said to detract from the attention given to the problems of effective energy utilization in production of aluminum, which is a matter of proper, and at times passionate, concern to numbers of people. There is also a great need, however, to improve the performance of simple equipment, such as water heaters, to increase the efficiency of fuel utilization.

Examination of industrial processes reveals three large scale processes - direct heat, process steam, and electric drive - which account for vast quantities of fuel consumption. In this country, process steam and direct heat consume more fuel than does transportation. These processes are known to have overall heat transfer efficiencies as low as 30%. For example, the average cement kiln operated in steady state and in well-maintained condition will show a heat transfer efficiency of 30% for a wet process. The efficiency may be as high as 40% for a dry process. The efficiency of the average metal heat-treating furnace is about 30%. It appears that heat transfer efficiencies can stand improvement. If the United States can use fuel more efficiently, then less fuel will be consumed.

The next questions are how much will it cost to improve the efficiency of industrial plant equipment, and whether it is economically justifiable to introduce the technology which would reduce industrial fuel consumption? In the studies conducted in the National Bureau of Standards we found three classes of economically justifiable and technically effective measures for improving the efficiency of industrial processes. The first is to apply maintenance practices and appropriate controls of plant operations. The second is to retrofit improved equipment to the existing plant; for example, to install better insulation or heat exchangers. The third is to replace present equipment with superior equipment.

We have found documented cases in which the application of exacting controls to steel reheat plants has yielded 25 percent reductions in fuel requirements with increases in productivity of 12% - an impressive reduction of fuel consumption which pays for itself. The data concerning retrofitting equipment show that by installing stack gas recuperators on industrial furnaces, furnace rail insulation, or combustion air preheaters, it is often possible to realize returns on investment in excess of 100%. In one case an annual cost rather than an annual saving was reported. This involved combustion air preheaters which were to be installed in large heattreating furnaces. A considerable amount of fuel could be saved, but the device would bear a $1,000 annual cost. Since the type of furnace to which that calculation applies can consume $50,000 to $100,000 worth of fuel each year, a very small rise in the price of fuel could turn that cost into a substantial saving. There is an additional economic justification for conservation devices. Many firms have now been placed on "quotas" by their gas or oil suppliers; the firm can buy just so many therms of gas, and no more. Many of these firms have plans to expand; at least they plan to continue production. To industrial management, the prospect of paying $1,000 annually to run a device which will insure sufficiently low fuel consumption for reliable operation or planned expansion may be attractive.

If it is true that industrial equipment could be modified or replaced to use fuel more effectively, and that the changes could be economically justified, why hasn't it happened? The fundamental reason seems to be that in the justification of industrial equipment (or of building construction), first costs have been of higher priority than operating costs, especially those operating costs which are associated with fuel consumption.

The classical economist has a tendency to shudder when this statement is made, because it means that industry may not function by the classical rational rules of economics. If there is a whole array of problems to try to solve with a limited amount of resources, there is a tendency to work on those problems which are worsening and to let the ones that are improving take care of themselves. One of the ways to assess an industrial problem is by its costs. In the past several decades fuel prices have declined while the price of other factors of production have risen. Thus, industrial management has tended to focus on rising costs, like labor, rather than on the fuel costs. As a result, the life term costs of energy for operation have not been given the attention they deserve.

Ideally one might wish to see a policy implemented which would promote energy conservation through rational life-time costing of equipment. However, one would not wish to see a policy of energy conservation instituted for its own sake. Energy is the resource which presently concerns us. But, if we were to promote effective use of energy without any consideration for the consumption of other natural resources, it would be conceivable to deplete our copper reserves by producing heat transfer equipment.

Energy is only one of the valuable natural resources that we must use effectively. The following seven graphs illustrate the supply and demand projections of several natural resources. Figure 1 shows the consumption of metals in the United States. Iron consumption is the greatest, followed by aluminum and copper. Figure 2 shows projections of scrap, mine production, and imports. Figure 3 shows the U. S. positon in copper is insecure. The remaining figures show that U. S. import requirements for aluminum, zinc, and other metals are expected to climb

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FIGURE 7 CONSUMPTION OF LEAD IN THE U.S.A.

rapidly; our own resources of these metals are nearly exhausted. Similarly, U.S. import requirements for lead are expected to rise rapidly. These figures, as a whole, illustrate one aspect of a very broad problem: the U.S. can no longer assume that vital natural resources fuel, metals, gravel, lumber and other vital resources - will be available in abundance and at low price. In a sense, our days of abundance may have passed.

I would like to propose that one of the essential problems in energy conservation is to recognize it is not just energy which must be conserved. What is now needed is not just a set of measures to conserve one resource at the expense of all others, but a rational economic method for achieving effective and balanced use of all natural resources. Using the classical theoretical notion of economics that the price of an item reflects its value is an imperfect way to compare oil with lead or other resources. But it is at least a method. When it is used with care, it offers a more effective way to balance the use of resources than simply ignoring the question. I suggest that we ought to seek to institute whatever measures are necessary to put total life term costing of equipment and buildings - at the top of the list of priorities for economic justification. This would be one way to promote effective use of all the natural resources on which our way of life. depends.