipments of petroleum products were minor compared with those of crude o i l , such shipments continued to appear i n I960. The h i s t o r i c a l legacy of a lack of refinery capacity outside of Alberta i n 1951, plus maladjustments of refinery outputs to market characteristics, 109 ensures the persistence of these shipments. The largest shipments i n I960 were into B.C. from Alberta, 1 1 which may only be into that part of B.C. within the market area of Alberta refineries, and into Manitoba where almost one-third of the requirements of petroleum products were met by imports. In sum, doubt exists as to the degree that the inter-provincial price pattern reflects the price gradient of crude o i l . Unfortunately, lack of data of petroleum product prices inhibits evaluation. It does appear that, particularly i n the case of Manitoba, the price gradient for petroleum products may be higher than that indicated i n Figure 5. Therefore, the price relationships of petroleum products to other fuels may not be so relatively favourable to the former i n B.C. and Manitoba and the consumption patterns may reflect this. CONSUMPTION OF PETROLEUM PRODUCTS Accounted consumption data are largely complete, in most cases checking closely with the apparent supply of petroleum products. Recorded end-use i n Alberta i s too high by four to five hundred thousand barrels because i t was impossible to exclude the N.W.T. The largest discrepancy i n ^Imports of U.S. heavy fuel oils do not invalidate the hypothetical price pattern of Vancouver prices reflecting the crude o i l price gradient. These imports make use of cheap ocean transport and Vancouver refineries, limited by the size of the gasoline market, cannot f u l f i l l a l l the fuel o i l demands. 110 the balance of petroleum products occurred i n Manitoba in I960 when consumption exceeded the apparent supplies by 1.8 million barrels. Such a discrepancy points to the under-estimation of the movements of petroleum products i n Figure 14. From the viewpoint of competition of energy sources, a large segment of petroleum products consumption in a l l provinces can be excluded. Consumption i n refineries and i n 12 ocean, road, and air transport i s specific to petroleum products. 1^ The distribution of these demand components i s controlled by the distribution of refineries and by factors external to the energy economy. On the other hand, road and air transport markets for gasolines are of indirect importance to this study i n that the size of these markets, indicated by the gasoline outputs of refineries shown in Figure 14, does tend to control the location of refineries and hence the supply patterns of a l l petroleum products. This point has already been established. Having excluded these demand components, the analysis i s restricted to consideration of the railway, domestic, and industrial markets. With regard to the railway market, consumption i n the non-locomotive sector i s not 12 Appendix E. •^This i s becoming less true of refineries where Liquified Petroleum Gases (IPG) are making inroads. In the case of ship bunkering, only a remnant of coal bunkering was l e f t by 1951. I l l " } 14 considered. This sector i s of minor size and the competitive patterns are p a r a l l e l to those of the domestic sector. Railway Locomotives In the discussion of coal consumption, attention was focused on the relationships of the consumption patterns to coal supply patterns. The assumption was made that f u e l o i l and di e s e l o i l were available from l o c a l r e f i n e r i e s i n a l l provinces. When the coal consumption pattern did not r e f l e c t the pattern of coal supplies, a number of non-energy fa c t o r s were suggested, to account f o r the decisions to change the f u e l mix or to switch from steam to d i e s e l locomotives. The task that remains i n evaluation of the locomotive market i s to examine the assumption concerning the supply patterns of f u e l o i l and d i e s e l o i l and, to evaluate the competition of o i l - f i r e d steam locomotives with d i e s e l locomotives. The consumption patterns of a l l locomotive f u e l s are shown i n Figure 15. Throughout th i s thesis consideration of the r e l a t i v e thermal e f f i c i e n c i e s of fuel s has been excluded. However, i n the case of locomotives the differences between the thermal e f f i c i e n c i e s of the various f u e l s are so large that, to only consider the inputs of Appendix E. EFFECTIVE USE OF ENERGY BY LOCOMOTIVES BRITISH COLUMBIA ALBERTA COAL FUEL OIL DIESEL OIL Nott: <U Only (MM for 1951.1956, «nd 1960 art ptottod taM, P H W I I comnuniettion. C . l . O * l » . C r * n m n . Oomioon Co* Board. 1962. DBS.Rai««Mry Trmport. Port « . A"""* -Figure 15 113 f u e l s would r e s u l t i n a serious underestimation of the contribution of d i e s e l locomotives. The input of locomotive f u e l s i n Western Canada decreased by 85 per cent between 1951 and I960, despite an increase i n t r a f f i c . This i s a s t r i k i n g testimony to the higher thermal e f f i c i e n c i e s of d i e s e l locomotives. The trends i n Figure 15 point to a s l i g h t decline i n the ef f e c t i v e power output of f u e l s over the decade. This i s probably because the e f f i c i e n c y of d i e s e l locomotives has been underestimated; such locomotives do not require f u e l f o r steam r a i s i n g before being put into operation. The hypothesis that f u e l costs would dictate a pattern of f u e l o i l replacing coal f i r s t on the coal p r i c e -sheds of B.C. and western Manitoba was based on the assumption that f u e l o i l was available from r e f i n e r i e s i n each province. The actual pattern of the change-over did not follow t h i s pattern, therefore non-fuel cost considerations were stressed i n discussing the elimination of c o a l - f i r e d locomotives. However, closer examination of f u e l o i l supplies reveals a concentration of such supplies within Alberta, a pattern which almost duplicated that of coal. Hence, s p a t i a l patterns of f u e l costs may s t i l l have had a role to play i n the h i s t o r i c a l replacement of coal by o i l - f i r e d locomotives i n B.C. and i n t h e i r extension eastward across the network. 114 The o i l discoveries immediately preceding Leduc were of heavy gravity crude o i l s lying at shallow depths to the east of Edmonton. Up until 1951 both the heavy crude oil s and the lighter Leduc o i l s were rail-hauled to Prairie refineries. With the advent of the Inter-Provincial pipeline the situation changed because i t i s almost impractical to primp heavy crude o i l through a pipeline. Consequently, refineries on the pipeline became orientated 15 just to the lighter gravity crude oils , and heavy crude o i l sources became restricted mainly to refineries i n the Wainwright-Iiloydminster area (Figure 12). Given f a i r l y standard processing techniques, the heavier crudes give rise to a high proportion of heavy fuel o i l s i n the product mix. The result was that this product mix, combined with the limited industrial market for heavy fuel o i l s i n Alberta, created a 'surplus' of such o i l s . (j>uch a 'surplus' arising at a location almost central to the network of C.N.R. enabled that company to obtain fuel o i l at "exceptionally low prices"-1-^) It has been previously established (Shapter IV) that C.P.R. did not eliminate coal-fired locomotives as quickly as C.N.R. It was suggested that explanation may l i e i n the cost of coal having been somewhat lower on the C.P.R. network because of the location of coal sources. However, C.P.R.'s lack of interest i n fuel o i l was also related to the spatial •'--'This did not occur immediately. A million barrels of crude o i l rail-hauled into Saskatchewan from Alberta in 1951 were destined mainly for the Moose Jaw refineries. 16 Personal communication: W.L. Shirray, General Fuel and Forest Products Agent, C.N.R., 1963. 115 pattern of fuel o i l supplies. Examination of Figure 12 points to the close spatial association of the above heavy fuel o i l supplies with C.N.R., an association which became formalized i n contracts guaranteeing supplies to C.N.R. In B.C. there was a marked emphasis on fuel o i l even by 1951. In the chapter on coal, explanation of this pattern stressed non-fuel cost factors and the traditional accessibility of B.C. to U.S. fuel o i l . The latter factor appears to have become a hist o r i c a l legacy by 1951 for, between 1951 and 1956, the rise i n fuel o i l consumption i n that province was largely f u l f i l l e d by supplies from Alberta refineries. Insofar as the increased consumption occurred i n the Interior, this was to be expected; the area being within the orbit of Alberta refineries because of the off-centre location of Vancouver refineries and of importing centres. Within Alberta and the Interior of B.C. coal and fuel o i l were competing largely on the basis of costs of production for, relative to other areas of Canada, movements of these fuels were limited i n terms of mileage. In Alberta the changeover to fuel o i l was second only to that of B.C. (Figure 15). This pattern could have arisen either because fuel o i l costs were lower than those of coal or, because of the organization problems of changing the fuel mix,, & point which was noted i n the discussion of coal locomotive consumption. 116 Not only are the costs of fuel o i l f.o.b. the refinery unknown, but the freight rates are also uncertain. The commodity r a i l rates from Alberta to Winnipeg i n the 1953-56 period were 30 per cent higher per coal equivalent ton for fuel o i l than for coal. The rates that the companies charged themselves for their own fuel were less because the above rates are partly based on 'what the t r a f f i c w i l l bear', and this factor possibly varied as between coal and fuel o i l . One can only assume that the delivery costs of Alberta coal and fuel o i l shipped to areas west of the coal subvention region did not d i f f e r significantly. If this i s the case, then the relative s t a b i l i t y of coal markets east of Alberta i s partly accounted for by the fuel cost patterns. Local supplies of fuel o i l proved inadequate for rising railway demands and a marked changeover to fuel o i l would have entailed fuel o i l shipments from Alberta. In Saskatchewan local refineries just f u l f i l l e d provincial needs of o i l - f i r e d locomotives, whilst i n Manitoba local refineries only f u l -f i l l e d 50 per cent of locomotive requirements after 1953. These limitations arose because of lack of refinery capacity and of the use of lighter gravity crude o i l s . Increased outputs of fuel o i l were dependent on refinery expansion and such expansion would not be justified unless markets for the greater part of the range of petroleum products expanded. 117 Diesel fuel had a dynamic spatial pattern similar to that of fuel o i l . With the thermal efficiency of diesel locomotives being over four times higher than that of coal or o i l - f i r e d steam locomotives, there was an incentive to commence dieselisation programmes on the price-sheds of fuel o i l , that i s , the Interior of B.C. and in Manitoba. The supply pattern of diesel fuel was more volatile than that of fuel o i l . Only after 1954 were the quantities of sufficient volume to permit any evaluation as to the emerging patterns. In B.C. local supplies of diesel o i l , plus imports from the U.S.A., kept pace with the rise i n demand except for a brief interlude in 1956 and 1957 when imports from Alberta rose to over two hundred thousand barrels per year. Imports rose again i n I960 in order to replace U.S. diesel o i l . Whilst Alberta had available supplies i n excess of demand in that province, the supply pattern of the Prairies differed from that of fuel o i l . Although Manitoba remained about 50 per cent deficient in supplies, this deficiency could have been f u l f i l l e d by Saskatchewan refineries. Apparent supplies of diesel o i l to railway companies in Western Canada were consistently i n excess of locomotive consumption after 1954 to the extent of two hundred to eight hundred thousand barrels per year. This consistent excess suggests an export of diesel fuel into Western Ontario. 118 The consumption pattern f o r d i e s e l o i l does to some degree r e f l e c t the a v a i l a b i l i t y of the f u e l i n that d i e s e l i s a t i o n was i n i t i a l l y concentrated within B.C. and Alberta. The I n t e r i o r of B.C. was a price-shed f o r d i e s e l o i l but, the thermal e f f i c i e n c y of d i e s e l o i l ensured that t o t a l transport costs would be s u b s t a n t i a l l y lower than those of shipping f u e l o i l into the region. However, r e l a t i v e a c c e s s i b i l i t y to sources of d i e s e l f u e l and other f u e l s was not an overiding consideration i n Western Canada. The d i e s e l i s a t i o n pattern was foreshadowed by that of f u e l o i l . There may well be a d i r e c t relationship- , d i e s e l i s a t i o n programmes probably took note of the existence of l i q u i d f u e l f a c i l i t i e s f o r f u e l i n g locomotives. With the f a l l i n t r a f f i c from the peak of 1956, coal and f u e l o i l were v i r t u a l l y eliminated from the locomotive market i n four years. The rapid elimination was evidence that both coal and o i l - f i r e d locomotives had already been l a r g e l y reduced to a standby role by the middle of the decade. I t has been pointed out previously (Chapter IV) that C.P.R. p o l i c y was to place d i e s e l locomotives on main-line t r a f f i c f i r s t , i n order to obtain the quickest return on the c a p i t a l investment. After 1956, the magnitude of the d i e s e l i s a t i o n programmes i n a l l provinces appears to have been governed by the decision to have d i e s e l i s a t i o n v i r t u a l l y completed i n a l l provinces by I960. The greater dispersal of d i e s e l o i l sources, plus the smaller quantities 119 moved, would tend to negate areal differences i n diesel o i l prices compared with fuel o i l prices. Consequently, the cost advantages of diesel o i l would be greatest on the fuel o i l price-sheds, Manitoba especially. It appears that the above dieselisation policy took no note of spatial variation i n the cost advantages of diesel o i l , though the end-result of total dieselisation i s i n agreement with costs of the various fuels i n that the fuel b i l l s of the railways declined. Domestic Market The f u l l range of petroleum products are consumed in this market sector but heating o i l s , especially medium and light fuel o i l s , dominate the consumption patterns. This market, as a segment of the total accounted consumption of petroleum products i n Western Canada increased i t s share from 15 to 22 per cent between 1951 and I960. Though the market expanded by 260 per cent between 1951 and I960, competition from natural gas reduced the rate of expansion after 1956 to only 60 per cent of the rate of prevailing during the earlier part of the decade. The distribution of petroleum product sales, shown below i n thousands of barrels, points to the concentration i n B.C. of 1951 sales: B.C. Alta. Sask. Man. 1951 3,316 550 1,443 1,157 1956 5,496 1,041 3,587 3,220 I960 6,886 1,416 2,891 5,443 120 In 1951 domestic markets in B.C. and Alberta had a legacy of being highly accessible to supplies of petroleum products for a number of years. Yet, an equal accessibility to natural gas i n the Alberta market had severely curtailed the consump-tion of petroleum products. The market trends show that the most rapid growth of sales took place in Saskatchewan and Manitoba where, the advent of the Inter-Provincial pipeline i n 1951 radically increased accessibility to o i l sources. But, sales i n the Saskatchewan market were unstable for they even experienced an absolute decline between 1956 and I960. The large quantities of petroleum products consumed within B.C. appear to be i n accordance with the price pattern. The coastal area of B.C. i s a price-shed for coal whilst being highly accessible to petroleum products transported by water from either Vancouver refineries or from U.S. sources. In 1951 over 80 per cent of the domestic sales of heating o i l s i n B.C. were i n the Vancouver and 17 Victoria metropolitan areas. Yet, examination of Table VI demonstrates that petroleum products had a greater degree of success against fuel wood than against coal. The substitution i n Table VI i s exaggerated because o i l has a thermal efficiency 18 gain over wood , and consequently the proportion of the 17 Heating o i l s are defined as petroleum products minus the stove o i l , kerosene, and tractor fuel group. Appendix B. 121 TABLE VI CHARGES IN THE QUANTITIES OP VARIOUS FUELS CONSUMED IN THE DOMESTIC MARKET Thousands of coal equivalent tons 1951-56 1956-60 B.C. Alta. Sask. Man. 1 Fuel Wood8, -295 - 81 - 98 - 71 Coal b - 79 -229 -389 -208 Petroleum 469 106 461 4 3 7 Balance 95 -204 - 26 158 1 a Fuel Wood -236 - 64 - 79 - 57 Coal b -315 -169 -323 -306 Petroleum 301 81 -149 536 Balance -250 -152 -551 173 Source: Figure 8. Figures for the two time periods interpolated from 1951-60 changes. Source: page, 75. Note: The balance can be negative because the changes i n the energy mix usually result i n a considerable gain in overall thermal efficiency. 122 expanding petroleum sales resulting from population growth may well have been over one quarter of the total. It i s unlikely that petroleum products offered a cost advantage over fuel wood derived from local sawmills, but petroleum does offer gains i n 'convenience'. In the second part of the decade i t i s d i f f i c u l t to evaluate to what extent petroleum was substituted for coal and fuel wood in B.C. Sales of petroleum products did experience a more limited expansion for, i n the face of natural gas, sales became more orientated to the non-metropolitan areas. The percentage of provincial sales i n these areas rose from 20 per cent i n the early years to 30 per cent i n I960. In the Interior of B.C. the expansion of petroleum sales was limited because this area i s a price-shed for petroleum products whilst being relatively accessible to fuel wood supplied by local sawmills, and to bituminous coal in the southeast region. Petroleum would continue to offer gains i n 'convenience' but price relationships are more disadvantageous to petroleum i n the Interior than i n the coastal region. Consequently, natural gas, by forcing the expansion of petroleum sales to rely more on the Interior energy market, ensured that petroleum in B.C. only had a limited expansion after 1956. 123 The significance to petroleum sales of metro-politan and non-metropolitan areas in the Prairie Provinces i s outlined i n terms of barrels of heating o i l s per capita: 1951 1956 I960' Winnipeg and Brandon Remainder of Manitoba 2.3 0.1 4.7 2.6 4.2 5.5 Regina and Saskatoon Remainder of Saskatchewan 4.7 0.5 10.3 2.1 1.8 3.0 Edmonton and Calgary-Remainder of Alberta 0.2 0.1 0.3 1.2 0.2 1.0 Sales to government institutions are excluded i n this year. It cannot be established as to what extent such sales have been included i n data for previous years. Marketing problems i n Alberta are immediately apparent ,Cf or natural gas had stripped petroleum of urban markets adjacent to the refineries^) Thus, petroleum expansion has been more limited than i n other provinces because virtually a l l the expansion took place under the handicap of additional trans-port costs. Added to this, the dispersed nature of the sub-bituminous fields favoured the competitive position of coal, and the gas pipeline network was being continually expanded. Thus, the Alberta per capita figures for the area outside of Edmonton and Calgary are considerably lower than those for similar areas i n other provinces, despite the longer time i n which relatively cheap petroleum has been available. If most of the fuel wood consuming areas of Alberta lay beyond the gas pipelines, then Table TI shows that over half of the 124 expanding petroleum sales had to r e l y on substituting f o r wood. I f t h i s i s so, the li m i t e d expansion of petroleum i s not surprising because the f u e l wood market i s remote from r e f i n i n g centres and t h i s market has the s t a b i l i z i n g factor of the farmer's woodlot. The rapid expansion of sales i n Saskatchewan and Manitoba, r e s u l t i n g from the Inter-Provincial pipeline r a d i c a l l y improving a c c e s s i b i l i t y to crude o i l , occurred i n both urban and non-urban areas. This i s shown by the r i s i n g per capita consumption figures. The i n t e n s i t y of sales i n Regina and Saskatoon i s exaggerated because population data f o r the c i t i e s were used, no metropolitan areas being delimited, and sales data probably apply to larger areas. After 1956 the sales pattern i n both provinces became more orientated to areas outside the major population centres as natural gas made inroads into those centres. In the case of Regina and Saskatoon, the f a l l i n consumption of petroleum products was s u f f i c i e n t to induce a drop i n t o t a l p r o v i n c i a l consumption. On the other hand, petroleum sales continued to expand i n Manitoba at a rate above that of the e a r l i e r part of the decade, a trend d i f f e r i n g from that of every other province. It has been suggested that the advent of the Inter-Provincial p i p e l i n e would tend to almost n u l l i f y differences between the Saskatchewan and Manitoba prices 125 for petroleum products. If this were so, there should have been a greater substitution of coal by petroleum i n Manitoba because this area i s a price-shed for coal, and because a larger segment of the provincial market i s adjacent to refineries. However, the evidence of Table VI i s of a greater degree of substitution i n Saskatchewan. In the chapter on coal the problem of the large f a l l i n coal sales i n Saskatchewan was noted, but coal supply patterns did not explain i t . If one accepts average prices of coal and fuel o i l to manufacturing industry, expressed i n 19 dollars per coal equivalent ton, as being Saskatchewan Manitoba Bituminous - 13.87 Sub-Bituminous 13.30 Lignite - 7.31 Fuel Oil 8.19 10.01 indicative of prices i n the domestic market then the explanation i s found i n the stabilizing element of lignite sales and i n the higher prices, relative to coal, of petroleum products i n Manitoba. From the above figures i t i s apparent that Manitoba's petroleum prices did not reflect the price gradient of the pipeline. The reason for this l i e s i n the lack of refining capacity in Manitoba and the consequent need to rail-haul petroleum products into that province. 19 Calculated from D.B.S., General Review of the Manufact- uring Industries of Canada 1959 (Ottawa, Queen's Printer, 1962; Table 1. Prices of only those coal ranks significant i n the domestic markets have been calculated. 126 Petroleum sales in the domestic sector expanded notably where natural gas was absent. Until about 1956 the pattern was of a considerable expansion of sales i n areas outside of Alberta. The expansion of petroleum sales appears to have been almost entirely dependent on sub-stitution for coal and fuel wood i n Saskatchewan (Table VI), where price relationships of these fuels were relatively favourable to petroleum. In B.C. and Manitoba about one-third of petroleum sales expansion appears to be accounted for by population growth. After 1956 natural gas was available at a l l major refining centres, therefore petroleum had to seek further expansion i n the more rural areas of each province. Despite the relatively high price gradient of pet-roleum products, sales continued to expand significantly except in areas around coal f i e l d s and i n fuel wood market areas. Industrial Market The outstanding contrast between the domestic and industrial markets for petroleum products was the limited expansion of the latter. The industrial market only expanded by 60 per cent between 1951 and 1956, and this expansion was followed by a slight decline. ^Similar trends occurred i n the use of petroleum by both thermal power stations and other 127 industrial consumers.) The consumption figures expressed in thousands of barrels, shown below, point to the ! minor size B.C. Alta. Sask. Man. 1951 Power Stations 173 91 733 8 Other 3,170 692 800 387 1956 Power Stations 246 24 1,249 7 Other 5,836 1,536 599 1,318 I960 Power Stations 140 46 761 31 Other 4,880 1,365 515 1,342 of the power station component except i n Saskatchewan. Not only was expansion limited relative to domestic consumption but, Table VII shows that such expansion as did take place i n the general industrial market, was an expansion largely i n response to the overall growth of industrial energy consumption. In 1951 petroleum sales to the general industrial market of Western Canada were heavily concentrated i n B.C. Coastal B.C. i s a price-shed for coal and has a legacy of accessibility via ocean transport to U.S. petroleum products. In the other provinces petroleum sales were limited by natural gas i n Alberta, the lack of industry i n Saskatchewan, and the problem of having to rail-haul crude o i l or petroleum products into Manitoba. 128 TABLE VII CHANGES IN THE QUANTITIES OF VARIOUS FUELS CONSUMED BY INDUSTRY8" Thousands of Coal Equivalent Tons B.C. Alta. Sask. Man. 1951-56 Fuel wood 370 - - -Coal -37 -108 -10 - 36 Petroleum 583 184 -44 205 Balance 916 76 -54 169 Fuel wood 518 - - -Coal -276 - 5 - 8 - I l l Petroleum -209 -25 19 - 4 Balance 33 -30 11 -115 a Excludes u t i l i t y power stations and the petroleum industry. Note: The trends of the above petroleum figures are sometimes contradictory to the trends of the total number of barrels consumed. Such contradictions can arise because of changes i n the product mix of petroleum consumption; the products having different conversion values (Appendix A). 129 The above relationships of petroleum to other fuels had been relatively stable for a number of years. In the 1951-1956 period the only significant change was the improvement i n availability of petroleum in Manitoba because of the Inter-Provincial pipeline. The Trans*Mountain pipeline did not lead to any significant change i n availability or prices of petroleum on the B.C. coast. Whilst, petroleum sales i n Manitoba showed a greater proportionate rise than B.C. sales, expansion i n both provinces was largely a result of expansion of industrial demands for energy (Table VII). Substitution for coal was very limited for i t has been noted (Chapter IV) that the coal market was stabilized by the use of small sized coal and by long-term contracts. In addition, relatively cheap lign i t e was available in Manitoba. At f i r s t sight i t appears 20 that most of the petroleum sales expansion in Alberta was a substitution for coal. However, most of the decline i n coal consumption was probably a result of natural gas expansion. Much of the petroleum market of Alberta appears to be related to power demands. Diesel o i l constantly accounted for over 60 per cent of petroleum sales i n Alberta and i t i s suggested that much of this o i l was f u l f i l l i n g power demands i n areas beyond the network of electric power lines. 20 The 1956 figure of one and a half million barrels may be too high. Data are from D.B.S. Consumption of Petroleum Fuels, Annual (Ottawa, Queen's Printer), which has consumption categories of industrial and unspecified. The energy estimate of this study combines these categories, and i n Alberta i n 1956 the unspecified amount was half a million barrels. 130 After 1956 expansion of petroleum sales i n B.C. and Manitoba was restricted by natural gas and by a slackening i n industrial growth rates. The role of natural gas cannot be evaluated at this stage of the study. However, i t i s possible to note f i r s t l y , factors limiting the inroads of gas into petroleum markets and secondly, factors checking further expansion of petroleum. In Manitoba, and to a greater extent in B.C., a number of petroleum consumers lay beyond the gas pipelines. In 1951, one-third of Manitoba's consumption was at P l i n Plon. In B.C. the f a l l in petroleum sales after 21 1956 occurred i n the middle d i s t i l l a t e s group. Sales of heavy fuel o i l became stabilized at around three and a half million barrels. By far the greater part of these sales were to plants of the forest products industry located on the coast north of Vancouver and on Vancouver Island, areas beyond the reach of natural gas. On the other hand, further expansion of petroleum sales was limited i n Manitoba by the lower price of l i g n i t e coal and, i n B.C. by the increased usage" of fuel wood in the forest products industry. It i s estimated that, allow-ing for thermal efficiencies, fuel wood expansion after 1956 deprived heavy fuel o i l of a potential market of some seven hundred thousand barrels (150,000 coal equivalent tons). Oil- f i r e d thermal power stations were to be found in a l l four provinces, but this market was only significant i n Saskatchewan where i t rose to a peak of one and a quarter Puel oils Nos. 3 and 2, and diesel o i l 131 million barrels i n 1957. Such a trend was directly opposed to that of the remainder of the industrial market for petroleum within Saskatchewan. Petroleum consumption i n Saskatchewan power stations was drastically reduced i n 1958 and by I960 was back to the 1951 level of three-quarters of a million barrels. The thermal power market i n Saskatchewan has become increasingly volatile as" the construction of new f a c i l i t i e s has placed over 50 per cent of the capacity i n the advantageous position of being t r i p l e - f i r e d . Therefore, the market has been able to take advantage of short-term price changes of coal, o i l , and gas. Whilst coal consumption was restricted to stations located on the coal f i e l d s , other stations took advantage of the apparently lower current prices of natural gas and drastically reduced o i l consumption in 1958. Outside of Saskatchewan petroleum has apparently been unable to penetrate the power production market because of natural gas in Alberta and because of the availability of hydro power in B.C. and Manitoba. Most of the petroleum consumption i n B.C. consisted of diesel o i l which suggests that demand was limited to the smaller communities beyond the major networks of electric power lines. CONCLUSION Because of the steep price gradient of r a i l -hauled petroleum products, the ability of these fuels to 132 compete i n the energy market i s closely related to the location of refineries. The locational pattern of refineries has become more market orientated as pipelines have reduced inter-provincial differences i n crude o i l prices to minor proportions. Yet, Manitoba s t i l l imported by r a i l about a third of i t s petroleum products requirements because of the inadequate size of i t s refinery industry. The supply pattern of the fuel o i l s for locomotives has been unique i n being areally concentrated i n a distribution reminiscent of that of coal. Otherwise, the hypothesis has been that there i s only a slight overall price gradient for petroleum products and that the significant price gradients are those radiating outwards from each of the major refinery centres within each province. Therefore, petroleum should have a highly favourable price relationship with respect to coal i n B.C. and Manitoba. But, lignite coal and lack of refinery capacity n u l l i f i e s any particular advantage for petroleum i n Manitoba. Thus, B.C. was the major domestic and industrial market for petroleum. (consumption of petroleum products has been dominated by transport end-uses, most of which have remained specific to petroleum.) Only i n railway locomotive energy consumption has there been competition with other sources of energy. The elimination of coal-fired locomotives began long before 1951 in B.C. In part, this pattern reflected the the historical legacy of access to U.S. fuel o i l . In contrast to the domestic and industrial sectors where o i l markets were 133 concentrated on the peripheries of Western Canada, the substitution of coal by o i l - f i r e d locomotives proceeded from west to east. This policy becomes explicable from the viewpoint of fuel costs when i t was established that fuel o i l supplies were limited i n the two eastern provinces and fuel o i l had to be rail-hauled from Alberta. Fuel supply patterns were also relevant to the areal dispersal of the dieselisation programmes which, though based on rates of return on capital, were to some degree permissable because of the greater dispersion of diesel o i l supplies. By I960 vir t u a l l y the whole transport sector had become specific to petroleum, hence analysis of this sector i s now complete. Substitution of petroleum for other sources of energy was more prevalent i n the domestic sector than in the industrial, (in a l l cases the expansion of petroleum appears to have been highly dependent on the presence or absence of natural gas^ Within the Alberta domestic market, petroleum appears to have been largely limited to the inroads i t could make in the fuel wood market, and the quantity of these gains was approximately the same i n each of the Prairie Provinces. Outside of Alberta, petroleum made i n i t i a l gains i n the expanding urban markets, and also expanded at the expense of coal. Inroads of petroleum into fuel wood markets were limited except in B.C. where the unique distribution of the market exposed i t to petroleum. (After 1956 there were only limited gains or even an absolute decline in petroleum 134 sales in metropolitan areas because of natural gas and consequently, expansion of petroleum in the domestic market became more limited.) The degree of market concentration does not appear to have been significant for, despite i t s price gradient, petroleum continued to encroach on coal markets in the non-metropolitan areas of provinces other than Alberta. On the inter-provincial scale the greatest quantity of substitution of coal by petroleum took place i n Saskatchewan, a relatively dispersed market. Here prices were highly favourable and, unlike B.C., the coal markets were more under the i n i t i a l impact of petroleum. Petroleum supplies in the Prairies were limited u n t i l after World War Two when, f i r s t heavy crudes and then medium gravity crudes were discovered. The growth of petroleum sales in the industrial sector was far less related to substitution for other energy sources than i t was to expansion of the demand for energy. With sales being so dependent on only one component of demand, expansion was more limited than i n the domestic sector and sales declined after 1956. The legacies of equipment and contracts stabilized coal markets. (£he availability of natural gas in a l l provinces after 1956 resulted in a general decline of petroleum sales]which became more restricted to those plants located beyond the gas pipeline network. In thermal power production the use of petroleum was highly dependent on the absence of hydro power and natural gas. In B.C. and Alberta diesel o i l was used i n areas beyond the power line networks, 135 n e t w o r k s s e r v e d b y h y d r o a n d n a t u r a l g a s r e s p e c t i v e l y . O n l y i n S a s k a t c h e w a n d i d p e t r o l e u m p l a y a r o l e i n f u l f i l l i n g e n e r g y d e m a n d s o f m a j o r p o w e r s t a t i o n s , b u t t h a t m a r k e t w a s h i g h l y u n s t a b l e . 22 T h e r e w a s l e s s s c o p e f o r d i e s e l o i l i n M a n i t o b a b e c a u s e t h e p o w e r l i n e n e t w o r k s e r v e d a g r e a t e r p r o p o r t i o n o f t h e p o p u l a t i o n i n 1 9 5 1 t h a n d i d t h e n e t w o r k s o f o t h e r p r o v i n c e s . 136 CHAPTER VI NATURAL GAS The increase i n sales of natural gas between 1951 and I960 was the highest of any of the fuels; i n Western Canada sales of natural gas almost quadrupled. Despite this great expansion, both production and sales of gas remained more areally concentrated than was the case with petroleum. In 1951 natural gas was virtually exclusive to Alberta, the province accounting for 99 per cent of the net output 1 and 98 per cent of the sales i n Western Canada. After nine years Alberta s t i l l accounted for practically a l l of Western Canada's output and for two-thirds of the gas sales. It was only within the latter part of the decade that natural gas supplies became available i n the other three provinces on anything other than a minor scale. Restrictions on the avai l a b i l i t y of this fuel have been a far more significant factor i n the sales pattern than was the case with the fuels examined previously. Over and above price considerations, natural gas offers outstanding qualities of convenience, cleanness, and homogeneity, and the dynamic sales patterns i n various market areas have reflected these qualities, once gas became available. Net output i s gross output minus f i e l d waste, flared gas, pipeline losses, and inventory adjustments. 137 AVAILABILITY OF NATURAL GAS Unlike the other f u e l s , natural gas i s li m i t e d to 2 one mode of land transport, the p i p e l i n e . Consequently, at the i n t e r - p r o v i n c i a l l e v e l , natural gas faces problems s i m i l a r to those of petroleum; namely problems of market size because of the economies of scale and throughput requirements of p i p e l i n e s . However, natural gas faces additional problems at the d i s t r i b u t i o n l e v e l i n that pipe-l i n e s have s t i l l to be u t i l i z e d . At t h i s l e v e l the problems of gas and e l e c t r i c i t y are sim i l a r i n that both energy sources require the construction of special transport f a c i l i t i e s 3 and therefore high d i s t r i b u t i o n a l costs can be anticipated. The evolving areal pattern of gas f i e l d s and of pip e l i n e s i s depicted i n Figure 16. Both patterns are sim i l a r to that of petroleum i n that they exhibit an areal dispersion out from Alberta. However, the dispersion of the gas f i e l d s was more l i m i t e d , and the advent of the major i n t e r -p r o v i n c i a l gas pipelines was three to f i v e years behind that of petroleum p i p e l i n e s . A causal relationship e x i s t s between the spread of gas production and of o i l f i e l d s because many of the gas discoveries of e a r l i e r years were a by-product of o i l exploration. Recently, the physical association of the 2 Bottled LP gases are not considered because of lack of data. ^Manners, 0£. c i t . , p. 81. Average cost of d i s t r i b u t i n g gas i n U.S. c i t i e s i s 26 d o l l a r s per coal equivalent ton. Figure 16 139 two fuels has declined because expanding gas markets have encouraged a shifting of d r i l l i n g activity towards the gas rich strata of the Foothills and of the Peace River area. Therefore, the percentage of gas reserves which were associated with petroleum i n I960 was virtually zero i n B.C., but rose to 75 per cent i n Saskatchewan. The lack of gas fields to the east of Alberta i s an expression of the thinning of the sedimentary strata. One estimate of the ultimate recover-4 able gas reserves i n Western Canada places less than 2 per cent of these reserves east of Alberta, with the remainder being evenly divided between Alberta on the one hand, and B.C., the Yukon, and "the N.W.T. on the other. It was noted i n Chapter IV that the areal expansion of o i l production beyond Alberta's borders was not of great significance to the market patterns. In contrast, the lack of such an expansion on the part of natural gas severely delayed the construction of long distance pipelines. For the f i r s t time i n this study, the absolute quantities of the fuel i n question are of considerable significance; i n particular the view of the Alberta Oil and Gas Conservation Board as to how much gas was available. Reserves of natural gas are d i f f i c u l t to estimate and the Board maintained a conservative viewpoint of what was available over and above ^Submission to the National Energy Board, January I960, by the Canadian Petroleum Association. Quoted i n Jack Stabback, "Gas Reserves i n Western Canada", Transactions of the  Canadian Institute of Mining and Metallurgy, Vol. LXIII (I960; p. 296. 140 Alberta's requirements f o r the next t h i r y years. From 1948 onwards, various companies estimated reserves and submitted b r i e f s f o r permission to export. Having declared a surplus i n the Peace River area, and having authorized export to Montana, the Board did not authorize exports to the east u n t i l 1953. But, other i n s t i t u t i o n a l and f i n a n c i a l b a r r i e r s delayed the advent of large scale exports to the east and west f o r several years to come. 5 The economies of scale of pipelines are even more c r u c i a l to the gas industry than to the o i l industry, f o r the price gradient of gas pi p e l i n e s i s approximately 6 three times higher. The need f o r large export markets outside of Western Canada was immediately apparent i f large throughputs were to be obtained. Possible markets were the P a c i f i c Northwest, the Mid-West, and Eastern Canada. However, the U.S. border was a much stronger i n s t i t u t i o n a l b a r r i e r to Canadian gas than i t was to petroleum. Not u n t i l 1954 was a permit granted f o r imports into the P a c i f i c Northwest, and a permit f o r gas crossing the Manitoba-U.S. border was delayed u n t i l I960. The Washington market was c r u c i a l and no construction of the western pipeline was undertaken u n t i l the permit was obtained. On the other hand, f o r a pipeline to the east, Ontario and Quebec offered ^Cost of transporting gas i n a 12" diameter p i p e l i n e i s approximately four times higher than that of a 30" p i p e l i n e . 6 Appendix D. 141 an alternative market to the Mid-West, but only after many set-backs. In the light of construction costs of the Canadian Shield section being three and a half times above 7 those of the Prairie section , and of the lack of markets in the Shield area, investment proved unattractive to private business and Federal aid had to be sought. In sum, potential supplies and markets for natural gas were available at an early date, but institutional barriers delayed the movement of gas to these markets. In the light of these barriers, Figure 17 illustrates the slow development of large scale gas movements. In 1951 there were only minor inter-provincial movements in the Peace River area and into Montana. The year 1956 marked a, transitional stage when major developments were already i n hand, and the I960 pattern represents the completion of the f i r s t stage in the search for markets out-g side of Alberta . The quantities of gas moved to Vancouver in 1956 and to the U.S. Mid-West i n I960 do not represent annual flows for, i n each case, the pipelines had only been on stream for two to four months. The degree to which the large diameter pipelines depended on markets outside of Western Canada i s apparent (Figure 17), but the benefits 'Alfred M. Leeston, John A. Crichton, and John C. Jacobs, The Dynamic Natural G-as Industry, (Norman: University of Oklahoma Press, 1962), p. 357. g The only major change i n the trunk line network since I960 has been a 36" pipeline from Alberta to San Francisco, which went on stream in December, 1961. 142 NET OUTPUT E N D - U S E I.3 63 59 1951 119 • 4 10 10 1956 375 197 102 NATURAL GAS BALANCE MMMcf Less than 1 - 9 10 - 2 9 Over 2 9 Note For the sake of clarity it has been assumed that all Alberta gas entering B C in 1960 was destined for the U S A End use is accounted consumption S o u r c e s A l b e r t a O i l a n d G a s C o n s e r v a t i o n B o a r d O i l a n d G a s I n d u s t r y A n n u a l B C D e p a r t m e n t of M i n e s a n d P e t r o l e u m R e s o u r c e s R e p o r t A n n u a l S a s k a t c h e w a n D e p a r t m e n t o l M i n e r a l R e s o u r c e s P e t r o l e u m a n d N a t u r a l G a s S t a t i s t i c a l Y e a r b o o k 1 9 5 6 a n d 1 9 6 0 R A S i m p s o n D M N o l a n a n d 0 W R u t l e d g e T h e N a t u r a l G a s I n d u s t r y i n C a n a d a 1 9 6 0 C a n a d a D e p a r t m e n t o l M i n e s a n d T e c h n i c a l S u r v e y s B u l l e t i n M R 5 5 S C A L E 0 300 M I L E S J V Y Figure 1? 143 which accrued to Western Canadian markets from the real-isation of these external markets are not so readily-apparent. Whilst external markets did lower f i e l d prices of gas in Western Canada, price gradients to Western Canadian markets were, to varying degrees, above those warranted by pipeline economics. In view of the higher price gradient compared with that of petroleum, gas would not be able to compete 9 i f i t were not for the particularly low f i e l d price. Having been largely a by-product of o i l exploration, the opportunity existed for the pressure of demand pricing. Thus, like petroleum, the widening of the market area squeezed the net-back to the producer. This squeeze has been particularly strong from the gate prices at the U.S. border, prices which are fixed by the Federal Power Commission.1^ Field contract prices of Canadian gas supplying markets i n northern U.S.A. varied,from six to ten cents per M.C.F. in 1956, whereas U.S. sources for these same markets netted f i e l d prices of fourteen to 11 twenty-two cents. However, f i e l d prices are increasing and Trans Canada Pipe Lines Limited was paying about thirteen and one half cents per M.C.F. in 1962. The rise Davis, op_. c i t . , p. 164, estimated the average f i e l d price of gas i n Alberta of 100 per M.C.F. as being equivalent to 600 per barrel of crude o i l . Compare the I960 o i l well-head price of $2.35 per barrel. •^These prices are not simple demand prices because the Federal Power Commission controls the supply of gas from the various competing U.S. production centres. Davis, op_. c i t . , p. 168. 144 i n prices i s partly accounted for by the increasing need to process natural gas i n Alberta where, practically a l l the gas was sour or wet i n 1962. But, market forces are the major factor behind the rising f i e l d prices. Western Canadian gas has now become established over a wide area, i n markets which can afford to meet higher field-prices. Table VIII establishes the price gradient of natural gas. The ratios indicate the pressure of demand pricing for the price gradient f a l l s as distance increases. This i s not so for gas moving from the Peace River d i s t r i c t to the Lower Mainland market of B.C. Prices of gas i n B.C. are high because they have to partly compensate for the transport charges of gas destined for the Pacific Northwest, gas which moves through the pipeline along with gas destined for the Lower Mainland. This need to compensate arises because of the unfavourable gate price of gas entering the U.S.A. Prom the ratios (Table VIII) i t was calculated that the cost of moving natural gas for a hundred miles varied from 1.84 to 2.57 dollars per coal equivalent ton. These rates are far above the gas rates of Figure 5» Not only i s this price gradient above that of petroleum, but i t i s higher than that of coal. Whilst i t i s recognized that the price gradients of petroleum and coal may well be 145 TABLE VIII Price Gradient for Natural Gas i n Western Canada I960. Value of Sales Transport charges a b Cents per M.C.F. Mileage from source Cents per 100 mile 0 B.C. 91 600 9.5 Alta. 29 _ Sask. 44 400 8.5 Man. 64 800 6.8 a. Average values of a l l sales of natural gas. b. Distance from major production centre to major market. c. Calculated from values of sales minus 10 cents production costs (6 cents for gas entering B.C.), divided by the mileage. Source: Values of sales obtained from R.A. Simpson, D.M. Nolan, and D.W. Rutledge, The Natural Gas Industry i n Canada, I960, Canada, Department of Mines and Technical Surveys, Mineral Resources Division, Mineral Information Bulletin, MR 55 (Ottawa: Queen's Printer, 1962) Table 18. 12 higher than Figure 5 suggests, gas appears to have the most favourable price r e l a t i o n s h i p with these competing f u e l s i n Alberta rather than i n B.C. i n Manitoba. I t i s also apparent that the r e l a t i v e l y low p r i c e of gas at the gas f i e l d has been a highly s i g n i f i c a n t f a c t o r i n enabling gas to establish i t s e l f i n distant markets. Included within the average prices (Table VIII) are the markedly d i f f e r e n t p r i c e s quoted i n the various market sectors. In B.C. and Alberta i n d u s t r i a l prices are about a t h i r d of the r e s i d e n t i a l prices, whilst Saskatchewan's pri c e range i s somewhat greater and Manitoba's rather l e s s . This range i n price i s l a r g e l y accounted for by the f a c t that gas moves from the p i p e l i n e almost immediately into end-use. Consequently,pipeline and d i s t r i b u t i n g operators are faced by d a i l y and seasonal fluctuations i n demand on the one hand, and the need to maintain high load factors on the other. The answer to t h i s ecomonic problem l i e s i n either the 13 development of storage f a c i l i t i e s , which are costly, or a drive to develop a firm i n d u s t r i a l market combined with sales of i n t e r r u p t i b l e gas to industry. In most parts of Western Canada the l a t t e r p o l i c y has been adopted and t h i s i s the main reason f o r the considerable v a r i a t i o n i n prices of r e s i d e n t i a l 12 In Chapter IV i t was noted that the shorter hauls of coal had a higher price gradient and i n Chapter V evidence was presented which suggested that at the very l e a s t , the crude o i l p r i c e gradient did not apply to Manitoba. 13 Natural gas i s too recent i n Western Canada fo r defunct gas f i e l d s to appear i n quantity. Such f i e l d s o f f e r cheap storage. 147 ' and i n d u s t r i a l gas. Areal variations i n market structure are not s i g n i f i c a n t to t h i s p r i c e v a r i a t i o n f o r i t i s almost spatially-constant. The problem of the above price v a r i a t i o n i s that, i n the absence of other price data, i t i s not c e r t a i n i f the v a r i a t i o n i n gas prices i s greater than that of coal and petroleum. However, i n view of the pressure to s e l l to industry at a low p r i c e , combined with the quality of gas as a f u e l permitting a high revenue producing r e s i d e n t i a l p r i c e , i t i s suggested that i n d u s t r i a l prices of gas may well undercut the i n d u s t r i a l prices of the other f u e l s . Consequently, one can anticipate that both the r e s i d e n t i a l and i n d u s t r i a l gas markets w i l l expand r a p i d l y . CONSUMPTION OP NATURAL GAS The end-uses of gas are l a r g e l y f o r heating purposes. Thus, there are only two market sectors to consider, the domestic and the i n d u s t r i a l . The sales pattern w i l l vary according to the sector. Not only have the fuels discussed so f a r demonstrated d i f f e r e n t patterns according to sector but, the above p r i c i n g p o l i c y may well lead to s p a t i a l differences between domestic and i n d u s t r i a l consumption. Domestic Market The consumption of natural gas i s shown i n Table IX. Once natural gas was available, a l l provinces exhibited high TABLE IX Domestic Consumption of Natural Gas M.M.C.F. B.C. Alta. Sask. Man. 1951 208 33,834 472 1956 1,513 50,762 4,162 I960 14,127 64,015 15,071 6,944 149 growth rates. The expansion of sales in Alberta at an almost constant rate between 1951 and I960 points to the s t a b i l i t y of the factors behind natural gas expansion. The extent to which expanding natural gas sales were dependent on substitution for other fuels and on the general rise in energy demands i s indicated i n Table X. Natural gas was able to benefit from the rise i n energy demands for most, i f not a l l , of the expansion of demand 14 took place i n urban centres. If i t were not for the urban-ization trend natural gas would be under serious handicaps for pipeline economies of scale tend to l i m i t natural gas availability to urban markets. Table X suggests that two-thirds of the gas sales expansion of Alberta was accounted for by ri s i n g energy demands, so the constant rise of gas sales i s not surprising. Elsewhere, new households could account for 50 per cent of the sales expansion i n B.C. and a l l the gas sales of Manitoba. Comparing the expansion of gas sales i n Saskatchewan after 1956 with that of B.C. and Manitoba (Table IX), i t i s to be expected that expansion i n Saskatchewan would be restricted because of restrictions Assuming that population growth, rather than rising per capita consumption, i s the major factor behind rising energy demands, the following figures indicate that expansion of these demands was concentrated in urban centres. Population growth in thousands, 1951-1961. B.C. Alta. Sask. Man. Provincial Total 444 392 93 145 Urban 355 393 144 149 TABLE X Changes i n Fuel Consumption i n the Domestic Market Thousands of coal equivalent tons B.C. Alta. Sask. Man. 1951-56 Fuel Wood -295 -81 -98 -71 Coal - 79 -229 -389 -208 Petroleum 469 106 461 437 Natural Gas 48 627 127 Balance 143 423 111 158 1956-60 Fuel Wood -236 -64 -79 -57 Coal -315 -169 -323 -306 Petroleum 301 81 -149 536 Natural Gas 467 421 404 257 Balance 217 339 -147a 430 a. A slow rise i n the demand for heat and power combined with rapid improvements i n thermal efficiency resulting from energy mix changes, has resulted i n the total being negative. 151 on the expansion of energy demands (Table X). Natural gas would have greater d i f f i c u l t y i n penetrating the established households for here gas faces the legacy of conversion equipment designed for other fuels. In gaining potential markets created by population growth and by intra-provincial redistributions of population, natural gas i s competing with petroleum products, the other 15 active fuel competitor. Simpson provides a cost ratio of B.C. Alta. Sask. Man. / 5.3 1.8 2.6 3.5 natural gas to petroleum for I960. This ratio was obtained by dividing the average price of one M.C.F. of natural gas by the cost of one gallon of No. 2 fuel o i l . Therefore, the higher the cost ratio, the poorer the competitive position of gas. The above pattern does establish that natural gas has a higher price gradient than that of petroleum products. However, from these cost ratios, ratios i n terms of costs per coal equivalent ton were calculated and, even i n B.C., natural gas was decidedly cheaper. Even so, the above cost ratio pattern remains significant for not a l l customers make detailed calculations of fuel costs and besides, installation costs may favour o i l . In the light 15R.A. Simpson, D.M. Nolan and D.W. Rutledge, The Natural Gas  Industry in Canada, I960. Department of Mines and Technical Surveys, Mineral Resources Division, Mineral Information Bulletin, MR 55 (Ottawa: Queen's Printer, 1962) Table 17. 152 of Manitoba's cost ratio compared with that of the other two Prairie Provinces i t i s not surprising that gas sales i n Manitoba were unique i n that they only gained about 50 per cent of the potential market provided by r i s i n g demands for energy (Table X). Yet, when Manitoba's cost ratio i s seen to be more favourable to gas than i s the case i n B.C., the cost ratio no longer provides an argument for the limited expansion of gas sales i n Manitoba. The analysis of petroleum products did imply that petroleum must have advantages of possibly cost and certainly convenience, for i t was an active competitor against fuel wood and coal. The above cost ratios, combined with the more prominent qualitative advantages of natural gas, place gas in a highly advantageous position over a l l other fuels i n a l l four provinces. The degree of advantage of gas w i l l have the same areal pattern as that of the above cost ratios, being relatively poorer i n B.C. and Manitoba. Competition with other fuels i s areally limited by the gas pipeline network. It appears fortunate from the view-point of natural gas that the two markets where i t s cost advantage i s weakest are the two provinces with the most concentrated markets. Metropolitan Winnipeg and Vancouver alone accounted for 52 and 49 per cent of the respective provincial total populations i n 1961. A measure of the areal 153 spread of r e s i d e n t i a l gas sales i s provided below, i n terms 1956 1958 i960 B.C. 870 1,530 2,580 A l t a . 9,300 6,920 6,340 Sask. 3,030 2,420 3,120 Man. — 1,240 3,580 of M.C.F. sold per mile of transmission and d i s t r i b u t i o n pipelines combined. In three of the provinces the density of sales was r i s i n g ; Saskatchewan's drop i n 1958 was temporary f o r gas had just reached Regina. Within Alberta, sales density was declining as pi p e l i n e s were extended into marginal areas. In view of the marked price advantage of natural gas and of the many years of gas a v a i l a b i l i t y , Alberta has the most extensive pipeline network and the highest density of sales. But, piped gas remains an urban f u e l . Of the increase i n t o t a l number of gas heated households between 1951 and 1961, only 8 per cent were located i n r u r a l areas. In urban centres, gas customers as a percentage of t o t a l customers rose from 84 per cent i n 1951 to 94 per cent i n I960. I t i s apparent that gas was dominant p r i o r to 1951 and that natural gas has substituted f o r only the remnants of a former urban coal market. Petroleum was never well established because ample supplies only became available a f t e r 1947. Natural gas i n Alberta has now reached the 154 threshold of the rural areas and i t i s extremely doubtful i f the economics of pipeline transport w i l l permit piped gas to cross that threshold. Thus, fuel wood markets are sheltered from piped gas behind the bulwark of their dispersed pattern. Despite major services being initiated into Saskatchewan seven years before i t began i n B.C. and Manitoba, the density of sales per mile of pipeline was similar to those of the latter two provinces. This i s indicative of the burden of transmission lines which each urban centre i n Saskatchewan carries. Examination of sales per mile of distribution pipeline only, showed that Saskatchewan's density was above that of B.C. and Manitoba. Yet, despite this burden of transmission costs, Table X demonstrates that natural gas i n Saskatchewan has overcome this barrier, resulting from the dispersed population pattern, and has substituted for not only coal, but also petroleum. Proximity to gas fields (Figure 16) has enabled these barriers to be surmounted. The cost ratio of 2.6 was almost as low as that of Alberta, where petroleum i s excluded from urban centres even i f they are refinery sites. Sales per mile of pipeline were lower i n B.C. and Manitoba than i n Alberta. This difference reflects the delay i n sales expansion arising from the historical legacy of use of alternative fuels by householders. Simpson^ Simpson, op. c i t . , p. 41. 155 correlated gas customer densities (gas customers per population served i e . population i n close proximity to p i p e l i n e s ) i n each province with the cost r a t i o s , already quoted, and the number of years of major service. These two variables explained 85 per cent of the variations i n customer densities between a l l the Canadian provinces served by gas. The major f a c t o r was the cost r a t i o , but years of service was s i g n i f i c a n t and t h i s f a c t o r i s an expression of the above h i s t o r i c a l legacy of use of other f u e l s . I t appears that t h i s h i s t o r i c a l legacy i s e s s e n t i a l l y related to time and hence, i t can be anticipated that sales densities per mile of p i p e l i n e w i l l r i s e i n B.C. and Manitoba. There remains the problem of the l i m i t e d expansion of gas sales i n Manitoba (Table IX). Compared to B.C. the reason l i e s p a r t l y i n the l i m i t e d gas pipeline network of 17 Manitoba, i t was only a t h i r d of that of B.C. (Figure 16). For t h i s reason, sales per pipeline mile were higher i n 18 Manitoba than i n B.C. However, Simpson pointed to Manitoba's customer density being below that predicted from h i s c o r r e l a t i o n and he suggested "a poor s t a r t i n the i n i t i a l year or so". I f the delay i n sales expansion i s dependent on time alone, t h i s 'poor s t a r t ' w i l l s t i l l have an impact The network i n B.C. i s extensive because of the s i x hundred mile p i p e l i n e from the Peace River d i s t r i c t and because an anticipated i n d u s t r i a l market at T r a i l no doubt f a c i l i t a t e d the construction of a. pipeline i n t o the Kootenays. 18—. _ . , Simpson, l o c . c i t . 156 on total gas sales several years later. In the chapter on coal i t was pointed out that U.S. coal and l i g n i t e were relatively stable in Winnipeg's domestic market. Whether the apparently lower prices of these coals, compared with that of Canadian bituminous, influenced gas company policies or not i s not known. A f i n a l component of the expansion of natural gas sales has been the trend for a greater intensity of 19 use per household. Conscious efforts have been made to develop a market for gas-fired appliances, competing mainly with e l e c t r i c i t y . In B.C., Alberta, and Saskatchewan, households using gas for water heating totalled 79 per cent or more of those households heated by gas i n I960. Similar proportions applied to the use of gas cookers i n B.C. and Alberta. In Manitoba the proportions of use of gas for cooking and water heating were much lower, dropping to 20 per cent or less. A relative lack of hydro power, r e s t r i c t -ing the availability of ele c t r i c i t y i n the past, appears to account for the use of gas in Alberta and Saskatchewan. The high proportionate use of gas for cooking and watei heating i n B.C., despite the traditional availability of ele c t r i c i t y , may be a result of the active policy of the former B.C. Electric Company i n promoting the sale of coal gas i n the years prior to the advent of natural gas. In 19 This component cannot be quantified because data of average consumption per household are not available for the earlier years. Besides, climatic fluctuations would distort the yearly figures. 157 contrast, average consumption of gas per residential customer i n I960 was, compared to Alberta, 25 per cent lower i n Manitoba and therefore the competition of electricity may have restricted total gas sales i n Manitoba by that amount. Industrial Market The areal expansion of industrial sales was restricted relative to that of domestic sales. In I960 Alberta s t i l l accounted for 71 per cent of the industrial sales i n Western Canada, compared with 58 per cent of the domestic sales. The more restricted areal pattern of industrial sales was less a result of restrictions i n markets outside of Alberta than a consequence of factors within Alberta promoting a rate of growth above that of domestic gas sales. The figures of industrial gas consumption (Table XI) point to the important part played by natural gas sales i n thermal power stations. Sales to thermal power stations w i l l be treated separately for the areal pattern differred from that of sales to the remainder of the industrial market. In the case of the l a t t e r market, Table XII indicates the extent to which the expansion of gas sales was dependent on the substitution for other fuels and on the external factor of the growth of industrial demands for energy. 158 TABLE XI Industrial Consumption of Natural Gas M.M.C.F. B.C. A l t a . Sask. Man. 1951 Power Stations 55 6,339 120 Other 36 13,591 81 — 1956 Power Stations* 1 211 13,685 2,436 Other 56 42,044 2,186 — I960 Power Stations 1,678 27,877 8,156 129 Other 9,982 49,839 7,206 4,461 a. Excludes use i n compressor stations, processing plantp, and gas f i e l d operations. b. U t i l i t i e s only. TABLE XII Changes i n Fuel Consumption i n the In d u s t r i a l Market Thousands of Coal Equivalent Tons B.C. A l t a . Sask. Man. 1951-56 Fuel Wood 370 — — — Coal -37 -108 -10 -36 Petroleum 583 184 -44 205 Natural Gas 1 1,054 78 -Balance 917 1,130 24 X65 L956-60 Fuel Wood 518 — — _ Coal -276 -5 -8 -111 Petroleum -209 -25 -19 -4 Natural Gas 289 186 165 Balance 347 259 159 50 159 Table XII shows that the rapid growth of industrial sales i n Alberta was heavily dependent upon the expansion of industry. In the discussion of petroleum products (Chapter V) the suggestion was made that the expansion of petroleum sales was not related to substitution for coal and that i t was gas which reduced coal consumption. Even i f this argument i s accepted, no more than 10 per cent of the expansion of gas sales was ever accounted for by substitution for other fuels (Table XII). Assuming that industrial energy consumption was more concentrated i n major urban centres than was domestic demand, gas would be available at most of the industrial plants even by 1951, whilst a large proportion of the domestic market remained beyond the reach of existing pipelines (Figure 16). Consequently, petroleum never became well established i n Alberta's industrial market and the industrial market for coal was reduced to minor proportions even by 1951. The above argument explains the greater dominance of gas in Alberta's industrial market of 1951 relative to the role of gas i n the domestic market. However, this argument does not explain why gas f u l f i l l e d v i r t u a l l y a l l the post-1951 energy demands of new and expanding industrial plants (Table XII). This expansion of gas sales was the result of gas being clearly the cheapest fuel. In 1959 the average cost of gas used i n manufacturing industry was about 4.50 dollars per coal equivalent 160 ton compared with seven dollars for sub-hituminous coal and 20 over eight dollars for fuel o i l . Prior discussion of the relationship of residential and industrial gas prices in each province pointed out that the price relationship i n Alberta was about average. One may well question whether the short lengths of Alberta's pipelines justified a need for firm and interruptible gas sales to the same degree as i n other provinces. Rather than pipeline economics, the i n i t i a l lack of markets for Alberta's gas appears to be the reason for the low industrial price. Industrial gas prices in a l l provinces have been rising as gas gained more lucrative markets. Within the other three provinces, the price advantage of natural gas was not so prominent. In B.C. and Saskatchewan gas undercut the prices of fuel o i l and coal by 25 per cent or 21 more. However, the 1959 average cost of gas to manufacturing industry i n Manitoba was about ten dollars per coal equivalent ton and fuel o i l had the same price, whilst lignite was being sold at just over seven dollars. Possibly, the high gas price of Manitoba reflected the limitations on the revenue producing domestic gas sales. In I960 the Public U t i l i t i e s Board of Manitoba granted a modification i n the general service rate of gas i n Winnipeg and this should provide a greater incentive for industrial energy consumers to use gas. 20 Calculated fromD.B.S., General Review of Manufacturing  Industries 1959, (Ottawa: Queen's Printer, 1962) Table 1. Ibid. 161 The cost advantage of natural gas i n B.C. and Saskatchewan would lead to gas f u l f i l l i n g the expansion of the i n d u s t r i a l demand f o r energy insofar as that expansion took place at s i t e s accessible to gas p i p e l i n e s . This c e r t a i n l y appears to have been the case i n Saskatchewan (Table XII), but i t was not so apparent i n B.C. because f u e l wood consumption i n the forest products industry expanded even at those plants adjacent to p i p e l i n e s . In B.C. the substitution f o r coal and petroleum appears to have been the d r i v i n g force behind expansion of gas sales. In quantitative terms the pressure of gas on'petroleum i n the i n d u s t r i a l market was equal to that of coal (Table XII), f o r the additional seventy thousand coal equivalent ton f a l l i n coal consumption was accounted f o r by the closing of the Vancouver gas plant. The quantity of the substitution f o r coal and petroleum i n Saskatchewan was l e s s because of the r e s t r i c t e d size of the t o t a l i n d u s t r i a l market. Gas already accounted f o r 50 per cent of i n d u s t r i a l energy consumption i n I960, and one in d i v i d u a l consumer deciding to r e t a i n the use of coal or petroleum could e a s i l y d i s t o r t the t o t a l energy mix. In Manitoba, whilst natural gas may s t i l l have had a cost advantage over other f u e l s i f thermal e f f i c i e n c i e s and the cost of conversion equipment were taken into consideration, 162 any such advantage would be l e s s than that of other provinces. Therefore, i t can be anticipated that gas sales would only show a li m i t e d expansion. Table XII establishes the f a c t that gas hardly affected the petroleum market and i t s impact on the general i n d u s t r i a l market f o r coal was r e s t r i c t e d , f o r a t h i r d of the f a l l i n coal sales was accounted f o r by the closing of the Winnipeg gas plant. I t was noted i n the chapter on coal that only bituminous coal sales f e l l . Bituminous coal was more costly than gas, but l i g n i t e remained considerably cheaper so the s t a b i l i t y of l i g n i t e sales was to be expected. Comparison of the domestic sales pattern (Table X) with the i n d u s t r i a l pattern (Table XII) points to the subs t i t u t i o n of gas f o r other f u e l s as having been more s i g n i f i c a n t to gas expansion i n the i n d u s t r i a l markets of B.C. and Manitoba than was the case i n domestic markets. This feature did not appear i n the case of Alberta and Saskatchewan because i n d u s t r i a l markets f o r coal and petro-leum were so minor that expansion of gas sales could only come i n large part from the growth of i n d u s t r i a l demands f o r energy. The emphasis on sub s t i t u t i o n i n the i n d u s t r i a l markets of B.C. and Manitoba came from a r e l a t i v e lack of expansion of the i n d u s t r i a l sectors compared with the domestic. Even so, the quantity of the substitution i n the i n d u s t r i a l sectors remained rather high when one considers that domestic consumers have a strong preference f o r gas because of i t s 163 'convenience'. I t appears that the low i n d u s t r i a l price of gas balanced this preference of the domestic consumer, the r e s u l t being that gas was a competitor of equal i n t e n s i t y i n both domestic and i n d u s t r i a l energy markets. Thermal power stations were a major component of gas consumption i n Alberta and Saskatchewan (Table XI). The lim i t e d use of gas i n the e l e c t r i c power industry of B.C. and Manitoba was related to the l a t e a r r i v a l of gas, the price of gas, and the a v a i l a b i l i t y of hydro power. Because of the l a s t factor, the gas pattern cannot be evaluated at t h i s point of the study. However, one can stress that patterns of gas consumption i n thermal power markets of Alberta and Saskatchewan did not necessarily have to repeat those of the general i n d u s t r i a l market. I t has been noted that strip-mined coal has much to o f f e r i n terms of price s t a b i l i t y (Chapter IV) and that the i n s t a l l a t i o n of t r i p l e -f i r i n g equipment i n several Saskatchewan stations made the energy mix highly v o l a t i l e (Chapter V). F i n a l l y , the rate of expansion of the demand f o r e l e c t r i c i t y i s not necessarily governed by rates of i n d u s t r i a l expansion. For these reasons, evaluation of gas consumption i n thermal power stations i s deferred u n t i l the next chapter. CONCLUSION The d i s t r i b u t i o n of gas sales was e s s e n t i a l l y related to the time of the a r r i v a l of gas i n the various 164 provinces. Once gas was available the price of gas enabled i i to exhibit high growth rates i n a l l provinces, though this was less true of Manitoba. The institutional barriers to the areal expansion of gas markets have been stressed for, economically, i t appears that these markets were available i n 1951. Natural gas had a price gradient well above that of crude o i l , but this was off-set by a low f i e l d price. The lat t e r price was low enough to permit a considerable degree of demand pricing i n each gas market. This applied particularly to industrial prices for industrial markets are necessary i f high load factors are to be maintained i n pipelines. Only in Manitoba has the pricing policy possibly been such as to inhibit the expansion of gas sales. In Alberta growth of gas sales was largely controlled by the overall expansion of both the domestic and the industrial energy markets. Inter-fuel competition was very limited because, in 1951, there were only the remnants of coal markets i n urban centres and industrial plants, and because petroleum did not become established except in areas beyond gas pipelines. Natural gas has probably reached i t s apogee in the energy mix of Alberta. Now, gas faces the threshold of the rural market and rising gas prices should limi t future expansion in the industrial sector. 165 Within the other three provinces, the advent of major service of gas took place too close to the end of the period under study to permit f u l l evaluation of the impact of the price gradient of gas, market structure, and the concentration of markets. The l a s t factor was not of sign i f i c a n c e because i n the dispersed domestic market of Saskatchewan gas sales per mile of pipeline were, at the most, only s l i g h t l y lower than those i n B.C. and Manitoba. In the future, Manitoba and B.C. may continue to exhibit high rates of growth of domestic consumption because, despite gas pri c e s r i s i n g , a large segment of t h e i r populations are accessible to gas without any major additions being made to the I960 pip e l i n e networks. Market structure does not appear to have been so important as i t was i n the case of the other f u e l s . Gas sales expanded notably i n the i n d u s t r i a l as well as the domestic markets. Natural gas had the advantage of a low price i n the i n d u s t r i a l sector and i n the domestic sector t h i s f u e l offers outstanding q u a l i t a t i v e c h a r a c t e r i s t i c s . However, market structure i s a key element i n the areal pattern of sales i n that the use of gas i n thermal power stations was larg e l y r e s t r i c t e d to Alberta and Saskatchewan. In the l a t t e r province the thermal power market was v i t a l to the maintenance of high load factors because the general i n d u s t r i a l energy market was very l i m i t e d i n s i z e . 166 Substitution of gas f o r other f u e l s was an important conponent of the expansion of sales outside of Alberta. In the domestic sector the substitution has l a r g e l y been a replacement of coal, though petroleum sales declined i n major urban centres and f u e l wood did likewise i n B.C. In most cases the continued expansion of petroleum outside of these urban centres more than compensated f o r the losses to gas. In contrast, the expansion of petroleum beyond gas pipelines i n the i n d u s t r i a l sector was r e s t r i c t e d by, the general lack of industry i n these areas, f u e l wood i n B.C., and by l i g n i t e coal i n Manitoba. Therefore, the p r o v i n c i a l energy mixes (Table XII) c l e a r l y show that natural gas substituted f o r both coal and petroleum to a considerable extent. Excluding the thermal power sector, coal could not successfully meet the competition of gas except i n the case of the l i g n i t e coal used by industry i n Manitoba and Western Ontario. I n t e r - f u e l competition i n the thermal power market has not been evaluated. I t i s necessary to e s t a b l i s h the demand f o r e l e c t r i c i t y before considering the primary energy sources used f o r the production of t h i s secondary form of energy. 167 CHAPTER VII ELECTRICITY A l l f u e l s are processed to varying degrees, but each of the primary f u e l s examined i n t h i s study s t i l l retains an exclusive set of secondary forms. E l e c t r i c i t y d i f f e r s , not only because end-use i s power fo r the most part, but because e l e c t r i c i t y production i s neither t e c h n i c a l l y or economically s p e c i f i c to water power. This important secondary form of energy may be derived from a l l the f u e l s , plus water power. In contrast to the f u e l s examined so f a r , the significance of the multiple primary sources of e l e c t r i c i t y i s : 1. The production of e l e c t r i c i t y has a wider choice of s i t e s and can become market orientated. This notably improves the competitive p o s i t i o n of e l e c t r i c i t y for transmission costs are h i g h . 1 2. Competition exists i n the production of e l e c t r i c i t y ; of hydro versus thermal power and of i n t r a - f u e l competition within the thermal sector. With a f l e x i b l e source base i t i s suggested that supply f a c t o r s w i l l be of minor importance i n c o n t r o l l i n g the production, and hence the demand patterns of e l e c t r i c i t y . Therefore, i t i s of more value to e s t a b l i s h the demand patterns f i r s t and then examine the patterns of the various primary sources of energy which have f u l f i l l e d these demands. "^Davis, op_. c i t . , p. 348. E l e c t r i c i t y transmission costs are generally four times higher than costs of r a i l - h a u l e d coal. 168 DEMAND FOR ELECTRICITY The growth in the demand for el e c t r i c i t y correlates 2 very closely with growth of the Gross National Product. Canada's elec t r i c i t y growth rate has been 7 per cent or more per annum since 1945 and this rate i s expected to continue. Such a high persist growth rate i s common to almost a l l economically advanced countries. The universality and the persistence of these growth rates point to the demand for el e c t r i c i t y being largely controlled by factors external to the energy market. Within Western Canada the growth rate between 1951 and I960 approached an average of 14 per cent per annum. This rate was above the national average and was exceeded only by that of natural gas. The industrial sector, heavily concentrated i n B.C., has been the major driving force behind electricity demands for this sector has accounted for over 60 per cent of total consumption. The task of this study i s to examine the extent to which the growth of industrial and domestic demands for el e c t r i c i t y have been sustained by external factors and by factors internal to the energy economy. Industrial Market The distribution of the total industrial demand for e l e c t r i c i t y i n Western Canada shows a notable concentration Davis, op. c i t . , p. 203. A correlation coefficient of 0.99 was established for Canada. 169 i n B.C., and this concentration became even more prominent by I960 (Table XIII). In fact, i f a l l generation for own-use was included, the I960 figure for B.C. would rise by almost a b i l l i o n and a half Kwh. The distribution of the electro-metallurgical industry, whose power demands are specific to ele c t r i c i t y , i s a significant factor i n the areal pattern of ele c t r i c i t y consumption. Data permitted the subtraction of consumption at Kitimat, T r a i l , and F l i n Flon only (Table XIII), but these plants account for the greater part of elec t r i c i t y consumption by this industry. These plants rely on hydro power and one of the chief locative factors has been the availability of these hydro sites. This study has taken the location of industry as given, and therefore these three demand centres are not examined further. The demand for ele c t r i c i t y was essentially controlled by factors external to the energy economy. A comparison of the distributions of electricity consumption and of value added proved inconclusive because inter-provincial differences i n the structure of industry seriously distorted both variables. However, evidence of external factors controlling ele c t r i c i t y 3 consumption i s provided by Davis who outlined the outstanding qualitative advantages of use of electricity to meet power demands. Electric motors permit more efficient plant layouts, remote control of operations, fewer breakdowns because of the Davis, 0£. c i t . , p. 200. 170 TABLE XIII INDUSTRIAL CONSUMPTION OP ELECTRICITY Millions of Kwh. 1951 1956 I960 B.C. A l l Industry- 3,427 6,273 8,207 Kit imat — 2,500 3,750 Tra i l 2,000(est.) a 2,200 2,000(est.) a Net 1,427 1,573 2,547 Alberta 511 1,024 1,750 Saskatchewan 145 305 436 Manitoba A l l Industry- 1,615 1,898 1,866 Pi i n Flon b 484 555 610 Net 1,131 1,343 1,256 Data only provided consumption figures for several years i n the middle of the decade. These estimates may have a 30 per cent error. 'Data provide export figures of el e c t r i c i t y from Sask-atchewan to Manitoba. These exports are from the Island Palls station and the bulk of them go into the electro-metallurgical plant at Plin Plon. Note; Generation for own use in industry has been excluded for 1956 and I960, except for electricity generated at Kitimat, Train, and Pl i n Plon. Generation for own use i s only significant i n B.C. where much of i t i s thermal and the fuel inputs (fuel wood mainly) have not been separated from other industrial fuel demands discussed in Chapters III - IV. 171 multiplicity of motors, and f i n a l l y cleaner and safer working conditions. Consequently, the qualitative advantages of electricity tend to outweigh any price disadvantages with fuels used for steam or diesel driven machinery. Power requirements accounted for almost a l l the el e c t r i c i t y consumption of industry except i n Manitoba. In the l a t t e r province the use of electric boilers was s i g n i f i -cant, accounting for 20-25 per cent of el e c t r i c i t y consumption. Data of el e c t r i c i t y used i n electric boilers were only available for the period after 1956, but i t i s l i k e l y that this use was equally significant prior to 1956. The uniqueness of Manitoba i n the use of electric boilers i s rooted i n the combination of that province having the lowest e l e c t r i c i t y costs^ and being a price-shed for fuels. E l e c t r i c i t y consumption i n boilers amounted to some f i f t y thousand coal equivalent tons which, i n the absence of ele c t r i c i t y , would have been a market for fuels. Por the most part, industrial demands for electricity can be taken as given. The qualitative advantages of ele c t r i c i t y provide i t with an absolute competitive advantage, except i n the case of electric boilers i n Manitoba. Therefore, the competitive factors outlined i n this study are'' only ^Davis, oj>. c i t . , Table 14, provides average costs of large power (50 Kw and over) i n cents per Kwh for 1953 * B.C. Alberta Saskatchewan Manitoba 0.94 1.02 2.68 0.41 172 significant in the generation of the e l e c t r i c i t y consumed by industry. Domestic Market Domestic sales of elec t r i c i t y , i n millions of Kwh, are shown belows B.C. Alta. Sask. Man. 1951 1,068 380 262 1,116 1956 2,056 772 578 1,481 I960 2,965 1,302 963 2,026 Sales increased i n a l l provinces, with no marked temporal variation in growth rates. However, the growth rates varied as between the provinces, resulting in the areal variations i n sales being reduced by I960. Examination of sales per household (Table XIV) shows that the areal variations i n e l e c t r i c i t y growth rates decreased because, between 1951 and I960, the sales pattern moved towards a closer accordance with the distribution of population. This trend could arise either from el e c t r i c i t y having overwhelming qualitative advantages over other energy sources or, from a levelling of electricity costs across Western Canada. Inter-provincial differences i n e l e c t r i c i t y costs did decrease somewhat (Table XIV), but areal variations i n costs s t i l l remained greater than variations i n sales per household. Also, Alberta's TABLE XIV INDEX NUMBERS OP ELECTRICITY SALES AND COSTS IN THE DOMESTIC MARKET, 1951 AND I960 B.C. Alta. Sask. Man. Sales per Household3, 1951 277 132 100 484 I960 139 0.91 100 217 Sales per electricity Customer 1951 171 100 111 348 I960 197 100 100 206 Costs of E l e c t r i c i t y 1951 0.61 0.85 100 0.32 I960 0.71 0.76 100 0.40 a Calculated from total number of households in each province. 174 elect r i c i t y market contradicts the influence of costs for sales per household i n I960 were the lowest of any of the provinces, yet power costs were lower than those of Saskatchewan. There are two components in total provincial sales of ele c t r i c i t y , the number of customers and the intensity of sales per customer. With regard to the f i r s t component, only the power line network of B.C. served nearly a l l the households of a province i n 1951. In Alberta and Manitoba about 60 per cent of the total households were on a power line and Saskatchewan's ratio was below 50 per cent. By I960 there was vi r t u a l l y complete coverage in a l l provinces, Saskatchewan being the most incomplete with a ratio of 88 per cent. Hence, i n 1951 not only were power costs higher i n Alberta and Saskatchewan, but the availability of e l e c t r i c i t y was limited. Consequently, one could anticipate that sales per household would be lower i n these two provinces. On the other hand, relatively low power costs in Manitoba compensated for the limited availability by encouraging an intensive use of elec t r i c i t y per customer (Table XIV). Until 1951 the availability of electric power was largely restricted to urban centres because of the costs of rural electrification. Thus, inter-provincial differences i n the percentage of households served by electric power in 1951 were essentially explicable by differences in the degree 175 of urbanisation. By I960 virtu a l l y a l l households were served by power lines. This extension of the network was subsidised and therefore the areal concentration of markets as a factor was discounted. The subsidy was an indicator of the qualities of electricity for lighting and farm mechanisation, qualities so outstanding that power avail-a b i l i t y was viewed as a social necessity. E l e c t r i c i t y did replace alternative lighting derived from kerosene and gasoline, but the quantities involved were not large enough to make any impact on total sales of petroleum products in the domestic sector. In contrast to the pattern of e l e c t r i c i t y avail-a b i l i t y , the supply patterns of fuels have had a role to play in the areal pattern of the intensity of sales per customer. Sales per customer were particularly high i n Manitoba (Table XIV), the province with the combination of lowest elec t r i c i t y costs and a price-shed of other energy sources. The limited sales per customer in Alberta in relation to elec t r i c i t y costs suggests that natural gas availability may be the major competitor to attempts to intensify e l e c t r i c i t y sales per customer. Data are available for I960 of two elements of the intensification of sales, namely water heaters and cookers. In the case of the former, 71 per cent of the households on a power line i n Manitoba used electricity for heating water. 176 In contrast, the percentage was only 20 i n B.C., and was i n s i g n i f i c a n t i n Alberta and Saskatchewan. This pattern appears to be strongly related to the costs of e l e c t r i c i t y and to the length of time natural gas has been available. On the other hand, e l e c t r i c cookers appear to have greater q u a l i t a t i v e advantages f o r t h e i r d i s t r i b u t i o n was s i g n i f i c a n t outside Manitoba, as well as i n that province. The following figures show the percentage of t o t a l households served by B.C. A l t a . Sask. Man. 1951 26 10 29 60 I960 52 31 50 84 e l e c t r i c i t y , which used e l e c t r i c cookers. Of the 1951 figur e s , Alberta was the lowest because of the a v a i l a b i l i t y of natural gas. In a l l provinces the percentages rose, despite the areal expansion of natural gas, though the expansion rates of e l e c t r i c cookers did tend to slacken a f t e r 1956 i n areas outside of Alberta. In part, the expansion of e l e c t r i c cookers took place i n areas beyond gas pipelines but, i n view of the numbers of e l e c t r i c cookers, expansion also occurred i n areas where gas was available. The expansion of e l e c t r i c cookers removed a p o t e n t i a l market f o r natural gas, but any actual replacement of gas cookers i s judged to have been very minor. Substitution would be more a replacement of coal, and possibly f u e l wood, by e l e c t r i c i t y . 177 The expansion of electricity sales in the domestic sector, like that of the industrial sector, has largely been controlled by the expansion of energy demands and by the qualitative advantages of elec t r i c i t y almost discounting any areal variation i n the price relationship of electricity with fuels. The factor of areal concentration of markets gave a pattern of e l e c t r i c i t y availability i n 1951, which resulted in the post 1951 e l e c t r i c i t y expansion replacing fuels used for lighting to a greater extent i n Saskatchewan than i n the other provinces. Only i n the case of electric water heaters and cookers has the price of e l e c t r i c i t y ! appeared to have been important. With regard to electric cookers, sales tendedoto be more evenly distributed, pointing to the greater role of quality. But the quality advantages of e l e c t r i c i t y were not so prominent when natural gas was available and therefore, supply patterns of gas were of significance to the sales pattern of ele c t r i c i t y . The extent to which the domestic expansion of e l e c t r i c i t y sales was the result of existing energy consumers switching from other energy sources to el e c t r i c i t y cannot be quantified. However, the total expansion of electricity's domestic sales only amounted to about one hundred thousand coal equivalent tons i n each province, with the exception of B.C. where i t was twice as much.'' _ The loss of actual and potential markets of the other energy sources would be greater for elec t r i c i t y has a thermal efficiency of 100 per cent. 178 In contrast to the consumption of e l e c t r i c i t y , competition i n the production of e l e c t r i c i t y i s l i k e l y to have been f a r more s i g n i f i c a n t . In t h i s sector costs of the various energy sources were c r u c i a l and the quantities were larger. By I960 the energy inputs of power stations had r i s e n to a m i l l i o n coal equivalent tons or more i n each province. SUPPLY OP ELECTRICITY Despite the many primary energy sources which are used to produce e l e c t r i c i t y , the pattern of production (Figure 18) f a l l s i n t o two broad groups. Hydro power dominated i n B.C. and Manitoba whilst thermal power dominated Sask-atchewan's e l e c t r i c i t y supplies. In 1951 Alberta lay i n between the two groups because e l e c t r i c i t y production was evenly divided between hydro and thermal sources. Thus, the problems of hydro versus thermal power and of i n t e r -f u e l competition i n the thermal sector tended to occupy d i s t i n c t geographic areas within Western Canada. Role of Hydro Power Certain well-known physical fac t o r s are conducive to the production of hydro power. Factors such as natural storage, r e g u l a r i t y of stream flow, r i v e r gradients etc. can notably influence the costs of i n s t a l l a t i o n . Within the Western C o r d i l l e r a and the Canadian Shield, the two physio-graphic regions i n which hydro power production i s o PRINCIPAL ELECTRIC GENERATING STATIONS 1960 WITH INSTALLED CAPACITY OVER 1300 Kw HYDRO THERMAL W-Wood waste C -Coal P - Petroleum G - Gas THE AREA OF THE CIRCLE IS PROPORTIONATE TO THE INSTALLED CAPACITY ACCORDING TO TOE FOLLOWING SCALE THOUSANDS OF K» 5 and under 125 WO 300 700 so Source Department of Northern Affeirs and National Resources, Water Resource* Branch, Bulletins 2722 and 2723 SCALE 0 MILES 200 180 important, markets are small and scattered. Exceptions are to be found at the s i t e s of electro-metallurgical plants, but these plants l i e outside the terms of reference of t h i s study. The only large market i s that of the lower Mainland—Vancouver Island, a market of over one m i l l i o n people i n 1961. Partly because of the small and scattered markets, there was a widespread pattern of thermal plants situated within these two physiographic regions (Figure 18). The i n s t a l l e d costs of hydro production are high, but operating costs are minor. For t h i s reason, economic hydro power usually demands the highest possible load factor. But lack of storage of e l e c t r i c i t y , as i n the case of piped gas, makes i t essential that f a c i l i t i e s are available i n order to meet peak demands. The 'peakiness' of demand i s l i k e l y to be increased i f the market i s small, e s p e c i a l l y i f i t consists l a r g e l y of r e s i d e n t i a l and commercial demands. Secondly, the small i s o l a t e d community i s often not i n a pos i t i o n to finance the large c a p i t a l costs of hydro i n s t a l l a t i o n s . For these reasons d i e s e l generation i s u t i l i z e d despite i t s high cost of some t h i r t y d o l l a r s per coal equivalent ton. Consequently, small scattered thermal plants are to be found i n the Fraser Valley and central parts of B.C. and i n northern Manitoba. 181 The B.C. coastal area i s unique i n having a series of i n d u s t r i a l thermal power plants generating e l e c t r i c i t y f o r t h e i r own use. Thermal power production i s r i s i n g i n t h i s region because of the paucity of suitable hydro s i t e s on the one hand, and a c c e s s i b i l i t y to r e l a t i v e l y cheap fuels on the other. The major hydro po t e n t i a l of th i s area l i e s on the eastern side of the Coastal Mountains, seen i n the developments at Kemano f o r Kitimat and at Bridge River f o r the Vancouver market during the l a s t decade. But, probably the key factor i n the trend to thermal power i s the a v a i l a b i l i t y of petroleum and wood waste. It has been pointed out (Chapter III) that the residual nature of wood waste permits demand p r i c i n g . Therefore, unless other markets are found, wood waste finds i t s way to power production. Over the decade, the supplies of wood waste have not kept pace with power demands, and increasing quantities of petroleum have been used. Petroleum, almost e n t i r e l y heavy f u e l o i l , remains r e l a t i v e l y cheap at a pri c e of some 2~i50 d o l l a r s per b a r r e l . The f i n a l market grouping of the hydro pattern i s the ma^or urban markets of Vancouver - V i c t o r i a , Winnipeg, and Calgary. The l a t t e r two l i e just outside the Shield and the C o r d i l l e r a areas respectively. Estimated delivered 182 costs of hydro power in cents per Kwh for 1953 are provided: Vancouver - Victoria Calgary Winnipeg 1.38 1.28 0.63 Comparison with the average delivered costs of thermal 7 stations, provided by Davis, showed the above figures to be lower i n every case. Three considerations, however, prevented the dominance of hydro power in these markets and, in particular, hinder i t s further extension. The f i r s t consideration i s one where thermal power, rather than competing, complements hydro power by meeting peak loads. For this reason the Port Mann plant was constructed at Vancouver i n 1959 and the Winnipeg coal plant, a legacy of forty years, was expanded i n capacity. A second check on hydro power i s the problem of finding new sites. In the case of Calgary new economic si>tes are not available in the face of natural gas and sub-bituminous coal, Consequently, Canadian U t i l i t i e s have so extended their thermal power production that the network was on the verge of reversing i n I960 to hydro power supplying peak loads only. Figure 18 illustrates how distant are the hydro sites developed i n the la s t decade. Bridge River i s some two hundred miles from Vancouver and a start has been made on tapping the potential of the Nelson River which i s five ^Derived from Davis, op. c i t . Table 14. The provincial figures for Commercial Stations - Hydro are assumed to be representative for Vancouver - Victoria and Calgary, whilst the Municipal Stations - Hydro figure i s representative of Winnipeg. 7 I b i d . 183 hundred miles from Winnipeg. Transmission costs are four times that of rail-hauled coal therefore only a low cost site can overcome this high price gradient. An important factor i n the Nelson River development i s that i t i s in public hands and consequently the rate of interest, which i s so crucial to capital costs, i s lower. The third consideration i s the price of alternative fuels. The bulk fuel cost map (Figure 4) i s evidence of the weak competitive position of hydro power i n Alberta and of i t s strength i n Manitoba. In the last years of the decade two important changes took place which affected the costs of fuels. In both B.C. and Manitoba, interruptible gas became available and very favourable contract prices for l i g n i t e were established i n the case of Manitoba. Extension of the ele c t r i c i t y grid i n Manitoba was another factor i n improving the position of lignite for, with major extensions into western Manitoba, the siting of a lignite fired station at Brandon was a logical choice. Though there were trends to thermal power production, such production i n I960 amounted only to 11 per cent of total power production i n B.C. and 2 per cent i n the case of Manitoba. Thermal power was more prominent i n B.C. mainly because of accessibility to U.S. heavy fuel o i l and to local wood waste i n the coastal region. The higher price of hydro power i n B.C. compared with that of Manitoba was a secondary factor. 184 However, one cannot predict a future trend from the developments of the Port Mann gas plant i n the Vancouver area or the l i g n i t e f i r e d Brandon and Selkirk plants i n Manitoba. The construction of hydro or thermal plants r e s t on p o l i t i c a l decisions to a considerable degree, and these decisions are based on s o c i a l costs and desires as well as the d e l i v e r y costs of the e l e c t r i c i t y produced. Fuel Mix of Thermal Power Production The demand f o r e l e c t r i c i t y rose r a p i d l y i n a l l Q provinces during the time period under discussion. Whilst hydro power f u l f i l l e d almost a l l t h i s expansion i n B.C. and Manitoba, the other two provinces had to expand thermal power production. Expansion of the demand f o r e l e c t r i c i t y made the f u e l mix of thermal production i n Alberta and Saskatchewan quite f l e x i b l e . There was a demand f o r new stations and f o r major additions to the capacity of exi s t i n g stations, so the legacy of e x i s t i n g f u e l conversion equipment was discounted. At the same time the extension of p r o v i n c i a l grids ensured greater f l e x i b i l i t y i n the l o c a t i o n of new stations. The f u e l mix of thermal production (Table XV) had a pattern similar to that of the general i n d u s t r i a l sector (Table XII). Petroleum was almost excluded from Alberta, lower c a l o r i f i c coals appeared i n Alberta and Saskatchewan, and natural gas was advancing i n a l l provinces. The major Approximate expansion ( u t i l i t i e s only): B.C. 3 b i l l i o n Kwh; Alberta 2 b i l l i o n Kwh; Saskatchewan and Manitoba, one b i l l i o n Kwh each. 185 TABLE XV FUELS USED IN THERMAL POWER STATIONS8, Thousands of coal equivalent tons B.C. Alta. Sask. Man, 1951 Bituminous 51 47 Other Coal - 96 170 Petroleum 37 20 163 2 Natural Gas 2 235 4 1956 Bituminous 1 1 - -Other Coal - 55 220 1 Petroleum 53 4 277 2 Natural Gas 8 507 90 I960 Bituminous - 2 - -Other Coal - 143 511 32 Petroleum 30 11 169 7 Natural Gas 62 1,032 302 5 ^ J t i l i ties only. 186 contrast with the general i n d u s t r i a l market was the lack of prominent bituminous coal and petroleum product markets i n B.C. and Manitoba, the reason being the domination of hydro power i n those provinces. One component of the petroleum products pattern i s the use of l i g h t f u e l o i l and d i e s e l o i l i n int e r n a l combustion stations. Reasons have been advanced f o r the appearance of these stations i n hydro regions and, the same reasons apply f o r t h e i r appearance i n the i s o l a t e d communities of a l l provinces. Many of these stations were too small to appear on Figure 18. With the extension of p r o v i n c i a l e l e c t r i c i t y grids several of these stations closed. Most of the f a l l i n the consumption of petroleum i n Alberta (Table XV) was accountable to the c l o s i n g of these stations. The impact of these stations on the f u e l mix of Saskatchewan should have been p a r t i c u l a r l y marked because of t h e i r m u l t i p l i c i t y p r i o r to 1952 and the formation of the Saskatchewan Power Corporation. However, v i r t u a l l y a l l the petroleum consumption of Saskatchewan (Table XV) was heavy f u e l o i l and the lack of d i e s e l o i l i s probably a r e s u l t of an error i n the data sources. Fuel costs, adjusted f o r the varying thermal e f f i c i e n c i e s of f u e l s , have been calculated f o r 1958 (Table XVI). These costs are a prime consideration i n thermal power 187 TABLE XVI FUEL COSTS OF UTILITY STEAM - ELECTRIC STATIONS 1958 Cents per Kwh output Coal Oil G-as Alberta .129 - .091 Saskatchewan .215 .473 .344 Manitoba .472 - .465 Source: Calculated from C E . Baltzer, "The Position of Coal Supply in Regard to the Requirements for Electric -U t i l i t y Operations". Canadian Mining and Metallurgy  Bulletin, No. 595 (November, 1961) p. 844. Note: Baltzer only provides the fuel input, cost of the fuel, and the percentage contribution of that fuel to the total steam-electric Kwh output of the province. Actual Kwh generated per fuel were calculated by applying these percentages to the total Kwh generated by thermal stations (provided by D.B.S., Electric Power Statistics, 1958). The data now permitted the calculation of the actual cost per Kwh. The above figures are slightly lower than the true costs because of Kwh output of a l l thermal stations w i l l be above that of steam-electric stations. This may affect the inter-provincial comparison, but the ratios of the various fuels within each province w i l l be correct. 18 8 production, but there are a number of q u a l i f i c a t i o n s to these costs explaining the f u e l mix of Table XV. F i r s t l y , 9 c a p i t a l costs, quality of the f u e l , and long-term price changes"*"^ are a l l s i g n i f i c a n t i n the costing of various f u e l s . Secondly, where more than one s t a t i o n i n a province uses the same f u e l , actual costs at these stations may d i f f e r s i g n i f i c a n t l y from the average cost (Table XVI) because of d i f f e r i n g l ocations. Use of heavy f u e l o i l i n thermal power production was concentrated i n Saskatchewan (Table XV). The bulk of f u e l o i l use was i n central Saskatchewan (Figure 18) where, as i n the domestic sector, petroleum l a r g e l y replaced sub-bituminous coal a f t e r 1951. In turn, petroleum was replaced by natural gas, hence the f a l l i n petroleum consumption (Table XV). Natural gas was cheaper than petroleum (Table XVI), and t h i s may be because thermal power production was the only possible large market f o r 'firm' sales of gas. Even so, the trend towards the i n s t a l l a t i o n of t r i p l e - f i r i n g equipment i n c e n t r a l Saskatchewan (Figure 18) points to t h i s area remaining a 'frontier* f o r f u e l o i l , gas, and possibly sub-bituminous coal. In contrast to other market sectors i n Saskatchewan, the thermal power market r e l i e d on l i g n i t e coal to a s i g n i f i c a n t ^Cost of thermal plants (20,000 Kw or more i n capacity) i n d o l l a r s per i n s t a l l e d Kwh i n the U.S.A.: Coal 150; O i l 145; Gas 120. Costs w i l l be higher i n Canada because of higher inter e s t rates and higher priced c a p i t a l equipment. J.A. Harle, "Thermal Power i n Alberta," Transactions of the Canadian In s t i t u t e of Mining and Metallurgy, Vol.LIV (1951 )p. 450. •^Gas prices are r i s i n g whilst strip-mined coal offers the most stable p r i c e s over the usual f i f t y year amortization period of power stations. 189 and increasing extent (Table XV). This contrast arises from the a b i l i t y to locate consumption (i.e. the thermal power station) on the coal f i e l d . By I960 a third of Saskatchewan's thermal power capacity was located at Estevan. Applying a transmission cost of 0.04 - 0.05 cents per Kwh per hundred miles1"1" to the coal costs per Kwh (Table XVI), thermal plants at Estevan could transmit competitive e l e c t r i c i t y to central Saskatchewan even when local stations i n central Saskatchewan were using gas. On the other hand, lignite could not supply thermal stations i n central Saskatchewan for lignite prices would be above those of gas. The cost of lignite i n this area would be very similar to that of Manitoba's coal cost (Table XVI) for the latt e r represents the Brandon station, and this station and central Saskatchewan stations are almost equidistant from Estevan. In Alberta there was a similar trend of locating new thermal capacity on coal fields and of rising coal consumption. In the earlier part of the decade gas f i n a l l y replaced coal in a l l major stations except for the one at Drumheller. Though gas consumption continued to expand, the establishment of the Battle River plant, a plant very closely associated spatially and contractually with the sub-bituminous mine, signified a trend back to coal. Table XVI shows gas prices being lower, but a component of these prices was interruptible sales and also, gas prices are rising whilst sub-bituminous coal offers long-term price s t a b i l i t y . These 1 1Davis, cp_. c i t . , p. 348. 190 price relationships were well exemplified by the construction of the Wabamum sta t i o n . The s t a t i o n i s located on a coal f i e l d , but i t was planned to use gas u n t i l 1961 because the 12 gas price would be lower. Within the minor thermal power markets of B.C. and Manitoba coal was a s i g n i f i c a n t contributor only i n the l a t t e r province. Table XVI shows Manitoba to be a ' f r o n t i e r ' of coal and gas, but i t would possibly not be a ' f r o n t i e r ' i f i t were not f o r p r i c i n g p o l i c i e s . L i g n i t e was obtained at s p e c i a l contract p r i c e s f.o.b. the mine and at s p e c i a l f r e i g h t charges, whilst the p r i c i n g p o l i c i e s of gas d i s t r i b u t o r s may well have raised gas p r i c e s . In the case of B.C., i n a c c e s s i b i l i t y to strip-mined lower c a l o r i f i c coals excluded coal, and competition was l i m i t e d to petroleum and gas. Gas made inroads into petroleum markets (Table XV), but these inroads were l a r g e l y r e s t r i c t e d to stations i n the I n t e r i o r (Figure 18), a price-shed f o r petroleum. The dual f i r e d s t a t i o n of the Lower Mainland suggests that only i n t e r r u p t i b l e gas could compete with petroleum i n the coastal area. CONCLUSION The demand patterns of e l e c t r i c i t y were examined f i r s t because i t was thought that the multiple primary energy sources of e l e c t r i c i t y would permit demand to be The use of coal began i n 1962 191 largely controlled by external factors. This assumption was found to be true for much of industrial and domestic consumption. Of the ele c t r i c i t y consumed by industry only the use of electric boilers was related to location, to Manitoba being a fuel price-shed and having available low cost e l e c t r i c i t y . In the case of domestic consumption, ele c t r i c i t y availability prior to 1951 was limited by the areal concentration of markets. The pressure of viewing power availability as a social necessity overcame costs of rural electrification, and by I960 nearly a l l households i n Western Canada were serviced by power lines. Supply aspects i.e. power costs, were limited to creating areal differences i n the intensity of sales. To some degree this was a legacy of the 1951 availability pattern, there would be a delay i n households just connected to power lines before the adaption of various electrical appliances. The existence of a strong preference for e l e c t r i c i t y was shown by the rising intensity of sales i n a l l provinces. But, the availability of natural gas affected the intensity of sales. Distributions of gas cookers demonstrated that, depending on the length of time in which gas was available, natural gas did retard the demand for electric cookers, a manor component i n raising intensity of sales. In general, i t proved valid to accept the demand for ele c t r i c i t y as given and thus energy source competition was i n large part restricted to electric generation. B.C. and Manitoba were orientated to hydro power because of suitable 192 physical s i t e s within those provinces. Despite the necessity to look further a f i e l d within those provinces f o r hydro s i t e s , thermal power only made a l i m i t e d impact. The only large thermal power market was on the B.C. coast where i n d u s t r i a l plants had ready access to U.S. o i l and to l o c a l l y produced wood waste. Otherwise, thermal power only appeared i n the form of d i e s e l o i l i n small, remote, communities. In recent years a new component of thermal power was added, large thermal plants were constructed, mainly f o r the purpose of meeting 'peak' loads of the p r o v i n c i a l grids. Within the thermal power market, l a r g e l y Alberta and Saskatchewan, the f u e l mix was highly dynamic. This was exemplified by the trend to dual and t r i p l e - f i r i n g . Fuel mix patterns repeated those of other market sectors to a considerable degree, proving the v a l i d i t y of the o v e r a l l price gradients. Petroleum was only s i g n i f i c a n t i n B.C. and Saskatchewan, e l s e -where gas assumed a dominating p o s i t i o n i n the market. But, i n contrast to other market sectors coal consumption expanded. The prerequisite f o r t h i s s i t u a t i o n was the r i s i n g e l e c t r i c i t y demands permitting the construction of new plants and major extensions of the pre-1951 plants. Whilst other market sectors had t h i s prerequisite, thermal power d i f f e r e d i n that stations are located according to energy costs. Consequently, the l o c a t i o n of the coal f i e l d s did not necessarily exclude coal; plants located on coal f i e l d s and transmitted the e l e c t r i c i t y 193 to major markets. This pattern was very prominent i n Saskatchewan and l e s s so i n Alberta where the l o c a t i o n of the sub-bituminous f i e l d s i s not so remote from markets. Within Alberta r i s i n g coal consumption was l a r g e l y the r e s u l t of the price trends of coal and gas. The promising future f o r coal i n western Canada was exemplified by i t beginning to reach out again from coal f i e l d s i t e s ; witness the c o a l - f i r e d stations i n Manitoba. Unlike other market sectors, competition i n the e l e c t r i c i t y generation industry was intense i n a l l provinces. The expansion of f a c i l i t i e s permitted continuous re-evaluation of the costs of the various primary sources of energy and, unlike the case of other consumers, these costs are c r u c i a l and therefore the legacy f a c t o r was less prominent. In f a c t the e l e c t r i c i t y generating industry was the only market sector which had, i n part, moved towards adjusting to short-term price i n s t a b i l i t y by use of the device of multiple f i r i n g equipment. 194 CHAPTER VIII EVALUATION OP THE COMPETITIVE FACTORS Data l i m i t a t i o n s prevented the establishment i n d e t a i l of s p a t i a l v a r i a t i o n s of the energy mix and of p r i c e s . In large part, the analysis was r e s t r i c t e d to four areal u n i t s , the provinces. With there "being only four market areas, a l l markets were unique i n several aspects i n addition to that of t h e i r areal r e l a t i o n s h i p to energy production centres. One variable, the d i s t r i b u t i o n of s p e c i f i c energy demands was excluded on the grounds that i t only i n d i r e c t l y a f f e c t s the competitive segment of the energy mix. But, other variables of these four markets could not be excluded and therefore, one could not i s o l a t e the variable of t h e i r areal relationships; the variable which i s the j u s t i f i c a t i o n f o r the geographic approach. This study had to focus on four variables which were competitive factors i n that they influenced the competitive segment of the energy mix, and hence the areal pattern of the mix. These four factors were ( l ) location, i e . the areal relationships of market and energy production, a r e l a t i o n s h i p expressed primarily i n transport costs, (2) market structure, (3) the degree of areal concentration of the p r o v i n c i a l market, and (4) h i s -t o r i c a l legacies. Other factors were involved i n competition of the energy sources but these other factors remained s p e c i f i c to one place or one energy source. Evaluation of the four competitive factors can only be q u a l i t a t i v e . The purpose of the f i n a l evaluation i s , i n the l i g h t of the examination of each energy source i n d e t a i l , to j u s t i f y the assertion made i n Chapter I that l o c a t i o n was the primary f a c t o r and that the other three factors only modified the areal pattern of the competitive segment of Western Canada's energy mix. LOCATION OF MARKETS AND ENERGY PRODUCTION Because the areal relationships of markets and energy production are primarily expressed i n transport costs, the advent of major trunk pipelines d r a s t i c a l l y a l t e r e d these r e l a t i o n s h i p s . For t h i s reason, i t i s useful to sub-divide the evaluation of l o c a t i o n as a factor into before and af t e r the advent of p i p e l i n e s . In the absence of pi p e l i n e s the l o c a t i o n factor operated i n the context of r a i l costs f o r , at the i n t e r - p r o v i n c i a l l e v e l , v i r t u a l l y a l l energy movements were by r a i l . Location i n the Framework of R a i l Movements Energy production i n Western Canada was mainly concentrated i n a region extending from southern Alberta to the Peace River area and from the Rockies to eastern Alberta. Outside of t h i s region energy production, s i g n i f i c a n t to the energy mix, was limi t e d to hydro power i n B.C. and Manitoba, l i g n i t e i n southeast Saskatchewan, 196 natural gas i n western Saskatchewan, and f u e l wood i n a l l provinces. Production of petroleum i n Saskatchewan and Manitoba was not s i g n i f i c a n t to the energy mix for, higher well-head pr i c e s discounted any lo c a t i o n a l advantages that petroleum may have had i n l o c a l markets and besides, these provinces r e l i e d l a r g e l y on petroleum piped i n from Alberta. With a l l the energy sources occurring i n Alberta the energy mix of that province would tend to be dominated by the energy source with the lowest production costs. Transport charges would be l i m i t e d because of the r e l a t i v e l y r e s t r i c t e d movements of energy. On the other hand, the energy mix of each of the other provinces would r e f l e c t the price relationship of costs of energy sources trans-ported from Alberta to costs of more l o c a l l y produced energy. P r i o r to i n t e r - p r o v i n c i a l p i p e l i n e s only coal and petroleum could be moved out from Alberta and only then with p r i c e gradients r e l a t i v e l y high to those of p i p e l i n e s . Thus, i n a framework of r a i l movements, l o c a l energy sources i n B.C, Saskatchewan, and Manitoba would play a larger role i n the energy mix. This l a r g e r r o l e would be r e s t r i c t e d to the domestic and i n d u s t r i a l sectors f o r , excluding imports into B.C. and Manitoba, a l l the energy supplies of the transport sector were derived from the major energy source region, extending from the Rockies to eastern A l b e r t a . 1 "'•It has been noted that petroleum production outside of Alberta did not confer any l o c a t i o n a l advantages because of the higher well-head p r i c e s . 197 The competitive pattern of the locomotive market i s treated f i r s t because the pattern of areal relationships was simpler than that of the remainder of the energy market. In t h i s market, the l o c a t i o n of B.C. i n permitting imports of U.S. f u e l o i l by ocean tanker was c e r t a i n l y a f a c t o r i n the s i g n i f i c a n t r o l e of o i l - f i r e d locomotives by 1951. l i k e B.C., Manitoba was a coal price-shed and here, imports of U.S. coal would c e r t a i n l y have been l a r g e r i f i t was not f o r the p o l i t i c a l decision to reduce haulage charges on coal from the Rockies by means of subvention payments. As the replacement of coal by f u e l o i l moved eastwards, the l o c a t i o n of the producing centres of these competing f u e l s proved s i g n i f i c a n t . Despite the advent of p i p e l i n e s , f u e l o i l production l a r g e l y remained i n Alberta, and thus both o i l and coal had a s i m i l a r p o s i t i o n on the network. In addition, these f u e l s had si m i l a r p r i c e gradients. Thus, cost differences between these fue l s were probably a r e a l l y constant, therefore any areal pattern of replacing coal i n the P r a i r i e Provinces was not contrary to the supply patterns. In contrast to the west to east advance of o i l - f i r e d locomotives, there was l i t t l e i n the way of an areal pattern to the d i e s e l i s a t i o n programmes. In t h i s case, the supply pattern d i f f e r e d from that of f u e l o i l f o r d i e s e l o i l production was more dispersed. This was a consequence of r e f i n e r y expansion, expansion which hinged on crude o i l p i p e l i n e s . 198 In the case of the other sectors of the energy-market, the energy mix was d i f f e r e n t because production centres of energy outside of Alberta were important. In Alberta natural gas dominated the energy mix even by 1951, a r e f l e c t i o n of lower production costs. Because natural gas could not be moved beyond Alberta, the energy mix of the other provinces d i f f e r e d s u b s t a n t i a l l y . In the early years of the period under review, natural gas was produced i n li m i t e d quantities i n the Peace River area of B.C. and i n western Saskatchewan. Though, as i n Alberta, t h i s gas did make inroads on other f u e l s i t s impact on the p r o v i n c i a l energy mixes was l i m i t e d (Pigure 2), not because of the l o c a t i o n of production centres, but, because of the l i m i t e d quantities of available gas. In the movement of coal and petroleum out from Alberta to the re s t of Western Canada, petroleum was the active competitor f o r large quantities of petroleum were a recent phenomena. However, the impact of petroleum was very l i m i t e d i n view of the si m i l a r price gradients f o r ra i l - h a u l e d petroleum and coal. In 1951, petroleum had made s i g n i f i c a n t inroads only into Saskatchewan's market. In t h i s case, i t was a sub-bituminous coal market which had a r e l a t i v e l y high p r i c e gradient and possibly the p r i c e gradient f o r crude o i l to Saskatchewan r e f i n e r i e s was lower. Even so, the inroads of petroleum were limited and thus B.C., I 199 an area accessible to petroleum moved v i a ocean tanker, was the only major petroleum market i n 1951. However, sales of Alberta coals outside of Alberta had to face the competition of l o c a l energy sources, i n addition to the competition of petroleum i n B.C. and Saskatchewan. One of the reasons why the l o c a l l y produced energy sources did not dominate the energy mix of t h e i r respective p r o v i n c i a l markets was because a l l these l o c a l sources had r e l a t i v e l y high price gradients and therefore t h e i r markets were ar e a l l y r e s t r i c t e d . This was p a r t i c u l a r l y so i n the case of f u e l wood. Fuel wood could not move beyond i t s production area and, because the production areas of the P r a i r i e Provinces were sparsely populated, f u e l wood was a minor s i g n i f i c a n t contributor to the energy mix. An exception was the coastal area of B.C. where juxtaposition of a large forest products industry and major domestic markets permitted considerable sales of f u e l wood to domestic consumers. I t i s recognized that these sales were dependent on the demand p r i c i n g policy of f u e l wood supplies, but t h i s was a key factor only with respect to i n d u s t r i a l consumption. The uniqueness of the domestic sales of f u e l wood i n B.C. was a r e s u l t of the l o c a t i o n of sawmills. The demand p r i c i n g p o l i c y applied to a l l Western Canada yet, domestic f u e l wood consumption i n the P r a i r i e Provinces was minor. 200 Lig n i t e coal had a price gradient above that of ei t h e r sub-bituminous or bituminous coal. In Saskatchewan l i g n i t e was a. minor item i n the energy mix f o r i t s p r i c e - gradient prevented any move towards the west or northwest; the d i r e c t i o n of Saskatchewan's major markets and a d i r e c t i o n which would bring l i g n i t e closer to Alberta's sub-bituminous coal and petroleum which were the major competing f u e l s . L i g n i t e could only have a s i g n i f i c a n t part i n Saskatchewan's energy mix when the energy consumer located on the coal f i e l d and t h i s only occurred i n the case of thermal power stat i o n s . On the other hand, l i g n i t e could f i n d a considerable market i n Manitoba and Western Ontario where l i g n i t e ' s p rice gradient moved p a r a l l e l to that of bituminous coal from Alberta. The more l i m i t e d mileage of l i g n i t e movements compensated f o r the higher p r i c e gradient. Evidence showed that l i g n i t e was the cheaper coal i n Manitoba and therefore, sales would have been even greater i f i t had not been f o r the legacies of bituminous markets and objections by domestic consumers to the quality of l i g n i t e . F i n a l l y , hydro power could never dominate the energy mix of any province, not because of i t s high price gradient but, because the demand f o r power i s only a l i m i t e d segment of domestic and i n d u s t r i a l energy consumption. Whilst e l e c t r i c i t y i s not s p e c i f i c to hydro power, e l e c t r i c i t y 201 sales i n 1951 were governed i n large part by the d i s -t r i b u t i o n of hydro power. Sales of e l e c t r i c i t y were p a r t i c u l a r l y high i n B.C. and Manitoba where hydro s i t e s were close to major markets. Compared to Manitoba, the i n t e n s i t y of sales per customer was lower i n B.C. and t h i s was a consequence of not only,higher power costs but, of the a v a i l a b i l i t y of l o c a l f u e l wood and imported petroleum. In conclusion, the l o c a t i o n factor determined the general areal pattern of the energy mix of 1951, and consequently the other factors could only be secondary i e . modifiers of t h i s pattern. It remains to be seen whether the lo c a t i o n f a c t o r s t i l l retained i t s key role a f t e r areal r e l a t i o n s h i p s were d r a s t i c a l l y changed by the construction of p i p e l i n e s . Impact of Pipelines Construction of pip e l i n e s permitted large quantities of energy to be moved from Alberta i n t o the rest of Western Canada. These pip e l i n e s substantially reduced the trans-port charges f o r crude o i l , and they removed the absolute embargo on i n t e r - p r o v i n c i a l movements of natural gas. The l o c a t i o n f a c t o r was the root of the delays i n the construction of these p i p e l i n e s . Distances from Alberta demanded large throughput pipelines, but markets i n Western Canada were too small to f u l f i l l these through-put requirements. Therefore, pipelines had to seek 202 markets external to Western Canada. In the case of petroleum these markets were quickly found. The only-delay was in the construction of the crude o i l pipeline to Vancouver, but this delay was not significant to the energy mix because the pipeline did not result in any significant change i n the price relationship of petroleum 2 to other fuels i n B.C. On the other hand, gas pipelines were delayed for several years by institutional barriers which were rooted in location. F i r s t l y , the Alberta Oil and Gas Conservation Board estimated that supplies were inadequate for the large exports necessitated by the requirement that only large pipelines were economic. Secondly, when permission for exports was granted the pipelines were delayed another three years by various institutional barriers preventing the realization of markets external to Western Canada. If markets adjusted immediately to the new set of areal relationships resulting from pipeline construction, delays i n the construction of pipelines would not affect the I960 energy mix and pipelines would only be relevant to the areal patterns of the energy mix of 1951 and 1956. The only change was the construction of a small refinery at Kamioops, an area remote from U.S. and Alberta petroleum products. Refinery construction at Vancouver did not lead to substantial price reductions i n heavy fuel o i l , the major competing petroleum product, for imports of American o i l remained stable. 203 Evaluation of t h i s point w i l l be made i n the discussion of h i s t o r i c a l legacies. The impact of crude o i l pipelines i s d i f f i c u l t to evaluate because f i r s t l y , r e f i n e r s ' decisions created a considerable v a r i a t i o n i n product prices and secondly, gas pipelines were no more than f i v e years behind those of o i l . There were in d i c a t i o n s that the p r i c e gradient of petroleum products remained about as steep as that of r a i l -hauled petroleum. Consequently, i t i s not surprising that the impact of the pipelines was somewhat l i m i t e d . In Figure 19, the 1951-56 data, except i n the case of Alberta, serve to indicate the impact of petroleum. By f a r the greater part of the expansion of energy demands and of the substitution was f u l f i l l e d by petroleum. I t i s evident that v i r t u a l l y a l l the increase i n i n d u s t r i a l sales and 50 per cent of the domestic sales expansion of petroleum was the r e s u l t of r i s i n g demands f o r energy. In B.C. the expansion of petroleum was only a r e s u l t of the pipeline to a very l i m i t e d degree, f o r the pipeline hardly affected the areal r e l a t i o n s h i p of petroleum supplies i n B.C. The switch from U.S. to Alberta o i l did not reduce petroleum prices by any s i g n i f i c a n t amount. In the case of the locomotive market pipelines were not s i g n i f i c a n t i n the change to f u e l o i l and, whilst d i e s e l o i l requirements were l a r g e l y f u l f i l l e d from l o c a l r e f i n e r i e s which expanded 204 EXPANSION AND SUBSTITUTION OF ENERGY SOURCES 'OOOC.E.TONS 1 0 O 0 -5 0 0 -1951-56 W. VVVN. B . C . A L B E R T A S A S K A T C H E W A N M A N I T O B A 'OOOC.E.TONS 1 5 0 0 - I lOOO-5 0 0 -B . C . A L B E R T A S A S K A T C H E W A N M A N I T O B A EXPANSION SUBSTfTUTION M e * MARKET SECTOR aExpansion of energy consumption was only 453,000 coal equivalent tons because of gains in thermal eff iciences. Note: (1)Substitution represents the total fall In sales of the declining energy sources. (2) Expansion is total expansion of energy sales after substitution is subtracted. (3) The industrial sector excludes utility operated power stations, which are shown separately, and electricity consumption at Kitimat,Trail,and Flin Flon. Consumption of their own product by the energy Industries is also excluded. (4) Thermal efficiencies are not considered. Therefore, in each market sector energy inputs are shown, and hydro power is converted at 2,640 Kwh to theC.E.Ton. This rate represents the Kwh generated by a C.E.Ton whereas the rate of 7,910 Kwh to the C.E.Ton (used throughout this study) represents equivalent B.t.u.contents. Figure 19 205 in response to the pipeline, i t i s probable that dieselisa-tion would have substantially reduced fuel b i l l s even i f a l l the supplies had to be obtained from Alberta. Con-sequently, the competitive pressure of petroleum resulting from pipeline construction was largely limited to the domestic and industrial sectors of Saskatchewan and Manitoba. This competitive pressure was more marked within Saskatchewan than i n Manitoba (Figure 19). In Manitoba, limited expansion of refinery construction, combined with accessibility to lignite coal and to hydro power for e l e c t r i c i t y production, ensured that the impact of the pipeline was relatively restricted. The impact of natural gas pipelines was dramatic for gas was essentially restricted to Alberta before 1956. In contrast to petroleum pipelines, the gas pipelines were highly significant to the energy mix of B.C., Saskatchewan, and Manitoba for, despite relatively high price gradients, the low f i e l d price of gas enabled i t to undercut the price of v i r t u a l l y every other fuel in a l l provinces. The relatively low price of gas permitted a considerable degree of substitution, as seen i n the 1956-60 data of Figure 19 where, of the substitution, only a minor segment was by petroleum. Outside of Alberta, the impact of gas on a provincial energy mix was greatest i n the case of Sask-atchewan and least in that of Manitoba (Figure 2). However, i f only the post 1956 gains by gas are examined 206 (Figure 2), the gains i n B.C. appear to have been almost the same as those of Saskatchewan, except i n the i n d u s t r i a l sector where f u e l wood i n B.C. industry r e s t r i c t e d gas. Natural gas had i t s l e a s t impact i n Manitoba because p r i c i n g p o l i c i e s were perhaps at f a u l t and because l i g n i t e coal was cheaper. Whilst there i s c l e a r evidence of energy markets, excluding c e r t a i n s p e c i f i c components, adjusting to the new set of areal relationships established by the pipelines, equilibrium had not been achieved by I960. The areal pattern of the energy mix of 1951 was l a r g e l y controlled by the lo c a t i o n f a c t o r , but th i s was les s true of the I960 pattern. I f the adjustment of markets to lo c a t i o n was perfect ( i e . equilibrium), gas would dominate i n Saskatchewan as well as Alberta. In Manitoba the energy mix would probably consist of gas and either l i g n i t e or petroleum, whilst i n B.C. the probable energy mix would be f u e l wood, petroleum, and natural gas. There were trends i n the d i r e c t i o n of these mixes (Figure 2), but v a r i a b i l i t y of progress i n t h i s d i r e c t i o n points to other f a c t o r s . At any point i n time these other factors modify the energy mix and, i n f a c t , prevent the energy mix from ever adjusting p e r f e c t l y to lo c a t i o n f o r the l a t t e r i s never constant i n the long run. MARKET STRUCTURE Clearly market structure was an important factor, throughout t h i s study the analysis of consumption has had 207 to be sub-divided into three sectors. Prom the viewpoint of the areal pattern of the t o t a l energy mix the large proportions of energy demands which were s p e c i f i c to p a r t i c u l a r energy sources were s i g n i f i c a n t . Whether i t was energy consumed by the energy industries ( f u e l wood consumed i n the B.C. forest products industry f a l l s into t h i s category), road transport, or the electro-metallurgical industry, the quantity of these demands always varied from province to province. These consumption components were excluded as f a r as possible, but market structure remained s i g n i f i c a n t i n the competitive component of energy demands. The energy mix of the locomotive market, which was not s p e c i f i c p r i o r to I960, had a unique areal pattern. This areal pattern was bound to d i f f e r from that of other market sectors f o r only two sources of primary energy, coal and petroleum, were involved. In addition, the production pattern of energy f o r the locomotive market was even more a r e a l l y concentrated by the reliance on Western bituminous coal and Alberta f u e l o i l i n the past. On the whole, i t has been established that the competitive pattern of the locomotive market was s t i l l l a r g e l y a response to the l o c a t i o n factor and thus, the thesis that t h i s was the primary fa c t o r i s not i n v a l i d a t e d . Because the r e l a t i v e proportions of the domestic and i n d u s t r i a l sectors varied from province to province, 208 the different behaviour of these two sectors induced areal differences in the competitive component of the energy mix. These two sectors differed i n , (l) their degree of areal concentration within the province, (2) the emphasis placed on 'convenience' of certain energy sources and the role of long term contracts for energy supplies, and (3) the regard paid to fuel prices by thermal power producers. The f i r s t difference, the areal concentration of the sectors, i s discussed in the next section. The industrial sector generally places less emphasis on the 'convenience' of the non-solid fuels and energy supplies are usually obtained on long term contracts. Both characteristics tend to make the energy mix more stable i n the industrial sector. This relative s t a b i l i t y i s evident i n Figure 19 where substitution in the general industrial sector was very limited prior to 1956. In fact, because of the lack of this market sector i n Saskatchewan and because B.C. already imported petroleum, the impact of crude o i l pipelines on industrial markets was essentially limited to Manitoba, and even here the use of lignite to a much greater degree than in the domestic sector ensured that petroleum would not replace coal i n any significant quantity. Yet, after 1956 natural gas replaced other fuels on a large scale i n industrial sectors (Figure 19). Sub-stitution was s t i l l rather less than that of the domestic sector and the more limited expansion of industrial demands 209 f o r energy i n most provinces guaranteed that natural gas 3 would not be as s i g n i f i c a n t i n the i n d u s t r i a l energy mix. In contrast to most i n d u s t r i a l consumers, thermal power stations constituted a remarkably v o l a t i l e market. This was the only market sector that achieved an almost perfect adjustment to the l o c a t i o n of energy supplies because dual and t r i p l e f i r i n g equipment permitted considerable f l e x i b i l i t y to change the f u e l mix. This f l e x i b i l i t y would account f o r f u e l consumption patterns d i f f e r i n g from those of other market sectors, but additional reasons were present. F i r s t l y , hydro power enters the picture as a source of energy and, because e l e c t r i c i t y demands are so l a r g e l y s p e c i f i c , hydro power had a r o l e to play i n B.C. and Manitoba. The r e s u l t was that the f u e l s could only f i n d large markets i n power production i n Alberta and Saskatchewan. Secondly, the thermal power s t a t i o n tended to be located with a view to minimizing energy costs. This gave greater f l e x i b i l i t y f o r power stations to adjust to f u e l supply patterns by means of s i t i n g the plant. Consequently i n some cases, because of t h i s f l e x i b i l i t y , power stations adapted to the l o c a t i o n of coal f i e l d s and s i t e d on the coal f i e l d s of Alberta and Saskatchewan. The l o c a t i o n factor remained the primary f a c t o r but, because of the f l e x i b i l i t y i n l o c a t i n g power stations, the use of coal increased instead of decreasing as i n a l l other market sectors. See the energy mix of B.C. and Manitoba i n Figure 2. 210 AREAL CONCENTRATION OP MARKETS It was suggested that on the P r a i r i e s , industry-was more a r e a l l y concentrated than was the domestic market. In the case of B.C. there remains some doubt as to which of the market sectors, the i n d u s t r i a l or the domestic, was more a r e a l l y concentrated. The degree of concentration i s p a r t i c u l a r l y s i g n i f i c a n t to natural gas because of the cost of building d i s t r i b u t i o n a l p i p e l i n e s . The need f o r a special transmission network applies to e l e c t r i c i t y also, but the s o c i a l necessity of e l e c t r i c power a v a i l a b i l i t y overrode cost considerations. There i s l i t t l e c lear evidence that areal concentration i s a f a c t o r d i f f e r e n t i a t i n g the energy mix of the i n d u s t r i a l and domestic sectors. In Alberta there was room fo r a domestic petroleum market between the urban gas pipelines and the f u e l wood market area, whereas a petroleum i n d u s t r i a l market was lacking because industry i s more concentrated i n urban centres and thus accessible to gas. In the other three provinces gas substituted f o r other f u e l s on an extensive scale i n both domestic and i n d u s t r i a l markets (Figure 19), therefore, natural gas had some special advantage i n i n d u s t r i a l markets which compensated fo r the greater regard paid to the q u a l i t a t i v e advances of gas by the domestic consumer. One can hardly argue the importance of the greater concentration of i n d u s t r i a l markets f o r t h i s may not be the case i n B.C. 211 yet, i n d u s t r i a l sales of gas were not l i m i t e d r e l a t i v e to other provinces. Rather, the breakdown of the r e l a t i v e l y stable energy mix of the i n d u s t r i a l sector was a r e s u l t of p o l i c i e s which lowered the i n d u s t r i a l p rice f o r gas considerably. Areal differences occur also i n the degree of concentration within the domestic market. B.C. and Manitoba had the most a r e a l l y concentrated markets whilst Sask-atchewan had the most dispersed market. Certainly, i n t r a -p r o v i n c i a l energy patterns demonstrated the importance of market concentration. Whilst consumption patterns of petroleum products did not d i f f e r e n t i a t e greatly between metropolitan and non-metropolitan areas, natural gas i n B.C. and Manitoba was l a r g e l y r e s t r i c t e d to metropolitan centres. As a r e s u l t , both coal and petroleum markets became more orientated to non-metropolitan areas. On the fringes of the ecumene were to be found the f u e l wood markets, though f u e l wood appeared also i n urban centres i n B.C. Part of the reason f o r the survival of f u e l wood i n the energy mix of the provinces was the dispersed nature of i t s market area. The problem i s that, whilst there were f a i r l y c lear cut i n t r a - p r o v i n c i a l differences i n the energy mix a r i s i n g from the d i s t r i b u t i o n of population, any evaluation of market concentration as a factor i n creating i n t e r -p r o v i n c i a l differences i n the energy mix remains inconclusive. 1 212 Though Saskatchewan was the most dispersed market, the social necessity of el e c t r i c i t y ensured a rural e l e c t r i f i c -ation programme, and Saskatchewan's location more than compensated for i t s dispersed nature i n that domestic gas sales were more important than i n B.C. and Manitoba. Because the gains of natural gas after 1956 were so similar i n B.C. and Saskatchewan i t i s suggested that the more dispersed market of the latter province would have been a barrier, and reduced the role of natural gas, i f i t were not for the fact that Saskatchewan had gas supplies long before B.C. This indicates that, at least up u n t i l I960, the important factor i n gas sales expansion was the historical legacy factor, not the degree of market concentration. HISTORICAL LEGACIES It has been pointed out that the I960 energy mix pattern, and to a lesser degree the 1951 pattern, was not adjusted to the location factor. Further evaluation showed that, whilst the energy mix did differ according to market structure, i t was possible for such differences to be largely a response to locational patterns differing as between sectors. Finally, despite the provinces differing i n degree of areal concentration of provincial markets, this factor does not appear significant at the inter-provincial level, though there i s enough evidence of i t s 213 significance within each province. Thus the evidence points to the historical legacy factor as the key modifier, preventing the energy mix from adjusting to the location factor and from being modified only by the areal concentration factor. The aspect of the historical legacy factor which has been stressed i n this study i s the delay by the consumer before changing old conversion equipment to equipment designed for alternative energy sources, mainly petroleum 4 and natural gas. This problem did not arise where external factors had expanded the demand for energy. In general, the expansion of petroleum outside of Alberta prior to 1956 was dependent on this external factor for 50 per cent of the increase i n i t s domestic sales and for a l l of i t s industrial sales (Figure 19 )• Likewise the increased sales of natural gas i n Alberta were highly dependent on external factors but, i n this province, there was virtually no alternative for gas i n 1951 already held a dominating position i n the energy mix. Because his t o r i c a l legacies restricted the substitution of gas in Alberta and of petroleum elsewhere, legacies which were particularly strong i n the industrial sector, the energy mix of 1956 s t i l l contained elements 4 Historical legacies also appeared i n the distribution of petroleum refineries and may well be the chief reason for the lack of refinery capacity in Manitoba, and the consequent higher prices of petroleum products. 214 of the 1951 pattern. This applied to the locomotive market also for there were s t i l l survivors of the coal-fired locomotive fleet in Saskatchewan and Manitoba. In fact, the west to east elimination of coal-fired locomotives rested partly on the legacy of having started that elimination several decades ago i n B.C. likewise, the I960 pattern of the energy mix contained perhaps even more legacies for natural gas was so recent i n Manitoba and B.C. Gas did replace other fuels i n both domestic and industrial sectors, but i t did not dominate the energy mix to anything l i k e the same degree as i n Alberta. There was a delay i n converting to gas and this delay may well be almost constant i n space, being purely a function of time. It i s recognized that gas pricing policies i n Manitoba, and the fact that e l e c t r i c i t y was available prior to gas i n both B.C. and Manitoba, inhibited conversions to gas, but the key factor behind the limited gas sales was the historical legacy factor. Because the delay i n conversion i s so strongly related to time, the pre-gas energy mix patterns were particularly prominent i n B.C. and Manitoba i n I960. CONCLUSION Though there remains a tendency for the areal pattern of Western Canada's energy mix to adjust to the location factor, i t i s apparent that the pattern of I960 215 was i n a very imperfect state of adjustment. So imperfect was the adjustment, indicated "by continuing intensive energy source competition,that doubts may be raised as to the assertion that l o c a t i o n was the primary fa c t o r . The argument against these doubts i s two f o l d . F i r s t l y , the energy mix pattern of I960 i n general did express an adjustment to the l o c a t i o n of markets and' energy production. Where the adjustment was p a r t i c u l a r l y lacking was i n the case of natural gas where a v a i l a b i l i t y i n three provinces was a recent phenomena. Secondly, the h i s t o r i c a l legacy factor i s not an independent variable but i s rooted i n the l o c a t i o n pattern, f o r i f gas had been available f o r a longer time the patterns of pre-gas a v a i l a b i l i t y would have been f a r less prominent. Thus, the key question i s the delay i n the advent of i n t e r - p r o v i n c i a l gas pipelines, and t h i s delay was rooted i n the l o c a t i o n factor. The need f o r large pipelines from Alberta, an expression of distance to other p r o v i n c i a l markets i n Western Canada, l e d to the need f o r external markets, the problems of gas reserves i n Alberta, and to i n s t i t u t i o n a l barriers which delayed the advent of trunk gas pipelines even further. The areal relationships of markets to energy production centres are not constant. Because h i s t o r i c a l legacies delay the adjustment of markets to energy supply pattern, the market w i l l never be i n perfect adjustment 216 ( i e . equilibrium) f o r , i n time, the areal relationships show substantial changes. The nearest approach to a perfect adjustment i n Western Canada was thermal power production i n Saskatchewan which had the f l e x i b i l i t y of dual and t r i p l e -f i r i n g equipment. FURTHER RESEARCH PROBLEMS As, the trauma of the gas pipelines recedes, a promising study of the present day energy mix appears. The h i s t o r i c a l legacy f a c t o r may or may not be so prominent, the problem i s how f a r i t i s e s s e n t i a l l y a function of time only. It was suggested that given time, the f a c t o r of areal concentration of markets might well appear as the key modifier to an energy mix pattern controlled by the l o c a t i o n f a c t o r . These are the problems to which an examination of the 1965 energy mix could provide answers. The f a c t o r of areal concentration of markets i s , i n i t s e l f , one of considerable i n t e r e s t to the geographer. This f a c t o r can be established f o r the domestic sales pattern because census data provide information of the energy mix of every municipality and census d i v i s i o n . From the l i m i t e d analysis of i n t r a - p r o v i n c i a l patterns i n t h i s study i t appears c e r t a i n that, generally speaking, energy competition was more severe i n major urban centres and that i t decreased towards the peripheries of the ecumene. This i s because there may be thresholds of size of market to cross f o r a l l 217 fuels; certainly there i s a threshold for gas pipelines and for petroleum refineries. Consequently, i n an area without production of primary energy, the energy region may he nodal. Gas would be u t i l i z e d i n the urban centre and outside this centre would be zones of various dominant fuels forming a ring pattern around the urban centre. The outer fringe would be comprised of fuel wood having a stable 'frontier* with the next zone in, that of coal. Coal would be restricted by the heads of the r a i l network and, given the long history of coal i n Canada, the 'frontier' of coal and fuel wood would be relatively stable. Finally, petroleum may form an inner zone around the urban centre, which contains the refinery, having been pushed out from the built up area by gas. The 'frontier' of petroleum and coal would be highly unstable and, depending on just what the price gradient for petroleum i s , petroleum may leap-frog the coal zone and be competing i n the fuel wood fringe. The sales patterns of energy have not, as yet, been examined on the more micro scale of assessing the nodality of the pattern. Not only may nodality be revealed as a key to the energy region, but the 'frontiers' of energy compet-it i o n could appear. Such 'frontiers' have only been established in a study of thermal power stations in 5 Pennsylvania and, in this thesis the thermal power stations 5 George F. Deasy and Phyllis R. Griess, Fuel Competition i n  Pennsylvania's Electric Generating Industry, Pennsylvania Geological Survey, Fourth Series, Bulletin M44 (Philadelphia: Commonwealth of Pennsylvania, Department of Internal Affairs, 1961). 218 of central Saskatchewan suggested that that area was a ' f r o n t i e r ' f o r gas, o i l , and possibly coal. In the case of domestic sales, the competitive f r o n t i e r s may be fragmentated s p a t i a l l y . The urban hierarchy may appear i n the nodal energy region to such a degree that a l l urban centres may be surrounded by a more or less complete series of zones of dominant f u e l s . Consequently, energy competition may be almost equally intensive over an area the size of a province. Such problems f a l l with the f i e l d of the geography of consumption, one of the most neglected f i e l d s of economic geography. 219 SELECTED BIBLIOGRAPHY 220 A. BOOKS Cassady, Ralph. Price Making and Price Behavior in the  Petroleum Industry. Petroleum Monograph Series, Vol. I, New Haven; Yale University Press, 1954. Davis, John. Canadian Energy Prospects. Royal Commission on Canada's Economic Prospects. Hull; Queen's Printer, 1957. George, Pierre. Geographie de l'Energie. Paris; Lihraire de Medicis, 1950. Hanson, Eric J. Dynamic Decade, Toronto; McCelland and Stewart, 1958. Hardwick, Walter G. Geography of the Forest Industry of  Coastal British Columbia. Occasional Papers In Geography, No. 5. Vancouver: Department of Geography, University of British Columbia, 1963. Leeston, Alfred M, John A. Crichton, and John C. Jacobs. The  Dynamic Natural Gas Industry. Norman: University of Oklahoma Press, 1962. Manners, Gerald. The Geography of Energy. London; Hutchinson University Library, 1964. Risser, H.E. The Economics of the Coal Industry. Lawrence: Bureau of Business Research, School of Business, University of Kansas, 1958. Schurr, Sam H., Bruce C. Netschert, and others. Energy i n  the American Economy 1850-1975 Its History and Prospects. Baltimore: The John Hopkins Press, i 9 6 0 . Stockton, J.R., R.C. Henshaw, and R.W. Graves. Economics of  Natural Gas in Texas. Research Monograph No. 15. Austin: Bureau of Business Research, University of Texas, 1952. 221 B. FEDERAL GOVERNMENT PUBLICATIONS Department of Mines and Technical Surveys, Mineral Resources Division. Petroleum Refineries i n Canada, I960. Operators Li s t 5. Ottawa: Queen's Printer, I960. , Geographical Branch. Atlas of Canada. Ottawa: Queen's Printer, 1957. Department of Northern Affairs and National Resources, Water Resources Branch. Principal Hydro-Electric and  Hydraulic Developments in Canada at 31 December I960. Bulletin 2722. Ottawa, 1961. , Principal Thermal-Electric Generating Stations in Canada at 31 December I960. Bulletin 2723. Ottawa. 1961. Dominion Bureau of Statistics. Census of Canada: 1951. Housing, Vol. I l l , Part 1. Ottawa: Queen's Printer, 1953. , Census of Canada: 1961. Housing, Heating Equipment and Fuel. Vol. II, Part 2, Series 2. Ottawa: Queen's Printer, .Coal Mining Industry. Annual, 1951, 1956, I960. Ottawa: Queen's Printer. ,Coke and Gas Industry. Annual, 1951, 1956, I960. Ottawa: Queen's Printer. , Consumption of Petroleum Fuels. Annual, 1951, 1956, I960. Ottawa: Queen's Printer. , Crude Petroleum and Natural Gas Industry. Annual, 1951, 1956, I960. Ottawa: Queen's Printer. , Electric Power Statistics. Annual, 1951, 1956, I960. Ottawa: Queen's Printer. , General Review of the Manufacturing Industries. Annual, 1956-59. Ottawa:* Queen's Printer. , Household F a c i l i t i e s and Equipment. Annual, 1953-1960. Ottawa: Queen's Printer. , Motor Vehicle. Annual, 1951, 1956, I960. Ottawa: Queen's Printer. , O i l Pipeline Transport (Formerly Pipeline (Oil) Statistics). Annual, 1951, 1956, I960. Ottawa: Queen's Printer. , Petroleum Products Industry. Annual, 1951, 1956, I960. uttawa: QIUJMH1 Pi'lnlei'. 222 Dominion Bureau of Statistics. Railway Freight Traffic. Annual, 1951, 1956, I960. Ottawa: Queen's Printer. , Railway Transport: Part III (Equipment, Track, and Fuel Statistics). Annual, 1951-1960. Ottawa: Queen's Printer. , Refined Petroleum Products. Annual, 1951, 1956, I960. Ottawa, Queen's Printer. , Sales of Manufactured and Natural Gas. Monthly, 1958-1960. Ottawa: Queen's Printer. , Shipping Report, Part II: International Seaborne Shipping. Annual, 1951, 1956, I960. Ottawa: Queen's Printer. Dominion Coal Board. Report. Annual, 1950-51 - 1962-63. Ottawa: Queen's Printer. Guernsey, F.W. Ut i l i z a t i o n of Sawmill Residue i n the Southern  Coast Region of British Columbia. Canada, Department of Resources and Development, Forestry Branch, Forest Products Laboratories Division, Bulletin No. 109. Ottawa, 1953. National Energy Board. Short-Term Energy Forecast, 1960-1966. Staff Report, June, 1963. Ottawa: Queen's Printer, 1963. Nolan, D.M. The Demand for Energy i n the Atlantic Provinces. 1950-1980. Department of Mines and Technical Surveys, Mineral Resources Division, Information Bulletin MR 57. Ottawa: Queen's Printer, 1962. Report of the Royal Commission on Coal, 1946. Ottawa: King's Printer, 1947. Report of the Royal Commission on Coal, 1959-1960. Ottawa: Queen's Printer, I960. Royal Commission on Energy. F i r s t Report, 1st October 1958. Ottawa: Queen's Printer, 1959. , Second Report, 2nd July 1959. Ottawa: Queen's Printer, 1959. Simpson, R.A., and D.W. Rutledge. The Natural Gas Industry In  Canada 1961 and 1962. Department of Mines and Technical Surveys, Mineral Resources Division, Mineral Information Bulletin MR 72. Ottawa: Queen's Printer, 1964. , D.M. Nolan, and D.W. Rutledge. A Survey of the Petroleum Industry i n Canada in I960. Department of Mines and Technical Surveys, Mineral Resources Division, Mineral Information Bulletin MR 52. Ottawa: Queen's Printer 1961. 223 Simpson, R.A., D.M. Nolan, and D.W. Rutledge. The Natural Gas Industry i n Canada, I960. Department of Mines and Technical Surveys, Mineral Resources Division, Mineral Information Bulletin MR 55. Ottawa: Queen's Printer, 1962. C. PROVINCIAL GOVERNMENT AND NON-GOVERNMENT PUBLICATIONS Alberta, Department of Mines and Minerals, Mines Division. Report. Annual, 1951-1960. Edmonton: Queen's Printer. , Oil and Gas Conservation Board. Oil and Gas Industry. Annual, 1951, 1956, I960. Calgary. Alberta Power Commission. Report. Annual, 1951-1960. Edmonton. British Columbia, Department of Mines and Petroleum Resources. Report. Annual, 1951-1960. Victoria. Queen's Printer. British Columbia Energy Board, Forecast of Electrical Power  Needs to 1985. Victoria, 1961. Canadian Imperial Bank of Commerce, Petroleum and Natural Gas Department. Oil and Gas Fields in Western Canada. Annual, 1959-60, 1960-61. Calgary. Canadian National Railways. Report. Annual, 1951-1960. Montreal. Canadian Pacific Railway Company. Report. Annual, 1951-60. Montreal. Canadian Petroleum Association. St a t i s t i c a l Yearbook. 1951, 1956, I960. Calgary. Canadian U t i l i t i e s Limited. Report. Annual, 1951-1960. Edmonton. Deasy, George F., and Phyllis R. Griess. Fuel Competition i n Pennsylvania's Electric Generating Industry. Pennsylvania Geological Survey, Fourth Series, Bulletin M44. Philadelphia: Commonwealth of Pennsylvania, Department of Internal Affairs. 1961. Saskatchewan, Department of Mineral Resources, Petroleum and Natural Gas Branch, Petroleum and Natural Gas Stat i s t i c a l  Yearbook. 1956-1960. Regina: Queen's Printer. , Department of Mineral Resources, Report. Annual, 1956, I960. Regina: Queen's Printer. Wright, R.W. An Analysis of the Liquified Petroleum Gas  Industry i n Alberta. Research Council of Alberta, mineo, Circular No. 29. Edmonton, 1959. 224 D. PERIODICALS Baltzer, C E . "The Canadian Power Situation with Particular Reference to Thermal-Electric Power,", Transactions of the  Canadian Institute of Mining and Metallurgy, LXI (1958), 32-39. '  "The Position of Coal Supply i n Regard to the Requirements for E l e c t r i c - U t i l i t y Operations," Canadian  Mining and Metallurgical Bulletin, No. 595 (November, 1961), 841-846. Botham, J.C., J.H. Walsh, and R.M. Ennis, "Puels i n the Canadian Non-Perrous Metals Industry," Canadian Mining and  Metallurgical Bulletin, No. 590 (June, , 1961), 466-71. ' ' Brouillette, Benoit, "L! approyisionneme'nt regional du Canada en combustibles: houille, petrole, gaz naturel, "L 1Actualite  Economique, XXXVI, 4 (janvier-mars, 1961), 575-64*3^  Chapman, J.D. "A Geography of Energy: , An Emerging Pield of Study," Canadian Geographer, V, 1 (Spring, 1961) 10-15. "The E l e c t r i c i t y Industry'of B r i t i s h Columbia", (Abstract) Annals of the Association of American .Geographers, 54, 3- (September 1%4)', 41?. ~ "r-*--Dingle, W.B. "Significant Developments i n .the Canadian.Oil and Gas Industry during 1951," Transactions of the Canadian  Institute of Mining and Metallurgy,,LV •(1952), ,216-222. . Ewarty T.G.", "The Market for Western^ Bituminous CoalV Trans-actions of the Canadian Institute of Mining and Metallurgy, ,LI1/ (1951), 193-197. ~ . ~ ;  Galloway, J.O. "Economic and Other Aspects;of Recent Petroleum and Natural Gas, Discoveries i n Western Canada", Transactions of the Canadian Institute of Mining and Metallurgy, LIII -£1950) '329-333. - —  , i , > Gardner, H.H. " P o s s i b i l i t i e s of Continuous Mining i n Pitching Coal Seams of Western Canada," Transactions of the Canadian -Institute, of Mining and Metallurgy, LXI ..(1958), *Ig8-141. Gilbert, J.C..," The -Heavy O i l Situation i n Yifestern„C.anada" , Transactions of the Canadian Institute of Mining"and  Metallurgy, LV- (1952), 148-152. 1 Guernsey, P.W. "The Value of Surveys and Researcluih Wood Utilization"," Transactions of the-Seventh British'Columbia Natural Resources Conference ; i 9 5 4 j , 87 -91 . '" Haider*, M.C. " O i l Developments in'Western Canada," Transactions  of the Canadian'lnstitute of Mining and Metallurgy, LIII •(1950),, 213-217.- -225 Harle, J.A. "Thermal Power f o r Alberta," Transactions of the Canadian Institute of Mining and Metallurgy, LIV (1951), 447-451. Hetherington, C.R. "The Source and Transmission of Natural Gas i n B r i t i s h Columbia," Transactions of the Seventh B r i t i s h  Columbia Natural Resources Conference, (1954), 250-259. Hutt, G. McL, and E. Swartzman. "Canadian Consumption of In d u s t r i a l Coals", Transactions of the Canadian I n s t i t u t e of Mining and Metallurgy, LXI U958), 17-24. Ingledow, T. "Future Production of E l e c t r i c a l Energy from Natural Gas and Petroleum Within B r i t i s h Columbia," Transactions of the Tenth B r i t i s h Columbia Natural Resources  Conference, (1957), 125-150. Lang, W.A. " U t i l i z a t i o n of Alberta Sub-Bituminous Coal", Transactions of the Canadian I n s t i t u t e of Mining and  Metallurgy, LXI (1958), 507-515. O'Brian, C.L. "Current S t a t i s t i c s on Coal i n Canada," Transactions of the Canadian Institute of Mining and Metallurgy, LI I I (1950), 585-389. , "Coal i n 1950: P a r t i c u l a r l y the Domestic Market," Transactions of the Canadian Inst i t u t e of Mining and  Metallurgy, LIV (1951), 346-555. , "Coal i n Canada i n 1951. Indu s t r i a l Requirements and Supply," Transactions of the Canadian Institute of Mining and  Metallurgy, LV (1952), 272-287. , "Canadian Energy Sources," Transactions of the Canadian Institute of Mining and Metallurgy, LVI (1955), 161-181. , "Two Years Coal Movement and the Future Outlook", Transactions of the Canadian I n s t i t u t e of Mining and  Metallurgy, LVII (1954), 508-514. , "Coal - A Source of Canadian Energy", Transactions of Canadian Institute of Mining and Metallurgy, LXI (1958), 1-15. , and A.W. Lovett. "Energy i n Western Canada", Transactions of the Canadian Inst i t u t e of Mining and  Metallurgy, LIX (1956), 289-504. Peet, J. Richard. "Natural Gas Industries i n Western Canada", Canadian Geographer, VII, 1 (Spring, 1965), 25-52. 226 Stabback, Jack. C. "Gas Reserves of Western Canada," Transactions of the Canadian Inst i t u t e of Mining and  Metallurgy, LXII (I960), 292-298. Stephans, D.M. "Water Power as a Source of Primary Energy," Transactions of the Canadian I n s t i t u t e of Mining and  Metallurgy, LYI (1955), 27-41. Theriault, Robert. "Le Pipe l i n e Edmonton - Montreal," L'Actualite Bconomique, XXXVI, 1 ( a v r i l - j u i n , I960),5-45. Viseman, J. "The Status of Coal Cleaning i n Western Canada", Transactions of the Canadian I n s t i t u t e of Mining and  Metallurgy, LVII (1954), 15-21. Walters, H.N. "Markets f o r Natural Gas i n B r i t i s h Columbia", Transactions of the Seventh B r i t i s h Columbia Natural  Resources Conference, (1954), 260-266. Williams, M.M. "Coal i n Western Canada and i t s Uses," Transactions of the Canadian Inst i t u t e of Mining and  Metallurgy, LXI (1958), 242-249. Young, James W. "Coal Consumption i n Western Canada 1951-1960," Occasional Papers i n Geography,4Department of Geography, University of B r i t i s h Columbia, 1965, 51-62. 227 APPENDICES 228 APPENDIX A ENERGY CONVERSION FACTORS Commodity Physical Unit B.t.u. Coal Bituminous one ton Briquettes it it Coke II II ' Sub-bituminous n it l i g n i t e it it Crude o i l one barrel A l l gasolines II ti Stove o i l (no. l ) , Tractor f u e l and kerosene It II Diesel o i l II II Fuel o i l Nos. 2 and 3 II n Fuel o i l Nos, 4, 5 and 6 ti ti Natural gas one cu. f t . E l e c t r i c i t y one K.w.h. Fuel wood one cord 27,000,000 27,000,000 25,000,000 19,000,000 16,000,000 c,800,000 ,200,000 5,. 5, 5,800,000 5,800,000 5,800,000 6,000,000 1,000 3,412 20,000,000 Source: John Davis, Canadian Energy Prospects, Royal Commission on Canada's Economic Prospects (Hull, Queen's P r i n t e r , 1957) p. 366. 229 APPENDIX B THERMAL EPPICIENCES OP ENERGY USE Residential and Commercial Percentage Coal and Coke 50 Wood 35 Fuel o i l , Kerosene 60 Gas and L.P.G. 70 E l e c t r i c i t y 100 Manufacturing and Mining Coal and Coke 60 Wood 40 Fuel oils 65 Gasoline and Kerosene 20 Gases (including L.P.G.) 70 El e c t r i c i t y 100 Railway Locomotives Coal 4 Fuel o i l 6 Diesel o i l 25 E l e c t r i c i t y 100 Highways and Air Gasoline and L.P.G. 20 Diesel o i l 20 Jet fuel 20 Water Transport Diesel o i l 15 Fuel o i l 9 Coal 6 Source: John Davis, Canadian Energy Prospects, Royal Commission on Canada's Economic Prospects (Hull, Queen's Printer, 1957) p. 363. 230 APPENDIX 0 VALIDITY OP THE ENERGY CONSUMPTION ESTIMATE To test the valid i t y of the estimate a comparison of the writer's estimate with two published estimates i s presented (Table l ) . Both Davis and 0'Brian sub-divided Western Canada into B.C. and the Prairies only. The comparison can only be a test of the early years of the writer energy estimate, for Davis only provided data for 1953 and 0'Brian's data are limited to the years up to 1954. The figures provided by Davis appear to underestimat energy consumption, though the addition of hydro power would raise the total for Western Canada by about one million coal equivalent tons. However, only 0'Brian's estimate offers the possibility of a satisfactory check on the writer's estimate, for both estimates are outlined i n some detail for the year 1951. Certain adjustments (Table II) are necessary i f the writer's estimate i s to be comparable with that provided by 0'Brian. The f i r s t adjustment was a downward revision of the writer's estimate by excluding fuel wood consumption in the forest products industry of B.C. and the consumption of their own product by the energy industries. None of this energy consumption was included i n O'Brian's estimate. In the second 231 TABLE I ENERGY CONSUMPTION ESTIMATES POR WESTERN CANADA Thousands of Coal Equivalent Tons Davis 8 , 0 1 Brian Writer's estimate Year B.C. Prairies Total 1953 5,820 15,346 21,166 1951 6,250 17,323 23,573 1953 6,527 17,230 23,757 1954 6,941 17,008 23,949 1951 8,867 16,209 25,076 1956 10,824 19,249 30,073 a. John Davis, Canadian Energy Prospects, Royal Commission on Canada's Economic Prospects (Hull, Queen's Printer, 1957) pp. 287 and 289. Consumption of motor gasoline, interpolated from the writer's 1951 and 1956 estimates, has been added to the figures provided by Davis. b. C.L. O'Brian and A.W. Lovett, "Energy i n Western Canada", Transactions of the Canadian Institute of Mining and  Metallurgy, Vol. LIX (1956), Tables VIII and XV. Figures presented are the energy consumption figures of these tables plus losses i n thermal power stations. Figures given originally i n B.t.u.'s and the writer has converted them at twenty-seven million B.t.u.'s per coal equivalent ton. TABLE II ADJUSTED ENERGY CONSUMPTION ESTIMATES POR 1951 Thousands of Coal Equivalent Tons Unadjusted Ad,iustment(l) 0'Brians' estimate Writer's estimate B.C. 8,867 6,250 Prairies 16,209 17,323 B.C. 6,725 6,250 Prairies 15,763 17,323 Adjustment(2 B.C. Prairie 6,725 15,763 6,872 16,329 232 adjustment, 0'Brian's estimate was changed so that i t incorporated the railway locomotive consumption figures of this study. The reason for the discrepancy in railway locomotive consumption i s puzzling for the figures used i n this study were forwarded by 0'Brian 1 and these figures do agree closely with more limited data provided by the major railway companies.^ The agreement of the two adjusted energy estimates Table II) i s as close as can be expected. Individual items of the two estimates were examined and a l l agreed within 10 per cent except for fuel consumption i n the industrial market of the Prairies. Comparison of the trends of O'Brian's estimate and of the writer's estimate (Table I) points to a growing disparity after 1951. There i s no published estimate later than 1954 against which the estimate of this study can be checked. The only guarantee of the validity of the 1956 and I960 estimates i s that these estimates were derived from the same data sources as that of 1951 and the data received the same processing procedures. 1. Personal Communication, C.L. 0'Brian, Chairman, Dominion Coal Board, 1962. 2. Personal Communication, W.L. Shirray, General Fuel and Forest Products Agent, C.N.R., 1963, and J.F. Moriarty, Fuel Purchasing Agent, C.P.R., 1962. 233 APPENDIX D COST OP TRANSPORTING ENERGY Form of Energy-Fuel wood Petroleum Natural gas Bituminous Coal Electricity-Transmission Method Rail 30 i n . dia. pipeline 34 i n . dia. pipeline Rail high tension line Distance m Miles 3 1,500 2,000 1,500 1,500 400 Cost per coal equivalent ton/100 miles In cents 254.3 to 296.3 9.0 to 13.5 28.0 to 40.8 70.0 to 80.0 316.5 to 395.5 a. Costs were calculated from actual shipments over these distances. Over shorter distances, the cost per 100 miles could well he higher. Note: Fuel wood costs were calculated by the writer. Rail costs were assumed to be the same per short ton as those of coal. One cord of wood (20 million B.t.u.) weighs about two tons and therefore a ton of fuel wood is equivalent to about 10 million B.t.u. Costs of moving wood are: Coal Costs 27 10 Source: John Davis, Canadian Energy Prospects, Royal Commission on Canada's Economic Prospects (Hull, Queen's Printer, 1957), Table I, p. 348. 234 APPENDIX E ESTIMATED ENERGY CONSUMPTION TABLE I CONSUMPTION IN THE DOMESTIC MARKET B.C. 1 9 5 1 Alberta Physical 'OOO Physical '000 Units a CE. Tons Units a CE. Tons Coal - Bituminous13 450 450 151 151 - Sub-bituminous 311 218 989 692 - Total ZT8 843 Petroleum - Nos. 4, 5 and 6 766 170 9 2 - Other 2,550 547 541 116 - Total 717 118 Puel Wood 1,554 1,151 410 304 Natural Gas 208 8 33,834 1,253 El e c t r i c i t y 1,068 135 380 48 Total 2,679 2,566 Coal , - Bituminous - Sub-bituminous and li g n i t e - Total Petroleum - Nos. 4, 5 and 6 - Other - Total Puel Wood Natural Gas Elect r i c i t y Total Physical Units 3 50 1,297 264 1,179 574 472 262 Saskatchewan TOT Manitoba CE. Tons 50 869° 919 59 253 312 425 17 33 1,706 Physicar Units 3 320 1,025 448 709 461 1,116 320 100 152 252 341 141 Table I continued 235 B.C. 1956 Physical Units 8 , '000 CE. Tons Alberta Physical Units 3 •000 CE. Tons Coal - Bituminous 415 - Sub-bituminous 248 - Total 415 174 589 79 765 79 j3_5 Petroleum - Nos. 4, 5 and 6 965 214 17 -4 - Other 4,531 972 1,024 220 - Total 1718T 224 Puel Wood 1,155 856 301 223 Natural Gas 1,513 56 50,762 1,880 El e c t r i c i t y 2,056 260 772 98 Total 2,947 37539 Saskatchewan Physical Units 3 •000 C E . Tons Manitoba Physical Units 3 •000 CE. Tons Coal - Bituminous13 14 - Sub-bituminous and lignite 771 - Total 14 516c 530" 200 884 200 548c TO Petroleum - Nos. 4, 5 and 6 496 - Other 3,091 - Total Puel Wood Natural Gas El e c t r i c i t y Total 441 4,162 578 110 665 773 527 154 75 17857 517 2,705 564 1,481 115 580 695 270 187 17900 Table I continued I960 236 B.C. Alberta Physical Units 8 , 150 178 Coal b - Bituminous - Sub-bituminous - Total Petroleum - Nos. 4, 5 and 6 1,246 - Other - Total Fuel Wood Natural Gas El e c t r i c i t y Total 5,640 836 14,127 2,965 '000 C E . Tons 150 124 274 277 1,210 1,487 620 523 375 3,279 Physical Units a 42 575 136 1,280 214 64,015 1,302 '000 CE. Tons 42 403 445 30 275 305 159 2,371 165 3,445 Saskatchewan Manitoba Coal - Bituminous*5 - Sub-bituminous and lignite - Total Petroleum - Nos.4, 5^and 6 - Other - Total Fuel Wood Natural Gas Ele c t r i c i t y Total Physical Units 3 , 11 292 399 2,492 335 15,071 963 '000 CE. Tons 11 1961 207 89 535 "6*24 248 558 122 1,759 Physical Units a 131 501 643 4,800 287 6,944 2,026 '000 CE. Tons 131 311v 442 143 1,030 1,173 213 257 256 2,341 Table I continued: 237 a. Units: Coal, thousand tons; Petroleum, thousand barrels; Natural Gas, million cu. f t . ; E l e c t r i c i t y , million k.w.h.; Puel Wood, thousand cords. b. Includes briquettes and coke. c. Conversions: Manitoba, 0.62 short tons equals one C E . Ton (allowing 75 per cent of the mix to be l i g n i t e ) . Saskatchewan, 0.67 short tons equals one CE. ton (allowing 25 per cent of the mix to be l i g n i t e ) . Sources: D.B.S. Annual Publications, (Ottawa: Queen's Printer). - The Coal Mining Industry  Consumption of Petroleum Fuels - Electric Power Statistics Wood estimated from data of number of households using wood as principal heating fuel. Census of Canada, 1951 and 1961. Natural Gas - 1951 data estimated from personal communications with gas distributing companies. - 1956 data from personal communications plus Saskatchewan, Department of Mineral Resources, Petroleum and Natural Gas  Statistical Yearbook (Regina: Queen's Printer, 1957). I960 data from R.A. Simpson, D.M. Nolan, and D.W. Rutledge, The Natural Gas Industry i n Canada, I960, Department of Mines and Technical Surveys, Mineral Information Bulletin MR55, Mineral Resources Division (Ottawa: Queen's Printer, 1961). 238 TABLE II CONSUMPTION IN INDUSTRY (EXCLUDING UTILITY POWER STATIONS AND ENERGY INDUSTRIES CONSUMING THEIR OWN PRODUCT) 1951 Physical" Units 3 Coal - Bituminous 360 - Coke - Sub-bituminous 7 - Total Petroleum - Nos.4,5 and 6 2,602 - Other 568 - Total Puel Wood 2,500 Natural Gas 36 El e c t r i c i t y 3,427b Total B.C. Alberta •000 CE. Tons 360 81 446" 578 122 7015 1,852 1 433 3,432 Physical Units 3 60 96 145 547 13,591 511 '000 CE. Tons 60 2 67 129 32 117 149 503 65 846 Physical Units 3 Coal - Bituminous 8 -Coke - Sub-bituminous and l i g n i t e 66 - Total Petroleum - Nos.4,5 and 6 291 - Other 509 - Total Natural Gas 81 El e c t r i c i t y 145 Total Saskatchewan '000 Manitoba C E . Tons 8 4£ 50 65 3 18 245" Physical Units 3 214 234 241 146 1,615C '000 C E . Tons 214 27 158' 379 54 51 204 668 Table II continued: 239 1956 B.C. Physical 'OOO Units 8 , C.E. Tons Alberta Physical Units* '000 C.E. Tons Coal - Bituminous 393 - Coke - Sub-bituminous 1 - Total Petroleum - Nos.4,5 and 6 3,977 - Other - Total Fuel Wood Natural Gas E l e c t r i c i t y Total 1,859 3,000 56 6,273] 393 115 1 509 884 1,283 2,222 2 794 4,810 5 19 414 1,122 42,044 1,024 5 3 i l 21 92 241 333 1,557 129 2,040 Saskatchewan Physical '000 Units a C.E. Tons Manitoba Physical Units" a '000 CE. Tons Coal - Bituminous 3 - Coke - Sub-bituminous and l i g n i t e 60 - Total Petroleum - Nos.4, 5 and 6 240 - Other - Total Natural Gas El e c t r i c i t y Total 359 2,186 305 2 1 40 53 77 130 81 39 290 261 205 922 396 1,898 261 12 121C 394 205 85 290 240 924~ Table II continued I960 Goal - Bituminous - Coke - Sub-bituminous - Total Petroleum Physical" Units 3 169 1 B.C. - Nos.4,5 and 6 3,474 1,408 - Other - Total Puel Wood Natural Gas El e c t r i c i t y Total 3,700 9,982 8,207* •000 CE. Tons 169 69 1 239 772 302 1,074 2,740 370 1,040 Physical Units 1 17 307 1,058 240 Alberta r000 49,839 1,750 CE. Tons 1 3 12 15 5,463 68 240 303 1,846 221 2,391 Saskatchewan Physical '000 Units 3 C E . Tons Manitoba Physical Units 3 ~^ "000 CE. Tons Coal - Bituminous 2 - Coke - Sub-bituminous and lignite 50 - Total Petroleum - Nos.4,5 and 6 44 - Other 471 - Total Natural Gas 7,206 Ele c t r i c i t y 436 Total 30/ 32 10 101 111 267 55 465" 160 197 821 521 4,461 1,866^ ">160 8 116c 284 182 112 294 165 236 "979 a. Physical units same as Table I. b. Only includes T r a i l and Kitimat in industrial generation. Other industrial generation i s largely thermal and i s included in the fuel consumption figures. In 1951 this thermal generation could not be excluded from electricity consumption and therefore total consumption includes some energy double-counted, of up to 75,000 C E . tons. Table II continued 241 c. For Saskatchewan, conversions vary because various proportions of the mix are estimated to be lig n i t e : 1951 0.64 short tons equals one C.E. ton (25$ lignite) 1956 0.62 " " " » " » (50" l i g n i t e ' I960 0.60 » " » » » " (90fo lignite Estimated a l l the mix in Manitoba to be l i g n i t e . d. Consumption at F l i n Flon included. Sources: Same as Table I except: Coke data from personal connumications with the Crow's Nest Pass Coal Company Limited; British Columbia Hydro and Power Authority; Greater Winnipeg Gas Company. Fuel Wood from personal communications with a l l major plants of the B.C. forest products industry. E l e c t r i c i t y consumption at T r a i l and Kitimat from British Columbia Energy Board, Forecast of Electric Power Needs to  1985, (Victoria, March, 1961). 242 TABLE III CONSUMPTION IN THERMAL ELECTRIC POWER STATIONS - UTILITIES ONLY Coal - Bituminous - Sub-bituminous - Total Petroleum - Nos.4,5 and 6 - Other Natural Gas Total Physical" Units 3 51 B.C. 173 55 '000 C.E. Tons 51 "51 37 _2 90 1951 Alberta Physical Units 3 47 137 91 6,339 •000 C.E. Tons 47 96 143 20 235 398 Saskatchewan Physical Units 8 , T000 C.E. Tons Physical Units 8 , Manitoba •000 C.E. Tons Coal - Sub-bituminous and lignite 266 Petroleum -Nos.4,5 and 6 733 -Other Natural Gas 120 Total 170 163 4 337 8 Physical Units B.C. Coal - Bituminous - Sub-bituminous Petroleum - Nos.4,5 and 6 - Other Natural Gas 246 211 '000 C.E. Tons 53 8 1956 Alberta Physical Units 3 1 79 6 18 13,685 •000 C.E. Tons 1 55" 1 4 507 Total 62 568 Table I I I continued 1956 243 Coal - Sub-bituminous and l i g n i t e Petroleum - Nos.4,5 and 6 - Other Natural Gas Total Saskatchewan Physical r000 Units 8 , 355 1,201 48 2,436 C E . Tons b 220 267 10 277 774 Manitoba Physical '000 Units 8 , C E . Tons B.C. Physical Units 8 , C Coal - Bituminous -- Sub-bituminous -Petroleum - Nos.4,5 and 6 3 - Other 137 Natural Gas 1,678 Total I960 Alberta •000 Physical «000 E. Tons Unitsa c.E. Tons 2 2 204 143 1 34 8 29 12 3 62 27,877 1.032 92 1,188 Saskatchewan Physical U n i t s a r000 C.E. Tons Manitoba Physical r000 Units 8 , C.E. Tons Coal - Sub-bituminous and l i g n i t e 851 Petroleum - Nos.4,5 and 6 741 - Other 20 Natural Gas 8,156 Total 511 165 4 302 982 55 31 129 32 2_ 44 a. Same as Table I. b. Conversions: same as Table II. Source: D.B.S., E l e c t r i c Power S t a t i s t i c s , Annual (Ottawa;, Queen's P r i n t e r ) . 244 TABLE IV ENERGY LOSSES IN THERMAL ELECTRIC STATIONS (UTILITIES ONLY) Thousands of Coal Equivalent Tons m i B.C. Alta. Sask. Man. Input 90 398 337 2 Output (116)15 (496)63 (463)59 (4)0.5 Loss 75 335 775 1.5 1956 Input 62 568 587 3 Output (720)91 (1,164)147 (1,030)120 (19)2 Loss 2"9"a 421 457 1 1^60 Ir Oi _ Loss 10 a 865 782 34 nput 92 1,188 982 44 utput (808)102 (2,557)323 (1,582)200 (82)10Note: Figures i n "brackets are outputs i n million k.w.h. a. Net gain. Reason i s unknown. Source: D.B.S., Electric Power Statistics, Annual (Ottawa, Queen's Printer). 245 TABLE V CONSUMPTION BY ENERGY INDUSTRIES OP THEIR OWN PRODUCT 1951 Physical" Units 3 B.C. Alberta Coal - Bituminous Sub-b Coke Total - Sub-bituminous - and Gas 20 •000 C.E. Tons 20 175 195 Petroleum - Nos.4,5 and 6 - Other Natural Gas Total 426 n. a. n.a. 95 290 Physical Units 3 122 7 •000 C.E. Tons 122 5 1 128 618 5,179 n. a. 137 192 457 Saskatchewan Physical '000 Coal - Lignite - Coke a Petroleum nd Gas c - Nos.4,5 and 6 - Other Natural Gas Total Units 3 24 511 C.E. Tons 14 n. a. n.a. 114 128 Manitoba Physical r000 Units 3 C.EviTons 26 237 53 n. a. ~79 Table V continued 246 B.C. Physical Units 3 '000 C.E. Tons 1956 Alberta Physical '000 Unit s 3 C.E. Tons Coal - Bituminous - Sub-bituminous - Coke and Gas - Total 20 20 124 144 61 3 61 2 63 Petroleum - Nos. 4,5 and 6 - Other d - Total Natural Gas Total 452 38 n. a. 100 3 247' 180 6 12,305 40 J . 41 456 560 Saskatchewan Physical •000 Unit s 3 C.E. Tons Physical Units 3 Manitoba r000 C.E. Tons Coal - Lignite ^ - Coke and Gas 19 11 25 Petroleum - No.4,5 and 6 - Otherd - Total 611 2 136 136 323 5 72 _1 73 Natural Gas Total 1,022 _J8 185 98 Table V continued I960 Physical" Units 3 B.G, Coal - Bituminous - Sub-bituminous - Coke and Gas - Total 14 '000 C.E. Tons 14 58 72 247 Alberta Physical '000 Units C.E. Tons 9 2 9 1 To Petroleum - No.4,5 and 6 - Other3-- Total Natural Gas Total 539 53 3,693 120 11 131 117 240 653 22 n.a. 145 5 150 160 Coal - lignite ^ - Coke and Gas Petroleum 0 - No.4,5 and 6 - Other d - Total Natural Gas Total Saskatchewan Physical '000 Manitoba Units 3 18 562 6 4,167 C.E. Tons 11 125 1 126" 154 291 Physical Units 3 605 5 '000 C.E. Tons 134 1 135 135 n.a. Not available. a. Same as Table I. b. Is coal input minus coke sales, therefore processing losses are included. c. Petroleum Refineries only. d. Excludes L.P.G. and S t i l l Gas. Table V continued 248 Source: D.B.S., The Coal Mining Industry, Annual (Ottawa; Queen's P r i n t e r ) . D.B.S., Refined Petroleum Products, Annual (Ottawa; Queen's P r i n t e r ) . Alberta, O i l and Gas Conservation Board, O i l and Gas  Industry, Annual (Edmonton; Queen's P r i n t e r ) . Saskatchewan, Department of Mineral Resources, Petroleum and Natural Gas Branch, Petroleum and Natural Gas S t a t i s t i c a l  Yearbook (Regina; Queen's P r i n t e r ) . B.C., Department of Mines and Petroleum Resources, Report, Annual ( V i c t o r i a : Queen's P r i n t e r ) . Coke and Gas industry data from personal communications. See Table I I . 249 TABLE VI RAILWAY LOCOMOTIVE CONSUMPTION Physical U n i t s 3 'OOO C.E. Tons Physical '000 Units C.E. Tons 1951 Coal 150 Puel O i l 3,525 Diesel O i l 74 Total B.C. 150 783 16 9?9 818 1,857 2 Alberta 818 413 172% 1256 b C o a l 0 3 Puel O i l 1,540 Die s e l O i l 853 Total 3 342 183 528 146 2,137 629 146 475 1^60 b C o a l 0 Puel O i l Diesel O i l Total 8 1,079 2 211 213 75 898 17 m Saskatchewan Manitoba C o a l 0 1,297 1,297 1,030 1,030 Puel O i l 294 65 232 52 Diesel O i l 1 - 36 8 Total 1,362 1,-090 1^6 b Coal 577 577 608 608 Puel O i l 1,519 338 999 222 Diesel O i l 331 71 282 61 Total 986* B"91 i i 6 0 b Coal 4 4 5 5 Puel O i l 63 14 61 14 Diesel O i l 630 135 728 156 Total 153 T75 a. Coal i n thousands of tons. O i l i n thousands of barrels. b. Bituminous and briquettes. Source: Personal communication, C.L. 0'Brian, Chairman, Dominion Coal Board, 1962. 250 TABLE VII COAL AND PETROLEUM USED BY RAILWAYS POR PURPOSES OTHER THAN LOCOMOTIVE FUEL Physical 1951 b Coal-Bituminous -Other Petroleum Products Total Units 22 8 330 a '000 C.E. Tons B.C. 22 6 72 Too Physical Units 3 '000 C.E. Tons 20 75 65 Alberta 20 53 i i 87 1956 b Coal-Bituminous 10 -Other 9 Petroleum Products 283 Total 10 6 62 78 8 46 63 8 32 i l 54 I960 b Coal-Bituminous 6 -Other 4 Petroleum Products 280 Total 6 3 61 70" 2 10 35 2 7 8 17 Saskatchewan Manitoba 2251 Coal-Bituminous 21 -Other 109 Petroleum Products 25 Total 21 70 5§ 34 174 30 34 108 7 149 1956 Coal-Bituminous 16 -Other 100 Petroleum Products 53 Total 16 62 12 90 15 158 73 15 93 16 124 1160 b Coal-Bituminous 5 -Other 68 Petroleum Products 47 Total 5 46 10 6~I 5 171 76 5 101 17 123 Table VII continued: 251 a. Coal i n thousands of tons and petroleum products i n thousands of barrels. b. Includes briquettes. Note: Consumption of natural gas and e l e c t r i c i t y by the railway companies has been included i n either domestic or i n d u s t r i a l consumption. Source: Personal communication from C.L. 0'Brian, Chairman, Dominion Coal Board, 1962. 252 TABLE VIII CONSUMPTION OP PETROLEUM FUELS BY ROAD TRANSPORT 1951 Gasoline Diesel and Other Total B.C. •OOO Barrels 4,778 271 •000 C.E. Tons 919 58 977 Alberta '000 Barrels 7,615 458 •000 C.E. Tons 1,464 98 1,562 1£56 Gasoline Diesel and Other Total 1960 Gasoline Diesel and Other Total 8,054 470 9,840 752 1,549 101 1,650 1,892 161 2,053 9,975 31 13,681 1,021 1,918 7 1,925 2,631 219 2,850 1951 Saskatchewan Manitoba Gasoline 5,478 1,053 3,488 670 Diesel and Other 433 93 386 85 Total rTlfS 755 1256 Gasoline 7,546 1,451 4,466 859 Diesel and Other 479 103 224 48 m _ j - _ n — — — Total 1,554 1260 907 Gasoline 8,342 1,604 5,811 1,118 Diesel and Other 202 202 486 1C)A Total I780T YtM Source: D.B.S., Motor Vehicle Annual (Ottawa, Queen's Printer). 253 TABLE IX CONSUMPTION IN SHIP'S BUNKERS 1951 Bituminous Coal Oi l Nos.4,5 and 6 Other Oil Total Physical '000 Units 3 C.E. Tons B.C. 15 1,487 480 15 330 192 44S Physical Units 3 •000 C.E. Tons 48 16 Alberta 11 14 1956 Oil Nos.4,5 and 6 1,948 Other Oil 557 1260 Oil Nos.4,5 and 6 985 Other O i l 668 433 120 553 219 45 22 37 10 _5 15 _8 8 Saskatchewan Manitoba 1951 Oil Nos.4,5 and 6 1956 O i l Nos.4,5 and 6 22 I960 Oil Nos.4,5 and 6 a. Coal i n thousands of tons Oil i n thousands of barrels Source: D.B.S., Consumption of Petroleum Fuels,'Annual(Ottawa; Queen's Printer). 254 TABLE X CONSUMPTION OP PETROLEUM FUELS BY AIR TRANSPORT 'OOO '000 barrels C.E. Tons '000 barrels •000 C.E. Tons B.C. Alberta 1951 1956 I960 167 488 689 32 94 132 185 986 1,045 36 190 201 Saskatchewan Manitoba 1951 1956 I960 24 159 178 5 31 34 164 1,258 1,046 32 242 201 Source: D.B.S., Consumption of Petroleum Fuels, Annual (Ottawa: Queen's Printer). 

Cite

Citation Scheme:

        

Citations by CSL (citeproc-js)

Usage Statistics

Share

Embed

Customize your widget with the following options, then copy and paste the code below into the HTML of your page to embed this item in your website.
                        
                            <div id="ubcOpenCollectionsWidgetDisplay">
                            <script id="ubcOpenCollectionsWidget"
                            src="{[{embed.src}]}"
                            data-item="{[{embed.item}]}"
                            data-collection="{[{embed.collection}]}"
                            data-metadata="{[{embed.showMetadata}]}"
                            data-width="{[{embed.width}]}"
                            async >
                            </script>
                            </div>
                        
                    
IIIF logo Our image viewer uses the IIIF 2.0 standard. To load this item in other compatible viewers, use this url:
http://iiif.library.ubc.ca/presentation/dsp.831.1-0104740/manifest

Comment

Related Items