Since 1992, the year covered by the previous survey, the Tucson-Pima Metropolitan Area has experienced substantial growth in population, real (constant dollar) income and real income per capita. Energy consumption during this period (1992-1998) has also grown but at a slower rate than population and income, and energy use per capita has declined. The major reasons appear to be improvements in efficiency of cars, appliances and buildings plus increased conservation by all sectors of the area's economy.

Annual expenditures for all energy sources have increased to more than $1.5 billion, 7 percent over 1992, due to greater volumes used and significant price increases in natural gas.

The outlook for increased use of solar energy has greatly improved since the last Assessment. Significant technological improvements and major efforts by both the Community and the industry are having a major impact and promise to reduce dependence on sources outside Arizona as well as contributing to improved air quality, resource conservation and job creation.

Net energy consumption (excluding electricity conversion and transmission losses) in the Tucson-Pima Metropolitan Area has increased by 7.1 percent during the six-year period., or 1.1 percent per year. (see Table 1 for data in original units and Tables 2-4 in BTUs by consuming sector and energy source.) The Industrial and Transportation sectors have grown faster than the total. Residential increased more slowly and Commercial declined in actual volume. The Transportation sector accounted for one-half of total consumption in 1998, up slightly from its share in 1992. Industrial increased to over one-quarter. Residential decreased to one-seventh while Commercial fell to less than one-tenth.

Examining supply sources, electricity increased most rapidly (19 percent) to account for 20 percent of total consumption. Usage in all sectors increased, though Commercial only slightly. These trends reflect increased population and economic activity plus shifts from fuels to electricity.

Natural gas use declined in all sectors despite the fact that the 1998-99 heating season was substantially colder than 1991-1992. Increased energy efficiency and greater competition from electricity contributed to the decline. Petroleum consumption is dominated by transportation fuels with Diesel oil showing particularly rapid growth, due to much greater commercial road traffic. The increase for Diesel fuel and gasoline together was 15 percent, substantially less than motor vehicle registrations (21 percent) or vehicle miles traveled (23 percent). Gasoline usage fell between 1992 and 1995 as efficiency of passenger cars improved, but it began to climb again thereafter with the growing popularity of high gas consumption vehicles (trucks, vans, SUVs, etc). Among other petroleum products, estimated jet fuel usage declined while minor fuels (chiefly asphalt, propane and lubricants) increased slightly.

Coal consumption more than doubled from the (revised) figure for 1992 but remained a small component of total energy consumption. It should be noted, however, that the concept used here is net energy consumption, not primary consumption. Thus, it represents final sales of electricity but not losses incurred in producing or transmitting it, and therefore excludes all coal and other fuels used in electricity production.

III. PRICES

Average energy prices in the Tucson-Pima Metropolitan Area in 1998 were up an estimated 16 percent over 1991 (the year used in the previous report). There were, however, major differences among the various energy sources (Table 5). Natural gas prices rose by an average of 30 percent (a figure that was used for all sectors since sector prices for 1998 were not available). The reasons were an increase in field prices of some 40 percent plus higher costs for such items as pipe replacement and system expansion. By contrast, petroleum product prices declined slightly (1.7 percent) for gasoline and more (8.4 percent) for Diesel oil. (The same decline was assumed for jet fuel and other petroleum products in the absence of specific information). These changes follow closely on the movement of world crude oil prices, which have fluctuated widely in recent years, except that gasoline is less affected by changes in crude oil because crude constitutes a smaller portion of prices at ! the pump.

Electricity prices did not follow a uniform pattern. Prices for residential and commercial users increased slightly (about 3 percent) while those for industrial users fell sharply (16 percent). This divergence is due to the fact that industrial customers may have the option of obtaining their supplies from sources other than the local utility, including own generation and locating plants elsewhere, whereas small users have until now been wholly dependent on a single supplier.

IV. EXPENDITURES

Total expenditures for all energy sources in the Pima-Tucson Metropolitan Area are estimated to have grown from $1.39 billion in 1992 to $1.54 billion in 1998 (Table 6), an increase of over 10 percent. The increases ranged from 24 percent for residential users to 7 percent for transportation and 4.5 percent for industry. Higher natural gas prices accounted for most of the increase in the residential sector while increased volumes, partially offsetting lower prices, were responsible for larger expenditures by industry and transportation.

Examining individual sources, the largest expenditure increase was for electricity (nearly 14 percent), chiefly because of sharply higher volumes used. Spending on natural gas came next (9 percent), with higher prices partially offsetting smaller volumes. Petroleum expenditures rose less than 7 percent, with lower prices offsetting some of the increased volume.

Table 7 compares changes in energy consumption between 1992 and 1998 for the Tucson Area with those for Arizona as a whole. In 1998, Tucson had 17 percent of the State's population and 16 percent of its income. Its energy consumption was only 11 percent of that of the State. Looked at another way, Tucson's per capita income was lower than the State's (92.7 percent) but its per capita energy consumption was much lower still (65.2 percent). The major factors in this ratio appear to be weather (fewer cooling degree-days and lower humidity, permitting use of evaporative coolers), less industrialization and shorter driving distances. But, very likely, greater conservation efforts also contributed to lower energy use.

These relationships are even more striking when considering trends since the previous Assessment. The ratios of Tucson to State population, income, energy use and energy use per capita all decreased significantly between 1992 and 1998. So, too, have per capita energy expenditures.

A series of important developments occurred on the energy scene since publication of the previous Assessment (1994), all of them with significant impacts, direct or indirect, on the Tucson-Pima Metropolitan Area.

• Purchasers of natural gas have been freed from dependence on local utilities and now can obtain their supplies from any producer, with the pipelines required to carry their gas. (Some large users are doing so but this is not practical for the typical small customer.) This is also the case with electricity, which is being opened to competition in Arizona (for small users on January 1, 2001).
  


• In response to deregulation, utility companies are facing increased competitive pressures, resulting in numerous mergers nation-and even world-wide, in many cases involving combinations of several energy sources e.g., electricity and natural gas) plus a wide range of energy-related services.
  


• The technology, and consequently the economics, of electric power generation have changed so as to make construction of very large power plants uneconomic in most circumstances. As a result, few Large coal plants and no new nuclear plants are being built though extensions of the useful life of some are being sought. Instead, most new power plants are smaller and operate on natural gas, at very low cost.
  


• Competitive pressures have also been strong in the oil industry. As a result of these competitive pressures, several trends have emerged: 1) Further combinations of very large companies have occurred (British Petroleum-Amoco and Exxon-Mobil are two cases). 2) Companies are exiting from marginal markets (Unical 76 and Exxon stations in Arizona, as well as 7-11 stores, are selling gasoline produced by TOSCO). 3) Many independent service stations have been bought out by major suppliers or otherwise forced out of business. 4) Many remaining stations are adding other services such as fast food in order to survive.
  


• Proven world oil reserves have continued to increase and now exceed one trillion barrels. This is not the case in the United States where reserves have continued a long-term decline. As a result, domestic oil production has fallen (11 percent between 1992 and 1998) and imports have steadily increased and now constitute over one-half of domestic consumption. These trends are expected to continue, with the U.S. Department of Energy projecting an import ratio of 65 percent for its 2010 Base Case.
  


• World oil prices declined sharply during the 1990s, reaching a low of less than $11 a barrel in early 1999. In response OPEC has acted to regain greater cohesiveness and succeeded in cutting production enough to raise prices to a current (February 2000) range of $28-30 per barrel. This price reflects high seasonal fuel oil consumption as well as OPEC action. It is almost certainly unsustainable even for the balance of the year and is likely to revert to an average of $18-20, however with wide fluctuations around this level. Long-term price trends are subject to even greater uncertainty. The U.S. Energy Department's most recent projections for the year 2020 range between $14.57 and $29.5 (in constant 1997 dollars), depending mainly on worldwide economic growth rates and OPEC's willingness to develop its huge reserves in a timely manner.
  


• Although electric passenger cars (and with few exceptions, heavier vehicles) have not been a success, alternative fuel vehicles are being produced (or existing ones modified) on a growing scale. In Tucson, Suntran now has 97 (nearly half) of its buses operating on compressed natural gas (CNG) or dual fuel engines (capable of switching from Diesel to CNG). An additional 60 vehicles in the City operate on alternative fuels or have dual fuel engines, and this number is scheduled to increase in coming years. All of Southwest Gas Company's fleet operates on natural gas
  .
• A most exciting development for the Tucson Area has been the remarkable progress made in solar energy in the last few years. Improved technologies and increased public awareness of the environmental benefits of solar have succeeded in bringing down costs and raising demand for solar homes. Through the strong efforts by both public and private groups, Tucson has become a nationally (and even internationally) recognized leader in solar. Concrete evidence is provided by such projects as the Global Solar plant (manufacturing a new form of thin solar film), the successful launching of Civano (whose buildings incorporate many solar features), and the ground breaking of the Armory Park del Sol housing project, which will feature solar homes.
  

There is every prospects that the growth of solar energy will accelerate, now that it has turned the corner in the market place, though continued educational and marketing efforts will speed up the process of solar establishing itself as a key energy sources in the Tucson Area and elsewhere in Arizona. With continued support, solar energy can be expected to contribute increasingly to improved environmental quality, reduced dependence on exhaustible fuels, creation of high-wage jobs, and progress toward a sustainable future community.