THE ENERGY BASE FOR INDUSTRIAL EXPANSION IN THE EUROPEAN SATELLITES 1950-75

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• Document Creation Date: December 23, 2016
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• Sequence Number: 1
• Publication Date: July 1, 1960
• Content Type: REPORT

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1
-CORRDENT-IAL--
ECONOMIC INTELLIGENCE REPORT
N? 85
THE ENERGY BASE FOR INDUSTRIAL EXPANSION
IN THE EUROPEAN SATELLITES
1950-75
CIA/RR ER 60-18
July 1960
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
ZO-NFIDENTIAL-
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WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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CONFIDENTIAL
ECONOMIC INTELLIGENCE REPORT
THE ENERGY BASE FOR INDUSTRIAL EXPANSION
IN THE EUROPEAN SATELLITES
1950-75
CIA/RR ER 60-18
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
CONFIDENTIAL
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FOREWORD
This report presents a preliminary evaluation of the adequacy of
the supply of energy in the European Satellites (excluding Albania)
to support the rate of industrial growth apparently planned for
1959-65 and to maintain that rate of growth through 1975.
The method employed was to determine the past relationship be-
tween the growth of the supply of energy and the growth of industry
in the European Satellites, individually and collectively, and then
to use this relationship to estimate the energy required to support
the rate of industrial expansion indicated by present Satellite plans.
The validity of results obtained by this method depends on the accu-
racy of the following assumptions:
1. No new major resources of fuels will be discovered that
will drastically change the production of energy in the Soviet Bloc.
2. No major changes will occur in technology that will sig-
nificantly alter patterns of supply and demand.
3. Different forms of energy for the most part are inter-
changeable, and there is sufficient flexibility within the Satellites
to provide energy in the required form in cases where substitution is
impossible.
4. The rate of change in the relative portion of the total
supply of energy available for industrial use in the future will be
similar to that attained during 1950-58.
5. The rate of increase in efficiency of utilization of energy
will be no greater in the future than it was during 1950-58.
The estimates of future requirements for energy should be regarded
as preliminary indications of the general order of magnitude rather
than as precise forecasts of such requirements. The exact effects of
a number of factors that will influence the size of both total require-
ments for energy and requirements for imports cannot be determined with-
out a considerable amount of additional research. In the future, sig-
nificant changes may occur in the structure and mix of industrial
production and in the sources and uses of energy. It is possible that
the efficiency of utilization of energy will increase at a faster rate
from 1959-65 than it did during 1950-58. Failure to fulfill plans for
production of nuclear power would result in a supply of energy smaller
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than that shown in this report as the estimate for 1975, and would
result in larger requirements for imports by the European Satellites
in 1975.
The nature of the data available for use in this report also
limits precision in estimating future supplies of energy or require-
ments for energy. Only limited information is available on future
plans for trade in solid fuels and electric power. Except in the case
of three of the European Satellites for which very preliminary esti-
mates of nonindustrial consumption of energy were available, it was
impossible to exclude nonindustrial uses of energy from the data used
in establishing the relationship between industrial growth and in-
creases in the supply of energy during 1950-58.
Measurement of the growth of industrial production in the European
Satellites presented a difficult problem. Neither official indexes of
past industrial growth, which are known to be subject to an upward
bias in varying degrees depending on the country and the year, nor
estimates of this growth prepared by this Office, which are believed
to be a more realistic measurement of actual achievements, are com-
parable methodologically to planned goals for industrial production
in 1965. Estimates shown in the body of this report, based on official
indexes of gross industrial production and on estimates of the net
supply of energy, are those believed best for representing probable
future developments and for illustrating the final conclusions reached
in the several analyses.
In spite of the imperfections in the data, the methodology and
conclusions appear to be reasonable for 1965. The results for 1975,
of course, are much less reliable because the cumulative effect of
changes mentioned above will, in time, i)rogressively invalidate the
specific relationship of requirements for energy to industrial growth
established during 1950-58.
Details of production, trade, and net supply of the various forms
of energy for the individual European Satellites are available in
this Office.
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CONTENTS
Page
Summary and Conclusions 1
I. Total European Satellites
II. Individual European Satellites
2
6
A. East Germany 6
B. Poland 9
C. Czechoslovakia 11
D. Rumania 12
1 E. Hungary 13
F. Bulgaria 13
G. Albania 14
Appendixes
Appendix A. Statistical Tables 15
Appendix B. Future Energy Base
Appendix C. Methodology
27
35
Tables
1. Planned Increases in Industrial Production and Esti-
mated Requirements for, Production of, and Net Trade
in Energy in the European Satellites, 1965
7
2. Calorific Values of Sources of Energy in the European
Satellites, 1958 16
3. Estimated Production of, Trade in, and Net Supply of
Energy in the European Satellites, by Type, 1950-58,
1965, and 1975
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4. Estimated Production of, Trade in, and Net Supply
of Energy in the European Satellites, by Coun-
try, 1950-58, 1965, and 1975
Page
23
5. Indexes of Industrial Production and Net Supply
of Energy in the European Satellites, 1950-58 . 25
6. Comparison of Available Plans with Estimates of
Production of Coal in the European Satellites,
by Country, 1965 and 1975 32
Charts
Figure 1. European Satellites: Relationship of In-
dustrial Production to Supply of Energy,
1950-58, and Projection for 1965 and
1975
Figure 2. European Satellites: Relationship of
Supply of Energy to Industrial Produc-
tion, 1950-58, and Projection for 1965
and 1975
Figure 3. East Germany: Relationship of Industrial
Production to Supply of Energy, 1950-58,
and Projection for 1965
Figure 4. Poland: Relationship of Industrial Pro-
duction to Supply of Energy, 1950-58,
and Projection for 1965 and 1975 . . .
Figure 5. Czechoslovakia: Relationship of Indus-
trial Production to Supply of Energy,
1950-58, and Projection for 1965 . . .
Figure 6. Rumania: Relationship of Industrial Pro-
duction to Supply of Energy, 1950-58, and
Projection for 1965
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Figure 7. Hungary: Relationship of Industrial Pro-
duction to Supply of Energy, 1950-58, and
Projection for 1965
Figure 8. Bulgaria: Relationship of Industrial Pro-
duction to Supply of Energy, 1950-58, and
Projection for 1965
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TBE ENERGY BASE FOR INDUSTRIAL EXPANSION
IN TBE EUROPEAN SATELLITES*
1950-75
Summary and Conclusions
The European Satellites** may have difficulty in achieving the rate
of industrial growth apparently planned for 1959-65 with the supply of
energy estimated to be available during that period. For the years
1966-75 it probably would be impossible to maintain the same rate of
industrial expansion planned for 1959-65 with the indicated supplies
of energy in the Satellites.
The European Satellites apparently plan about a 9.3-percent average
annual rate of increase in industrial production during 1959-65. If
the relationship between increases in industrial production and in the
supply of energy remains approximately the same through 1965 as it was
in 1950-58, a total of about 413 million tonsxxx of standard fuelt
would be required to achieve the planned level of industrial produc-
tion. It is estimated that the European Satellites will produce ap-
proximately 353 million tons of standard fuel in 1965, and preliminary
plans for trade in 1965 provide for a net import of about 11 million
tons of standard fuel. With a total supply of 364 million tons of
standard fuel, the Satellites probably could support an average annual
rate of increase of 7 to 8 percent in industrial production during
1959-65. If the 9.3-percent rate of increase is to be achieved, how-
ever, a net import of as much as 60 million tons of standard fuel may
be required. The USSR could supply this quantity of energy in 1965
from its estimated exportable surplus of 50 million tons of petroleum
(75 million tons of standard fuel) without adversely affecting its own
supply of energy, but after satisfying the needs of the Sino-Soviet
Bloc, only limited quantities of Soviet oil would be available for ex-
port to the non-Bloc countries.
* The estimates and conclusions in this report represent the best
judgment of this Office as of 1 April 1960.
** Except for general comments, Albania is excluded.
XXX Tonnages are given in metric tons throughout this report.
t Different forms of energy, normally measured in dissimilar units,
have been converted to a common unit -- standard fuel -- defined as
having a calorific value of 7,000 kilocalories per kilogram. Calo-
rific values used for all fuels are given in Table 2, Appendix A.
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No plans are available for industrial production beyond 1965 for
the European Satellites, except for Poland. If the 9.3-percent rate
of increase in industrial production were continued from 1966 to 1975,
the requirements for energy could not be met from sources of supply in
the Soviet Bloc unless new sources of energy were obtained or unless
future requirements for energy were reduced substantially by major ad-
vances in technology or by changes in the pattern of industrial output.
The estimated requirement for energy in 1975 would-be about 893 million
tons of standard fuel, but the estimated production of energy would be
a maximum of 500 million tons, necessitating a net import of about
393 million tons of standard fuel. The exportable surplus of energy in
the USSR in 1975 may amount to 150 million to 200 million tons of stand-
ard fuel. During the entire period 1959-75 it is probable that a
7-percent average annual rate of increase in industrial production could
be attained from supplies of energy available in the Bloc.
I. Total European Satellites
From 1950 through 1958, each 1-percent increase in industrial
production* (1950 = 100), on the average, was accomplished with an
increase of about 0.5 percent** in the net supply of energy.*** Pro-
duction, trade, and net supply of energy for the years 1950-58, 1965,
and 1975 are shown by type in Table 3t and for the same years by coun-
try in Table 4.tt
Available information indicates that plans for growth in industrial
production in the individual European Satellites during 1959-65 ap-
parently provide for about a 9.3-percent average annual increase in
industrial production for the Satellites as a whole. If the relation-
ship between the growth of industrial production and the supply of
energy that was established during 1950-58 is assumed to apply in the
* Based on officially announced indexes of gross industrial produc-
tion. (For details on the indexes used and the effects of the alterna-
tive use of an index of net industrial production for 1950-58 prepared
by this Office, see Table 5, p. 25, below, and Appendix C.)
** The exact figure is 0.470 percent. (See the charts, Figures 1 and
2, following p. 4, below, and Appendix C.)
xxx The term net supply of energy as used in this report comprises
the domestic production of primary energy plus the net balance of trade
in primary and secondary fuels.
t Appendix A, p. 17, below.
tt Appendix A, p. 23, below.
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future,* approximately 413 million tons of standard fuel** will be
required in 1965 (see the chart, Figure 1***). Available information
indicates that plans for the Satellites provide for total production
of energy of about 367 million tons of standard fuel in 1965. It is
estimated, however, that the actual production of energy in 1965 will
be approximately 353 million tons of standard fuel,t primarily because
of the probable underfulfillment of the optimistic goals for produc-
tion of brown coal in Poland and Bulgaria.tt Thus it would appear
that the Satellites will require net imports of about 60 million tons
of standard fuel in 1965 if plans for industrial production are to be
achieved. It is important to consider that the limits attached to
this estimated requirement for imports are 30 million to 90 million
tons of standard fuels.ttt In addition, it has been impossible to
determine the extent of any change that may occur in the relationship
that existed between the growth of industrial production and the
* This assumption makes no. allowance for the effect of more rapid
increases in savings of inputs than occurred during 1950-58, for
future changes in the industrial product mix, or for changes in the
share of total consumption of energy accounted for by nonindustrial
consumption.
**. The index of industrial production fOr the total Satellite area
would be 467 in 1965, and the index of requirements for energy for
the same year would be 272. The range of the requirements for energy
is from 401 million to 425 million tons of standard fuel based on
plus or minus three standard errors of estimate. As a control,
indexes of industrial production that were prepared by this Office
were correlated with rough estimates of past and future industrial
consumption of energy. An estimated requirement for energy in 1965
of about 420 million tons of standard fuel was obtained by this method.
The close agreement between requirements for energy obtained by the
two methods may be partly attributable to offsetting biases in the
data that were used in correlating officially announced increases in
industrial production with increases in the supply of energy (see
Appendix C).
XXX Following p. 4.
t The range of the estimate of production is from 335 million to
371 million tons of standard fuel, based on a range of error of plus
or minus 5 percent. (For details of the estimate of production, see
Appendix B.) This range of production of energy would support a
level of industrial production that could be achieved by an average
annual increase of 5 to 7 percent.
tt See Table 6, Appendix B, p. 32, below.
ttt The range of requirement for imports is based on the differences
between estimated minimum requirements for energy and maximum produc-
tion of energy (as a lower limit) and between the estimated maximum
requirements for energy and the minimum production of energy (as an
upper limit).
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supply of energy. In any event, the Satellites will become net im-
porters of energy by 1965, although this area as a whole was a con-
sistent net exporter of energy during 1950-58. Such exports during
1950-58 averaged about 17 million tons of standard fuel per year,
but the quantity has declined during the past several years.
The present estimate of probable net imports of energy in 1965
by the European Satellites as a whole, based on fragmentary informa-
tion on planned trade for all sources of energy, is about 11 million
tons of standard fuel.* The estimated supply of energy in 1965 --
364 million tons of standard fuel -- would be adequate to support a
level of industrial production that could be achieved by an average
annual rate of increase of about 6.7 percent during 1959-65. The
range of this estimated rate of increase would be 5.0 to 8.3 per-
cent.** On the preliminary supposition that the efficiency in the
utilization of energy will increase at a faster rate than in the past,
it is estimated that at least a 7-percent, and possibly an 8-percent,
average annual increase in industrial production could be attained
through 1965 with the estimated supply of 364 million tons of standard
fuel. If an increase of 9 percent or more is to be accomplished, how-
ever, the USSR may have to supply a significant portion of its export-
able surplus of energy.
It is estimated that in 1965 the USSR will have an exportable
surplus of about 50 million tons of petroleum (equivalent to 75 mil-
lion tons of standard fuelxxx). Information available on plans in-
dicates that the European Satellites expect to receive about one-
third of this Soviet surplus. In addition, it is estimated that about
8 percent of the surplus is destined for Communist China and the
Asiatic countries of the Sino-Soviet Bloc. The remainder probably
will go to non-Bloc countries. (Estimates of net imports of energy
11 million tons of standard fuel -- by the Satellites in 1965 were
based on this evidence, as shown in Table 3.t) Thus, if necessary, the
USSR could supply the Satellites with as much as 60 million tons of
standard fuel.Tt Under these circumstances the USSR also could supply
the estimated needs of the Asiatic countries of the Bloc in 1965 but
* See Table 3, Appendix A, p. 17, below.
** Based on the range of the estimated supply of energy, plus or
minus three standard errors of estimate of the regression of industry
on energy. (See the chart, Figure 2, following p. 4, above.)
xxx Based on current Soviet plans for production and On estimates of
consumption of petroleum in 1965.
t Appendix A, p. 17, below.
tt The range of the requirement for energy is from 30 million to
90 million tons of standard fuel.
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60
500
200
100
1
EUROPEAN SATELLITES
Relationship of Industrial Production to Supply of Energy
1950-58,and Projection for 1965 and 1975
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28193 6-60
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(Based on weighted averages of official indexes)
850
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Figure 1
910.8
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455.4
303.6
151.8
1150
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Supply of Energy (Million Tons of Standard Fuel)
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Figure 2
EUROPEAN SATELLITES
Relationship of Supply of Energy to Industrial Production
1950-58,and Projection for 1965 and 1975
1150151.8
1000
850
700
550
400
250
100
Supply of Energy (Million Tons of Standard Fuel)
303.6 455.4 607.2
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would have to reduce the quantity of petroleum exports to non-Bloc
countries to about 6 million tons. This amount is considerably less
than the 14.5 million tons of petroleum exported to non-Bloc countries
by the USSR in 1959. If the USSR were required to supply only the
lower limit of the range of the estimated requirements for energy --
30 million tons of standard fuel -- there would be little difficulty
on the basis of the energy available. The USSR not only could supply
Communist China and the Asiatic countries of the Bloc in 1965 but also
could export about 25 million tons of petroleum to the Free World.*
The USSR also could supply coal to the European Satellites in 1965.
Unless production of coal is increased beyond the present goals of the
Soviet Seven Year Plan (1959-65), however, only the relatively small
quantities of high-quality coal necessary to satisfy the specialized
requirements for hard coal and coke of the Satellites will be available.
No information is available on planned rates of increase in indus-
trial production beyond 1965. If the past relationship between the
growth in industrial production and the supply of energy continues to
be applicable,** it appears that a 9.3-percent rate of industrial
growth could not be maintained during 1966-75. Continuation of this
rate of industrial production during 1966-75 would require about
893 million tons of standard fuelxxx in 1975. Because production of
energy in the European Satellites in 1975 is estimated at about 500 mil-
lion tons of standard fuel,t a net import of about 393 million tons of
* If the requirement for energy were 90 million tons of standard
fuel, the Sino-Soviet Bloc would be unable to supply the quantity
needed, and the rate of industrial production would have to decrease
or the Bloc would have to seek sources of energy in the Free World.
It is extremely unlikely, however, that the Satellites will require
this quantity of energy in 1965.
** It is recognized that other factors, such as supplies of labor,
construction, or investment, also will affect the rate of industrial
production. These factors cannot be evaluated, however, without an
over-all study of economic plans of the Satellites.
*** The index of industrial production for the total Satellite area
would be 1,138 in 1975 (1950 = 100), and the index of the requirements
for energy for the same year would be 588. The range of the require-
ments for energy is from 881 million to 905 million tons of standard
fuel, based on plus or minus three standard errors of estimate.
t The range of the estimate of production is from 450 million to
550 million tons of standard fuel, based on a range of error of plus
or minus 10 percent. For the estimate of production and the probable
inclusion of the excess supply of energy originally estimated for
nuclear energy by 1975, see Appendix B.
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standard fuel* would be required in 1975. Very preliminary informa-
tion on plans for trade indicates a net import of at least 4o million
tons of standard fuel in 1975.
It is estimated that the USSR will be capable of exporting about
100 million tons of petroleum (equivalent to 150 million tons of
standard fuel) in 1975. Although the USSR could supply large amounts
of coal by 1975 (in addition to the specialized requirements for hard
coal and coke), it probably could not supply the remainder of the
energy needed.
It is estimated, however, that an average annual rate of increase
of 7 percent in industrial production probably could be achieved
during the entire period 1959-75 with the estimated supply of energy.
Therefore, if the Satellites were to attempt to achieve an average
annual rate of increase of 9 percent in industrial production during
1966-75, it is probable that a significant amount of energy would
have to be obtained from outside the Soviet Bloc.
II. Individual European Satellites
The sum of the requirements for energy to fulfill the 1965 plans
for industrial production in the individual European Satellites
(415 million tons of standard fuel) agrees very closely with the esti-
mate of the requirements for energy based on a 9.3-percent average
annual increase in industrial production for the Satellites as a whole
during the period 1959-65 (413 million tons of standard fuel**). The
total production of energy in 1965 is estimated at 353 million tons of
standard fuel, thus necessitating a net import of about 62 million tons
of standard fuel if the goals for all of the countries are to be at-
tained. A summation of requirements, production, and net trade in
energy for the individual Satellites in 1965 is shown in Table 1.***
A. East Germany IP
From 1950 through 1958, official East German statistics indi-
cate an average annual increase of 11.6 percent in gross industrial
production. ft
The accompanying average annual increase in supplies of
* The range of the requirement for imports is from 331 million to
455 million tons of standard fuel (see the last footnote on p. 3, above).
** For an explanation of the reason why the results do not agree
exactly, see Appendix C.
xxx Table 1 follows on p. 7.
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tt The average annual increase in industrial production is estimated
by this Office at 9.8 percent.
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Table 1
Planned Increases in Industrial Production and Estimated Requirements for,
Production of, and Net Trade in Energy in the European Satellites
1965
Million Metric Tons of Standard Fuel
Country
Planned Average Annual Increase
in Industrial Production, 1959-65
(Percent)
Requirements
for Energy
Production
of Energy
Net Trade
in Energy12/
East Germany
9.4
127
101
+26
Poland
8.8
108
102
+6
Czechoslovakia
9.1
84
77
+7
Rumania
10.0 a/
47
48
-1
Hungary
7.6
29
17
+12
Bulgaria
14.7
20
8
+12
Total
9.3 1/
415 2/
353 fj
+62 5/
a. Excluding Albania.
b. Data on net trade differ from data on trade in Table 4, p. 23, below. Data in this
table are based on an estimate of actual production and on estimated requirements for
energy, whereas data in Table 4 are computed from information on trade plans. The symbol
+ indicates imports; the symbol - indicates exports.
c. Estimated from 1959 Plan.
d. A weighted average of the planned rates of increase of the individual Satellites.
(For the weights used, see Appendix C.)
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C -0-N-F -I -D -E -N-T -I -A-L
Table 1
Planned Increases in Industrial Production and Estimated Requirements for,
Production of, and Net Trade in Energy in the European Satellites 2/
1959-65
(Continued)
e. Sum of the requirements for energy for the individual Satellites. The range of the
requirement for the Satellites as a whole on the basis of plus or minus 3 standard errors
of estimate of the regression of the supply of energy on industrial production is
401 million to 425 million metric tons of standard fuel. The corresponding range for the
total requirements of the individual Satellites is 397 million to 433 million metric tons
of standard fuel and agrees very closely with the above range.
f. The range of the estimate of production is from 335 million to 371 million metric
tons of standard fuel.
g. Sum of the estimated requirements for imports of the individual Satellites. (The
range of the net imports for the Satellites as a whole is )43 million to 79 million metric
tons of standard fuel.) This estimate may be compared with the estimated requirements
for imports of 60 million metric tons of standard fuel (range 30 million to 90 million
metric tons), based on the 9.3-percent average annual increase in industrial production
for the Satellites as a whole.
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energy was only 5.5 percent. The recovery of industrial production
to prewar levels in East Germany was rather slow because of Soviet
removal of materiel from the country, thus making the 1950 base a
comparatively low one. After Soviet policy changed to make increased
quantities of industrial materials available for East German industry,
the repair, expansion, and modernization of industrial facilities re-
sulted in prompt and substantial increments in industrial output.
Development of heavy industry, however, has brought about increased
requirements for imports of fuels that are in short supply domesti-
cally, such as hard coal, metallurgical coke, and crude oil.
According to the East German Seven Year Plan, gross industrial
production in 1965 is to be 88 percent above that in 1958, 2/ indicat-
ing an average annual rate of growth of 9.4 percent. On the basis of
past relationships between industrial production and the supply of
energy (see the chart, Figure 3*), a supply of energy of 127 million
tons of standard fuel** would be required to achieve the stated goal
for industrial production. It is estimated that East Germany will
produce about 101 million tons of standard fuel in 1965 and that the
net requirement for imports would be equal to about 26 million tons of
standard fuel.*** Preliminary estimates indicate that net imports of
energy by East Germany in 1965 may be about 18 million tons of stand-
ard fuel, resulting in a net deficit of about 8 million tons of stand-
ard fuel. This deficit might be filled by changes in plans for imports
of energy, by more rapid improvement than during 1950-58 in the ef-
ficiency of utilization of energy, or by changes in the commodity com-
position of industrial products that would change the quantity of
imports needed.
B. Poland .V
Economic plans for Poland in 1965 and 1975 appear to call for
a higher rate of growth in industrial production than the probable
supplies of energy will be able to support.
From 1950 through 1958, official Polish statistics indicate an
annual rate of increase in gross industrial production of 13.5 percentt
and an average annual rate of increase in the supply of energy of
5.4 percent (see the chart, Figure 4tt). In 1958 a 9.4 percent increase
* Following p. 10.
** The range of the requirement for energy is from 122 million to
133 million tons of standard fuel.
XXX The range of the requirement for net imports is from 21 million
to 32 million tons of standard fuel.
t The average annual increase in industrial production is estimated
at 8.8 percent by this Office.
tt Following p. 10.
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in gross industrial production was attained in spite of a decrease in
the supply of energy, occasioned by a sizable increase in exports of
hard coal. Some of this apparent decrease in the supply of energy may
have been offset by sudden large imports of fuels at the end of the
year or by the possible use of stockpiles of fuels.
Poland is the only one of the European Satellites that has
published long-range plans (through 1975) for industrial production.
Plans call for an average annual increase of 8.8 percent from 1959
through 1965 and for an average annual increase of 8.4 percent from
1966 through 1975. )1/
Fulfillment of the plan for 1965 would result in an index of
industrial production of 500 (1950 = 100), as shown in Figure 4.*
If it is assumed that the relationship between growth in industrial
production and in the supply of energy will be the same in the future
as it was during 1950-58, the requirement for energy in 1965 would be
108 million tons of standard fuel.**
Poland plans to produce approximately 107 million tons of
standard fuel in 1965, the bulk of which is to consist of 111.5 million
tons of hard coal and 27 million tons of brown coal. Although Poland
has ample coal resources, the considerable investment and time required
to develop new mines militate against fulfillment of the goal for pro-
duction of hard coal. Poland also has emphasized that fulfillment of
the goal for production of brown coal depends on technical and financial
assistance from East Germany and on imports of coal mining equipment
from East Germany. It is believed that East Germany can supply the
necessary aid only by sacrificing its own plans for production of brown
coal. Although either country may achieve its goal for production of
brown coal in 1965, plan fulfillment by both countries appears unlikely.
For the purposes of this report, it is estimated that East Germany will
fulfill its goals for production of brown coal and that Poland will be
unable to do so, although further study of changes in the structure of
production and of possibilities for more rapid improvements in the
efficiency of the utilization of energy could modify this tentative
conclusion. A more reasonable estimate of probable Polish production
in 1965, therefore, is 110 million tons of hard coal and 16 million
tons of brown coal.
* Following p. 10.
** The range of the requirement for energy is from 103 million to
113 million tons of standard fuel (see Appendix C).
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Figure 3
Index of Supply of Energy
250
200
225
175
150
125
100
EAST GERMANY
Relationship of Industrial Production to Supply of Energy
1950-58,and Projection for 1965
I
A1965
I
I
/
/
/
+3 STANDARD ERRORS
/
OF ESTIMATE
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
1957/ 1958
1950=100
1953
1954
1956.
1955 ?
EQUATION OF LINE
Y=a+bX
a=.-57.50
b=0.422
1951
?1952
I
?
I
i
1
100 200 300
Official Index of Industrial Production
28196 6-60
400
127.5
114.8
102.0
89.2
76.5
63.8
51.0
500
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Index of Supply of Energy
450
400
350
300
250
200
150
100
POLAND
Relationship of Industrial Production to? Supply of Energy
1950-58,and Projection for 1965 and 1975
1975,/
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?V
?3 STANDARD
ERRORS OF ESTIMATE-,..
/
7
/
I
I
/
/
I
?
I
I
/
/
I
I
I
/
I
I
/
I
/
19650,
? ?
?/
/ /
1950=100
EQUATION
OF LINE
1957*
,
??
? ?
///
/?1958
Y=a+bX
a =65.62
b =0.331
1956
1954 1955
1953
? 1952
1951
100
28195 6-60
250
400
550 700
Official Index of Industrial Production
850
1000
Figure 4
211.0
187.6
164.2
140.7
117.2
93.8
70.4
46.9
1150
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After allowing for production of petroleum, natural gas, and
hydroelectric and nuclear power, it is estimated that the total Polish
production of energy in 1965 will be about 102 million tons of stand-
ard fuel. Fulfillment of the goal for industrial production for 1965
would require Poland to become a net importer of about 6 million tons
of standard fuel.* In the past, Poland has been a major net exporter
of energy, and, during 1950-58, net exports of energy averaged about
20 million tons of standard fuel per year. Exports of hard coal and
coke have been a principal source of foreign exchange for Poland, ac-
counting for at least 40 percent of the value of all Polish exports.
Preliminary information indicates that Poland expects to export ap-
proximately 15 million to 16 million tons of hard coal per year
throughout the period 1959-65. This position as a net exporter ap-
pears to be incompatible with the realization of the goals for in-
dustrial production in 1965.
Achievement of goals for industrial production in 1975 would
require that Poland be an even greater net importer of energy. If the
planned rate of growth in industrial production for 1975 were attained,
the index for industrial production would be 1,120, as shown in
Figure 4.** On the basis of the past relationship between industrial
growth and supplies of energy in Poland, about 204 million tons of
standard fuelxxx would be required. Plans for 1975 call for produc-
tion of about 150 million tons of standard fuel, consisting primarily
of 135 million tons of hard coal and 60 million tons of brown coal.
It is estimated that production in 1975 actually will be about 125 mil-
lion tons of standard fuel, consisting of 125 million tons of hard
coal and 30 million tons of brown coal, with the remainder including
petroleum, natural gas, and hydroelectric and nuclear power. Therefore,
it would appear that Poland will require net imports of about 79 million
tons of standard fuelt in order to achieve the goal for industrial pro-
duction set for 1975. It is unlikely that this goal can be fulfilled
unless significant changes occur in the efficiency of utilization of
energy or in the commodity composition of industrial production.
C. Czechoslovakia 2/
Plans for industrial production in Czechoslovakia in 1965 ap-
pear to have been made on the basis of a consideration of the adequacy
* The range of the requirement for imports is from 1 million to
11 million tons of standard fuel.
** Following p. 10, above.
xxx The range of the requirement for energy is from 199 million to
209 million tons of standard fuel.
t The range of the requirement for imports is from 74 million to
84 million tons of standard fuel.
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of the probable supplies of energy. The Czechoslovak Third Five Year
Plan (1961-65) indicates that gross industrial production in 1965 will
be 101.3 percent above that in 1957 .6./ and that the index of industrial
production would be 413 (1950 = 100*). During 1950-58, each 1-percent
increase in industrial production was accomplished with an increase of
about 0.6 percent in the supply of energy (1950 = 100), as shown in the
chart, Figure 5.** On this basis, approximately 84 million tons of
standard fuel*** would be required to support the level of industrial
output planned for 1965, although production of energy in Czechoslo-
vakia for that year is estimated at about 77 million tons of standard
fuel. Thus net imports of energy would have to be 7 millions of stand-
ard fuelt if the plan goal is to be achieved. It is estimated that net
imports in 1965 actually will be about 7 million tons of standard fuel.
D. Rumania
No long-range plans for industrial expansion in Rumania are
available. The average annual rate of increase in industrial produc-
tion achieved from 1950 through 1958 was 13.1 percent.tt Plans for
1959 call for a 10-percent increase above production in 1958. Continua-
tion of a 10-percent rate of growth through 1965 would result in an
index of industrial production of 521 for 1965. On the assumption that
the past relationship between industrial development and supplies of
energy continue, about 47 million tons of standard fuelttt would be
required in 1965, as shown in the chart, Figure 6.t It is estimated
that approximately 48 million tons of standard fuel will be produced
in Rumania in 1965. Thus, continuing the 10-percent rate of industrial
growth, Rumania could be a net exporter of 1 million tons of standard
fuel** in 1965. During 1950-58, Rumania was a net exporter of about
8 million tons of standard fuel per year, in the form of petroleum.
* An index based on the estimate prepared by this Office would be
316.
** Following p. 12.
*** The range of the requirement for energy is from 82 million to
86 million tons of standard fuel.
t The range of the requirement for imports is from 5 million to
9 million tons of standard fuel.
tt The average annual increase in industrial production estimated by
this Office is 10.7 percent.
ttt The range of the requirement for energy is from 44 million to
50 million tons of standard fuel.
* Following p. 12.
** The range of the estimate is from net exports of 4 million tons
of standard fuel to net imports of 2 million tons.
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Figure
Index of Supply of Energy
300
250
200
150
100
CZECHOSLOVAKIA
Relationship of Industrial Production to Supply of Energy
1950-58,and Projection for 1965
de
/
/
/
/
I
.-
/
/4 1965
+3 STANDARD
ERRORS OF ESTIMATE
-...,
,
/
/
/
/
de
/
de
/
I
/
1956
de
/
/
1958
. 1957
/
,
1950=100
EQUATION
Y=a-FbX
a =39.71
b=0.604
OF LINE
1952
1951
.1953
1954
1955
100 150 200 250 300
Official Index of Industrial Production
28197 6-60
350
400
87.6
73.0
58.4
43.8
29.2
450
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5 50X1
Supply of Energy (Million Tons of Standard Fug
50X1
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450
400
350
300
Q.
Q.
tr)
250
200
150
100
RUMANIA
Relationship of Industrial Production to Supply of Energy
1950-58,and Projection for 1965
Figure 6
Z
o,
?
?
?
? 4965
?
?
?
?
?
?
?
?
?
?
+3 STANDARD
ERRORS OF ESTIMATE
-i..
/
/
/
i/
?
?
?
?
/
/
/
/
/
/
/
/
/
r
1957.
/
/
/
?/
61958
,
1950
=100
1953.
1954
1956
61955
EQUATION OF LINE
Y=a+bX
a =28.74
b=0.752
1952?
1951
100 150 200 250 300 350 400
Official Index of Industrial Production
28198 6-60
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450
500
50.4
44.8
39.2
33.6
28.0
22.4
16.8
11.2
550
Supply of Energy (Million Tons of Standard Fuel)
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E. Hungary
Hungary plans to increase industrial production in 1965 to at
least 65 to 70 percent above that in 1958/ 2/ or an average annual
increase of about 7.6 percent if the midpoint of this range is used.
On the basis of the relationship between industrial growth and supplies
of energy that existed during 1950-58,* achievement of the 1965 goal
for industrial production would require about 29 million tons of
standard fuel,** as shown in the chart, Figure
7?xxx
Plans for 1965 envision production of about 30 million tons
of poor-quality coal, which will account for more than 80 percent of
the total estimated production of energy -- 17 million tons of stand-
ard fuel. Although it is believed that this goal can be attained,
Hungary will require net imports of about 12 million tons of standard
fuelt in 1965.
F. Bulgaria 12/
From 1950 through 1958, Bulgaria actually achieved an average
annual rate of growth of 14.1 percent in industrial production,tt al-
though original plans for 1958-62 envisioned an average annual increase
of 10 percent in gross industrial production. Subsequently, under the
"leap forward" program, the plan for industrial production was increased
to provide for an average annual rate of increase of 14.7 to 18.9 per-
cent during 1958-65. These goals for 1965 appear to be overly optimis-
tic, but, for purposes of projection, the lower range of the plan was
used.
The only available plan goals for production of energy by
Bulgaria are those for coal, which call for the production of 1.2 mil-
lion tons of hard coal and 35 million to 45 million tons of brown coal
and lignite in 1965. Realization of these goals would mean a total
production of 16 million to 19 million tons of standard fuel in 1965,
enough to support the level of industrial production that would be
achieved by an average annual rate of growth of 10 to 14 percent if it
is assumed that the past relationship between the growth of industrial
production and the supply of energy continues. Realization of the goals
* See Appendix C.
** The range of the requirement for energy is from 27 million to
31 million tons of standard fuel.
xxx Following p. 14.
t The range of the requirement for imports is from 10 million to
14 million tons of standard fuel.
tt The average annual increase in industrial production estimated
by this Office is 11.2 percent.
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for production of coal appears unlikely, however, for the equipment is
only now being ordered and the development work necessary for achieve-
ment of the goal for 1965 could not be completed by that time. The
achievement of the 14.7-percent rate for 1959-65 would mean a require-
ment for 20 million tons of standard fuel* in 1965, as shown in the
chart, Figure 8.**
Present estimates of probable production of energy in Bulgaria
in 1965 are about 8 million tons of standard fuel. Unless the average
annual rate of increase in industrial production during 1959-65 is to
be lower than 14.7 percent, Bulgaria will be a net importer of about
12 million tons of standard fuelxxx in 1965.
G. Albania
Albania has been excluded from consideration in this report
because data on industrial production are lacking. This country's
contribution to the supply of energy in the European Satellites is less
than 0.5 percent in any year. Albania is deficient in supplies of
hard coal and coke for the development of heavy industry, but it has
adequate resources of petroleum to supply its needs. The planned pro-
duction of crude oil in 1965 has been reported at 2.5 million tons.
Although this goal may be too high, Albania may become the second
largest producer of crude oil in the Satellites by 1965.
* The range of the requirement for energy is from 19 million to
21 million tons of standard fuel.
** Following p. 14.
XXX The range of the requirement for imports is from 11 million to
13 million tons of standard fuel.
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Figure 7
Index of Supply of Energy
350
300
250
200
150
100
100
HUNGARY
Relationship of Industrial Production to Supply of Energy
1950-58,and Projection for 1965
196;e"
.
..
+3 STANDARD ERRORS
OF ESTIMATE
#
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
1950=100
/,/
.,
/
194p7 .1958
EQUATION OF LINE
1955
Y=a+bX
1956.? 4
1953.
a=24.77
b=0.742
?1952
.1951
28199 6-60
150 200 250 300
Official Index of Industrial Production
350
32.2
27.6
cu
23.015
0
18.4 21
(/)
13.8
9.2
400
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50X1
50X1
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500
450
400
tsn 350
-a. 300
a.
(1)
0
(1)
"-0
c 250
200
150
100
100
BULGARIA
Relationship of Industrial Production to Supply of Energy
1950-58,and Projection for 1965
Figure 8
1965
A
A
- A
? A
A
A
A
- A
A
A
A
- A
A
A
A -
-7-
-A
A
A
A

+3 STANDARD
ERRORS OF
ESTIMATE
--
-
,
?
/
0
0
A
A
A
,

7
,..-
0
0
0
,
0
0
0 ,
7
,
,
,
/
./
0
,
1950
EQUATION
=100
OF
a=50.69
b=0.540
LINE
1955.
,
?
1957
956
.
- 1958
Y=a+bX
19530
1952.
1951
1 95,4
28200 6-60
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150 200 250 300 350 400 450 500 550
Official Index of Industrial Production
600
650
700
22.0
19.8
17.6 ?ti.;
Li
-0
15.4 4
13.2 c
.2
>,
11.0
LU
>,
8.8 o.
6.6
4.4
750
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L
C-0-N-F-I-D-E-N-T-I-A-L
APPENDIX A
STATISTICAL TABLES
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? C-0-N-F-I-D-E-N-T-I-A-L
Table 2
Calorific Values of Sources of Energy in the European Satellites 2/
1958
Source
Unit
Bulgaria 12/
Czechoslovakia 2/
East Germany 1/
Hungary 2/
Poland II/
Rumania E/
Hard coal
Kilocalories per kilogram
5,000
5,090
6,000
4,608
6,000
6,500
Brown coal
Kilocalories per kilogram
3,600
3,550
2,200
3,405
2,000
3,300
Lignite
Kilocalories per kilogram
1,800
2,102
N.A.
2,032
N.A.
Crude oil
Kilocalories per kilogram
10,000
10,500
10,500
10,000
10,500
10,500
NArd coal coke
Kilocalories per kilogram
6,000
6,500
6,100
6,500
6,500
6,400
Brown coal coke
Kilocalories per kilogram
N.A.
4,500
4,500
4,500
N.A.
4,500
Brown coal briquetts
Kilocalories per kilogram
5,000
5,000
4,700
3,600
4,600
4,500
Fuelwood 11/
Kilocalories per cubic meter
1,750
1,750
1,750
1,750
1,750
1,750
Peat
Kilocalories per kilogram
N.A.
3,000
3,000
3,000
N.A.
N.A.
Natural gas 11/
Kilocalories per cubic meter
9,000
9,000
9,000
9,000
9,000
9,800 1/
Natural gas liquids
Kilocalories per kilogram
N.A.
N.A.
N.A.
10,900
10,900
N.A.
Petroleum products ,1/
Kilocalories per kilogram
11,000
11,000
11,000
11,000
11,000
11,000
Hydroelectric power 11/
Kilocalories per kilowatt-hour
2,800
2,800
2,800
2,800
2,800
2,800
Nuclear power
Kilocalories per kilowatt-hour
2,800
2,800
2,800
2,800
2,800
2,800
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
Excluding Albania.
11/
1E/
1431
12
12
11/
Including natural gas liquids.
The calorific value of all imports,
on a weighted basis, approximates that for diesel fuel.
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Table 3
Estimated Production of, Trade in, and Net Supply of Energy
in the European Satellites, by Type 2/*
1950-58, 1965, and 1975
Million Metric Tons of Standard Fuel
Source of Energy
1950
1951 .1952
1953
1954
1955
1956
1957
1958
1965
1975
Solid Fuels
Production
Hard coal
83.9
87.9
91.2
95.1
98.6
101.5
102.9
102.6
104.9
126.3
143.2
Brown coal
66.7
73.3
78.7
84.8
89.5
97.4
101.7
106.8
111.6
152.5
186.4
Lignite
1.2
1.6
2.1
2.5
- 2.8
3.2
3.3
3.7
4.3
8.2
16.9
Fuelwood
6.5
6.6
6.6
6.8
6.0
6.0
6.2
6.0
6.0
I2/
bJ
Peat
0.1
0.1
0.1
0.2
0.2
0.5
0.5
0.4
0.4
y
2/
Total 2/
158.5
169.5
178.7
189.4
197.1
208.7
214.6
219.5
227.3
287.0
346.5
Trade 1/
Hard coal 2/
Brown coal E./
-18.5
-2.1
-19.0
-1.9
-18.2
-2.5
-14.5
-2.9
-13.7
-3.8
-14.4
-4.7
-11.8
-3.8
-5.9
-4.2
-9.2
-4.1
-8.7
-0.8
-9.0
_0.8
Fuelwood
Negl.
Negl.
Negl.
Negl.
+0.1
+0.1
+0.1
+0.2
+0.1
12?.9
12/
Coke
+2.6
+2.5
+3.0
+3.4
+4.1
+4.4
+3.8
+4.3
+4.3
+5.4
Briquettes
+0.1
+0.1
+0.1
+0.3
+0.2
+0.2
+0.2
+0.2
+0.1
1+2/
12/
Total 2/
-17.9
-18.3
-17.5
-13.7
-13.2
-14.4
-11.5
-5.5
-8.8
-4.6
-4.4
* Footnotes for Table 3 follow on p. 21.
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Table 3
Estimated Production of, Trade in, and Net Supply of Energy
in the European Satellites, by Type 2/
1950-58, 1965, and 1975
(Continued)
Million Metric Tons of Standard Fuel
Source of Energy
1950
1951
1952
1953
1954
1955
1956
1957
1958
1965
1975
Net Supply
Hard coal
65.4
69.0
73.0
80.6
84.9
87.1
91.1
96.6
95.6
117.6
134.2
Brown coal
64.6
71.4
76.2
81.8
85.8
92.8
97.9
102.6
107.6
151.7
185.6
Lignite
1.2
1.6
2.1
2.5
2.8
3.2
3.3
3.7
4.3
8.2
16.9
Fuelwood
6.5
6.6
6.6
6.8
6.0
6.1
6.3
6.3
6.2
V/
/,21/
Peat
Coke
0.1
2.6
0.1
2.5
0.1
3.0
0.2
3.4
0.2
4.1
0.5
4.4
0.5
3.8
0.4
4.3
0.4
4.3
zil. .9
2/
5.4
Briquettes
0.1
0.1
0.1
0.3
0.2
0.2
0.2
0.2
0.1
y
12/
Total 2/
140.6
151.2
161.2
175.6
183.9
194.3
203.1
214.0
218.5
282.4
342.1
Petroleum
Production
Crude oil
8.6
10.4
13.3
15.3
16.9
18.8
18.9
18.6
18.9
23.4
28.4
Natural gas gi
5.3
6.6
8.2
9.2
9.5
10.1
10.9
12.2
12.9
26.5
31.9
Natural gas liquids
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
12/
12/
Total 2/
14.0
17.1
21.6
24.5
26.5
28.9
29.9
30.8
31.9
49.9
60.2
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Table 3
Estimated Production of, Trade in, and Net Supply of Energy
in the European Satellites, by Type 2/
1950-58, 1965, and 1975
(Continued)
Million Metric Tons of Standard Fuel
Source of Energy
1950
1951
1952
1953,
1954
1955
1956
1957
1958
1965
1975
Trade
Crude oil 12/
-5.0
-5.5
-6.3
-6.9
-8.3
-9.2
-7.0
-2.8
-4.1
+16.0
+42.5
Natural gas
+0.1
+0.1
+0.1
+0.2
+0.2
+0.2
+0.2
+0.2
+0.2
0
0
Petroleum products
+1.3
+1.5
+1.9
+2.3
+3.2
+3.2
+3.3
+3.7
+3.6
0
0
Totals/
-3.6
-.1&,
-4.4
-4.5
-4.9
-5.8
-3.5
+1.1
-0.3
+16.0
+42.5
Net supply
Crude oil
3.7
4.9
7.0
8.3
8.6
9.6
11.9
15.7
14.8
39.4
70.9
Natural gas
5.4
6.8
8.3
9.3
9.7
10.2
11.1
12.4
13.1
26.5
31.8
Natural gas liquids
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
12/
12/
Petroleum products
1.3
1.5
1.9
2.3
3.2
3.2
3.3
3.7
3.6
0
0
Total E/
10.5
13.3
17.2
20.0
21.6
23.2
26.4
31.9
31.6
65.9
102.7
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Table 3
Estimated Production of, Trade in, and Net Supply of Energy
in the European Satellites, by Type 2/
1950-58, 1965, and 1975
(Continued)
Million Metric Tons of Standard Fuel
Source of Energy
1950
1951
1952
1953
1954
1955
1956
1957
1958
1965
1975
Electric power
Production
Hydroelectric power
0.8
0.9
1.0
1.0
1.0
1.6
1.6
1.7
2.0
4.4
12.0
Nuclear power
0
0
0
0
0
0
0
0
0
11.2
80.4
Total
0.8
2.,2
1.0
1.0
1.0
1.6
1.6
1.7
2.0
15.6
92.4
Grand Total sj
Production
173.2
187.5
201.3
214.8
224.6
239.3
246.2
252.0
261.2
352.5
499.1
Trade 1/
-21.4
-22.2
-21.9
-18.2
-18.1
-20.2
-15.0
-4.4
-9.0
+11.4
+38.1
Net supply
151.8
165.3
179.4
196.6
206.6
219.1
231.2
247.6
252.2
363.9
537.2
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Table 3
Estimated Production of, Trade in, and Net Supply of Energy
in the European Satellites, by Type a/
1950-58, 1965, and 1975
(continued)
a. Excluding Albania.
b. No data are available on which the future production of fuelwood, peat, and natural gas liquids
or the future trade in brown coal coke and fuel briquettes can be estimated. The exclusion of these
sources of energy, however, should not cause any significant error in the estimate of the supply of
energy after 1958.
c. Data are derived from unrounded figures and do not necessarily agree with the totals listed.
d. The symbol + indicates imports; the symbol - indicates exports.
e. Including hard coal coke.
f. Including brown coal coke and brown coal briquettes.
g. Including production of natural gas liquids in Rumania.
h. Including petroleum products.
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Table 4
Estimated Production of, Trade in, and Net Supply of Energy in the European Satellites, by Country 2/
1950-58, 1965, and 1975
Thousand Metric Tons of Standard Fuel
Country
1950
1951
1952
1953
1954
1955
1956
1957
1958
1965
1975
Production
Trade 12/
Net
Supply
Production
Trade P./
Net
Supply
Production
Trade 12/
Net
Supply
Production
Trade 12/
Net
Supply
Production
Trade 12/
Net
Supply
Production
,
Trade .12/
Net
Supply
Production
,
Trade ID/
Net
Supply
Production
Trade 12/
Net
Supply
Production
,
Trade12/
Net
Supply
Production
,
Trade
Net
Supply
Production
,
Trade 2/
Net
Supply
East
Germany
46,461
+4,513
50,974
51,104
+4,400
55,504
52,878
+4,781
57,659
57,322
+6,863
64,185
60,128
+7,188
67,316
66,338
+6,258
72,596
67,919
+6,211
74,130
70,060
+6,840
76,900
70,993
+7,349
78,342
100,597
+18,321
118,918
140,574
+26,357
166,931
Poland
69,854
-23,000
46 854
73,657
-24,444
49,213
76,194
-24,317
51,877
79,817
-22,788
57,029
82,134
-21,812
60,322
84,955
-21,677
63,278
85,674
-17,840
67,834
84,482
-11,654
72,828
85,588
-14,575
71,013
101,592
-11,827,
89,765
125,469
-6,142
119,327
Czechoslovakia
28,471
+708
29,179
29,764
+2,373
32,137
32,747
+2,599
35,346
33,399
+3,206
36,605
36,074
+3,333
39,167
38,237
+2,943
41,180
42,111
+2,477
44,588
45,691
+1,746
47,437
50,182
+1,886
52,068
76,797
+6,646
83,441
130,948
+15,396
146,344
Rumania
16,044
-4,845
12...219__9
19,159
-5,834
13,325
23,287
-6,751
-16,536
25,933
-7,864
18,069
27,205
-9,202
!.993
28,976
-9,877
19,099
30,581
-8,601
21,980
31,980
-6,680
25,300
32,951
-8,130
24 821
47,669
-9,503
38,166
60,600
-11,069
49,531
Hungary
8,247
+933
9,180
9,196
+1,015
1112Z2a
10,962
+1,396
12,358
12,571
+1,883
14,454
13,346
+1,886
15,232
14,211
+1,777
li,23
12,708
+2,428
15,136
12,070
+4,839
16,909
13,552
+3,592
17,144
17,473
+6,055
23,528
25,159
+20,079
35,238
Bulgaria4,169
+253
4 422
4,624
+320
4,944
5,259
+407
5 666
5,811
+491
6,302
5,746
+524
6 27o
6,580+348
6,928
7,187
+310
7,497
7,771
+487
8,258
7,956
+836
8,792
8,386
+1,829
10 215
16,381
+3,565
19,946
a. Excluding Albania. Data on. trade in this table do not agree with data in Table 1. See Table 1, footnote b, p. 7, above.
b. The symbol + indicates imports; the symbol - indicates exports.
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Table 5
Indexes of Industrial Production and Net Supply of Energy
in the European Satellites 2/
1950-58
1950 = 100
Year
Total European Satellites
East Germany
Poland
Czechoslovakia
Rumania
Hungary
Bulgaria
Net Gross
Industrial Industrial Net Supply
Production Production of Energy
Gross
Industrial Net Supply
Production of Energy
Gross
Industrial
Production
Net Supply
of Energy
Gross
Industrial
Production
Net Supply
of Energy
Gross
Industrial
Production
Net Supply
of Energy
Gross
Industrial
Production
Net Supply
of Energy
Gross
Industrial
Production
Net Supply
of Energy
1950
100
100
100
100
100
100
100
.100
100
100
100
100
100
100
100
1951
112
121
109
123
109
122
105
114
110
124
119
127
111
120
112
1952
123
143
118
142
113
145
111
135
121
146
148
155
135
140
128
1953
139
162
130
160
126
170
122
147
125
168
161
173
157
160
143
1954
145
175
136
176
132
190
129
153
135
179
161
182
166
174
142
1955
157
193
144
190
142
212
135
170
141
203
171
198
174
188
157
1956
165
206
152
202
145
231
145
186
153
225
196
180
165
216
170
1957
181
226
163
217
151
254
155
205
163
244
226
209
184
248
187
1958
198
251
166
241
154
278
152
228
178
267
222
234
187
287
199
a. Excluding Albania
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APPENDIX B
FUTURE ENERGY BASE
1. Estimated Net Supply
Coal will continue to be the major source of energy in the European
Satellites through 1975, although its contribution will decline from
about 82 percent of the total supply of energy in 1958 to about 76 per-
cent in 1965 and to 63 percent in 1975. If original plans are ful-
filled, nuclear power may provide about 15 percent of the total avail-
able supply of energy by 1975. The contribution of petroleum and
natural gas to the total supply of energy will continue to rise
gradually -- to about 18 percent in 1965 and to about 19 percent in
1975. By 1975, imports of crude oil will provide at least one-half of
the energy supplied by petroleum and natural gas.
No data are available with which to estimate the future production
of fuelwood and peat or future trade in brown coal coke and fuel bri-
quettes. The exclusion of these sources of energy, however, should not
cause any significant error in the estimate of the supply of energy
after 1958.
2. Estimated Production
a. Coal
Goals for production of coal in 1965 have been announced for
the following countries: Czechoslovakia, 116 million to 117 million
tons 1.y; Hungary, 30 million tons 12/; and Bulgaria, 36 million to
46 million tons. ..(2/ East Germany has reported plans for production of
about 295 million tons of brown coal in 1965 and 350 million tons in
1970. L./ Poland has prepared long-range plans for production of about
139 million tons of coal in 1965 and 195 million tons by 1975. No
information is available on goals for Rumania beyond 1960. Table 6*
presents these plan data in comparison with estimates of probable pro-
duction of coal in 1965 and 1975.
East Germany and Czechoslovakia have theresources and the
apparent capabilities to achieve their planned goals. The East Gelman
goal for production of 350 million tons of brown coal in 1970 has been
reported to be the maximum rate of production possible consistent with
the resources, the investment required, the difficulties with overburden,
* Table 6 follows on p. 32.
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and the labor force. .2./ It is estimated that, with the background
of successful experience and competence attained in strip mining, East
Germany can achieve the goal for 1970 and also can sustain production
of 350 million tons annually through 1975. In Czechoslovakia the goal
of producing 35 million to 36 million tons of hard coal and 81 million
tons of brown coal in 1965 probably can be fulfilled. The estimated
production of 145 million tons of coal (40 million tons of hard coal
and 105 million tons of brown coal) in 1975 was obtained by extrapo-
lation, using the data for 1950-58 and plans for 1960 and 1965.
Poland and Bulgaria appear to have established goals that may
be difficult, or impossible, to fulfill. The probable level of produc-
tion of coal in Poland is 155 million tons in 1975, considerably less
than planned production of 195 million tons. Bulgaria probably has
the resources to increase production considerably, but it will take
time to obtain equipment and develop new mines. The extremely opti-
mistic plan for production of 36 million to 46 million tons of coal by
1965 does not appear to be realistic at this time. Preliminary esti-
mates of future production of coal by Bulgaria (18 million tons and
24 million tons in 1965 and 1975, respectively) have been based on
projections of past rates of growth.
The Hungarian plan to produce 30 million tons of coal in 1965
appears to be reasonable. The planned increase in production is to be
primarily in brown coal, the resources of which probably are adequate,
and it is not out of line with that which has been achieved in the past.
Production for 1975 (36 million tons) has been estimated on the basis
of the same general rate of increase accomplished during 1950-58 and
planned for 1960 and 1965.
Estimates of the future production of coal (approximately
12 million tons in 1965 and 16 million tons in 1975) in Rumania were
made by projecting rates of production from the years 1950-58.
Coal will continue to be the major source of energy produced
and utilized in the European Satellites, but the percentage of the
total production of energy represented by coal will decline about
18 percent from 1958 to 1975. Production of coal in 1958 accounted
for approximately 221 million tons of standard fuel of the total pro-
duction of energy of about 261 million tons of standard fuel. By
1975 the total production of energy may be equal to approximately
500 million tons of standard fuel, of which coal may represent 347 mil-
lion tons. Since the mid-1950's, brown coal has exceeded hard coal as
a source of energy. Plans for the future indicate that this trend will
continue, as brown coal is to be produced in increasing quantities for
the development of large thermal powerplants throughout the Satellites.
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Poland and East Germany will continue to be the major producers
of hard coal and brown coal in 1975, when Poland will produce about
75 percent of the hard coal and East Germany about 63 percent of all
brown coal and lignite produced in the European Satellites. Czecho-
slovakia will maintain its position as an important producer of coal,
accounting for about 23 percent of the hard coal and about 19 percent
of the brown coal and lignite in the Satellites.
b. Crude Oil and Natural Gas
Only very fragmentary information is available on planned pro-
duction of crude oil beyond 1960. No long-range plans concerning pro-
duction of crude oil have been released by any of the European Satel-
lites. In Rumania, the major producer, difficulties have been en-
countered in fulfilling the program for drilling. The rate of increase
in production is declining, and it is doubtful that the goal of 13.5
million tons in 1960 can be achieved. Production of crude oil in
Rumania for 1965 and 1975 has been estimated at 14 million and 17 mil-
lion tons, respectively. Only Albania and Hungary appear to have the
potential resources to increase production significantly above the
level of 1958 of 400,000 tons and 830,000 tons, respectively. It is
estimated, however, that the combined output of these two countries in
1975 -- about 3.5 million tons -- would represent less than 17 percent
of the estimated total production of crude oil in the Satellites in
that year. Because available evidence indicates a lack of oil re-
sources in the other Satellites, little or no increase in production
above the levels of 1958 has been estimated through 1975 for Bulgaria,
Czechoslovakia, East Germany, and Poland.
Planned increases in production of natural gas through 1965
have been reported only for Czechoslovakia and Poland. LP/ Projections
have been made for production of natural gas for these two countries
in 1975 (Czechoslovakia, 4 billion cubic meters; Poland, 1 billion
cubic meters) using data for 1950-58 and plans for 1960 and 1965. No
information is available beyond 1960 on planned production of natural
gas in Rumania, the largest producer by far. Estimates of future
production of gas have been projected at approximately the same rate
of increase as that for crude oil. (Estimates for 1965 and 1975 are
15 billion and 17 billion cubic meters, respectively.) No data are
available on actual or planned Bulgarian production of natural gas for
any postwar year. The relatively minor amounts of gas that may have
been produced before 1958 or that may be produced in the future by
Bulgaria have not been considered.
The estimated production of crude oil and gas in 1975 in the
European Satellites may be equal to approximately 60 million tons of
standard fuel, less than twice the amount produced in 1958. This
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production may represent about 12 percent -- the same percentage as
that for 1958 -- of the total production of energy in that year.
c. Electric Power
No specific details are available on which to base estimates
of production of power from hydroelectric powerplants in the indi-
vidual countries of the European Satellites. General plans, however,
have been made to continue the development of this source of energy
in the Satellites. Excluding the possible costly development of the
potential of the Danube River, much of the available water resources
of the Satellites has been developed or is in the planning stages of
development. Thus it has been assumed that the Satellites will con-
tinue to develop this valuable source of energy but not as rapidly as
was accomplished in the past. The construction of the "super" thermal
powerplant and the initiation of production of nuclear power also will
tend to restrict the rate of growth of production of hydroelectric
power. During 1950-58, production of hydroelectric power increased
from about 2 billion kilowatt hours (kwh) to 5 billion kwh, an increase
of about 160 percent. Indications are that production of hydroelectric
power may increase from about 7 billion kwh in 1960 to about 31 billion
kwh in 1975. The contribution of this source of energy to the total
production of energy in 1975 will continue to be less than 3 percent.
Considerable information exists on long-range plans for the
utilization of nuclear energy. If these plans are achieved, nuclear
power will be the most significant new source of energy. By 1975,
about 16 percent (200 billion kwh or 80 billion tons of standard fuel)
of the estimated production of energy from primary sources in the Euro-
pean Satellites may be supplied by nuclear power. Czechoslovakia is
expected to begin operation in 1960 of the first nuclear powerplant
(150 megawatts -- mw) in the Satellites. Nuclear power is to be pro-
duced from a 90-mw plant in East Germany in 1961, and Hungary and
Poland plan to begin nuclear power operation by 1965. A continuous ex-
pansion of installed capacities for this source of energy is planned
for these four countries.
In view of the relative scarcity and the high cost of other
indigenous sources of energy, there is strong incentive to exploit nu-
clear power in the European Satellites. For purposes of this report,
therefore, the goals for generation of nuclear power have been accepted
in spite of the ambitious size of the investment required to achieve
such production.*
* Recent information indicates that the original plans for production
of nuclear power in the Satellites were optimistic. Czechoslovakia,
East Germany, Poland, and Hungary have Lfootnote continued on p. 317
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3. Estimated Patterns of Trade
Some long-range plans are available on the proposed imports of
crude oil by the European Satellites, but little additional information
exists on patterns of trade in other sources of energy. In this report
the data on trade for 1965 and 1975, therefore, are subject to consid-
erable error. Plans have been reported for imports of about 15 million
to 16 million tons of crude oil (22 million to 24 million tons of stand-
ard fuel) in 1965 and 35 million tons (52 million tons of standard fuel)
in 1975 by Czechoslovakia, East Germany, Poland, and Hungary. These
imports, which will come primarily from the USSR, will help to satisfy
the increased demands for petroleum products and to provide for the
development of petrochemical industries. Rumania, however, will con-
tinue to export petroleum products through 1975. Thus the pattern of
trade in petroleum in the Satellites will change from a net export of
0.3 million tons of standard fuel in 1958 to a net import of about
42 million tons in 1975.
The following major assumptions have been made as a basis for esti-
mating future trade in solid fuels:
a. Poland will attempt to maintain exports of hard coal at a
level of 16 million to 17 million tons.
b. Poland will gradually increase the exportable surplus of
brown coal, which will be shipped only to East Germany.
c. The demands for hard coal coke by the European Satellites
will be supplied partly by Poland (at a constant annual rate of 2 mil-
lion tons) and by Czechoslovakia (increasing gradually to a level of
1.5 million tons by 1975) and will be supplemented by imports from the
USSR. It is estimated that net exports of coal will decline about
25 percent by 1975 -- from 13.3 million tons of standard fuel in 1958
to about 9.8 million tons in 1975.
In spite of the long-range plans for connecting power networks be-
tween contiguous European Satellites, it is assumed that there will be
neither net exports nor net imports of electric power. The same con-
clusion was reached for natural gas.
announced that nuclear powerplants will not be completed for about 1 to
7 years after the starting dates originally planned. Consequently, the
requirements for imports of energy by the Satellites by 1975 will be
even greater than estimated.
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Table 6
Comparison of Available Plans with Estimates of Production of Coal
in the European Satellites, by Country 2/*
1965 and 1975
Million Metric Tons
1965 1975
Country
Type of Coal
Plan
Estimated
Production
Plan
Estimated
Production
Total European
Satellites
Hard coal
154 to 155 12/
154
N.A.
174
Brown coal
and lignite
465 to 475 12/
447
N.A.
555
Total
619 to 63012/
601
N.A.
729
East Germany
Hard coal
3
3
N .A .
3
Brown coal
and lignite
295
295
350 2/
350
Total
298
298
350
353
Poland
Hard coal
112
110
135
125
Brown coal
27
16
60
30
Total
139
126
195
155
Czechoslovakia
Hard coal
35 to 36
36
N.A.
40
Brown coal
and lignite
81
81
N.A.
105
Total
116 to 117
117
N.A.
145
Footnotes for Table 6 follow on p. 33.
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Table 6
Comparison of Available Plans with Estimates of Production of Coal
in the European Satellites, by Country 2/
1965 and 1975
(Continued)
Million Metric Tons'
Country
Type of Coal
1965
1975
Plan
Estimated
Production
Plan
Estimated
Production
Rumania
Hard coal
N.A.
1
N.A.
1
Brown coal
N.A.
11
N.A.
15
Total
N.A.
12
_
N.A.
16
Hungary
Hard coal
3
3
N.A.
4
Brown coal
and lignite
27
27
N.A.
32
Total
30
30
N.A.
36
Bulgaria
Hard coal
1
1
N.A.
1
Brown coal
and lignite
35 to 45
17
N.A.
23
Total
36 to 46
18
N.A.
24
a.. Excluding Albania.
b. Excluding Rumania.
c. This figure was planned for 1970 but was reported as the maximum rate of
production and, therefore, was used for 1975.
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APPENDIX C
METHODOLOGY
?
1. Past Relationship Between Industrial Growth and Supplies of Energy
The relationship between growth of industrial production (either
reported gross or estimated) and increases in the supply of energy in
the European Satellites was found to be very close for the years
1950-58. Correlation of the index of industrial production with the
index of the supply of energy in the Satellites as a whole for the
9 years 1950-58 (1950 = 100 on both indexes) resulted in a coeffi-
cient of correlation of 0.99 and a coefficient of determination of
0.98.* Similar high coefficients of correlation and determination
were obtained by correlation of the indexes for individual Satellites.
This high degree of correlation is not unexpected when it is con-
sidered that both series are time series and would therefore be
autocorrelated.**
In addition, some bias undoubtedly was introduced by the fact that
energy was included in the calculation of the index of industrial pro-
duction. It is believed, however, that at least 90 percent of the
growth in industrial production in the European Satellites was directly
associated with the increase in the supply of energy -- that is, the
true coefficient of determination would not be less than 0.90.
Measurements of increments of industrial production involve diffi-
cult problems of methodology and estimation. Two types of measures of
industrial growth are available for past years, as follows: official
indexes of the gross value of production in fixed prices and estimates
of net production calculated by this Office from sample commodity
series weighted, insofar as possible, by labor costs. The official
indexes are subject, in varying degrees, to an upward bias, especially
* The coefficient of correlation measures the degree of relationship
between the variables -- that is, industrial production and the supplies
of energy -- independent of the units or terms in which they were origi-
nally expressed. The coefficient of determination measures the rela-
tive amount or proportion of variation in one series that is associated
with or explained by the variation in the other series.
** The internal correlation between members of series of observations
whereby the value of each observation is partly dependent on the value
of those that have immediately preceded it.
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in the early years of the 1950-58 period. This bias is caused by the
use of inflated prices and, in some cases, by increases in the degree
of double counting in gross value. The indexes prepared by this Office
are believed to provide a measure of industrial growth roughly similar
to measures used in Western countries, but their quality 'varies among
countries and years. For future yea/1's, only indexes from official
plans are available. Little is known about the methods used to con-
struct these indexes for future years, although they probably are
crude price-weighted averages of commodity series. An unofficial
Polish index for 1965 is believed to have been calculated in a manner
similar to that used in constructing the indexes developed by this
Office, but no such indexes are available for other countries. Use of
either the index prepared by this Office for past years or the unoffi-
cial index of net production for future years in Poland results in ap-
proximately the same requirements for energy for 1965 and 1975 as are
obtained by use of official indexes of gross industrial production for
both periods. The calculated Polish requirements for energy in 1965
and 1975 are as follows: ,
Million Tons of Standard Fuel
Year Gross Net
1965 108 112,
1975 204 203
Plan goals for the individual European Satellites probably are not
exactly comparable either with the official indexes of industrial produc-
tion published in the past or with the indexes of industrial production
estimated by this Office. In the construction of plans, there is no in-
centive to inflate prices of new products or of modifications of old
products as there is in calculating plan fulfillment. In recognition
of the problem of noncomparability of data, the relationship between
increases in industrial production and increases in the supply of energy
was determined by using both types of indexes of industrial production.
The index of gross industrial production for the European Satellites
as a whole for the years 1950-58 was developed from official indexes
reported for each of the Satellites and weighted by rough estimates of
the relative share of each country in the total industrial production of
the Satellites, as follows:
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Country
Percent
Country
Percent
East Germany
33
Rumania
9
Poland
24
Hungary
9
Czechoslovakia
21
Bulgaria
4
This index indicated an average annual rate of growth in industrial
production of 12.2 percent during 1950-58, but it does overstate the
actual growth in industrial production, especially during the early
years of the period. The index of net industrial production prepared
by this Office indicates that the actual average annual increase in
industrial production for the European Satellites as a whole was only
8.9 percent during 1950-58. The net supply of energy during this
period increased at an average annual rate of 6.5 percent. Thus, de-
pending on whether the index of gross industrial production or the
adjusted index prepared by this Office is used as the basis of calcu-
lation, every 1-percent increase in industrial production (1950 = 100)
was, on the average, accomplished with an increase of 0.5 or 0.7 per-
cent in the total net supply of energy (1950 = 100).
The inability to deduct nonindustrial consumption* of energy from
the net supply of energy results in an overstatement of the quantita-
tive increase in-the energy supply accompanying or required to support
each 1-percent increase in industrial production during 1950-58. Such
overstatement is especially true during the early years of the period,
when nonindustrial consumption of energy accounted for a larger per-
centage of total consumption of energy than it did in the latter part
of the period. As a result of the inclusion of nonindustrial consump-
tion of energy, correlation of total net supplies of energy with net
industrial production introduces an upward bias in the resulting esti-
mates of requirements for energy. If total net supplies of energy are
correlated with gross industrial production, however, the overstatement
of industrial growth, especially in early years, and the inclusion of
energy consumed for nonindustrial purposes appear to be offsetting
factors.
Data were available for making crude estimates of industrial con-
sumption of energy for East Germany, Poland, and Hungary. These data
on industrial consumption were correlated with the index of net indus-
trial production prepared by this Office for the same countries. Each
1-percent increase in net industrial production was accompanied by an
0.75-percent increase in industrial consumption of energy (1950 = 100).
Estimates of requirements for industrial consumption in 1965 derived
* Nonindustrial consumption includes consumption by agriculture, trans-
portation, communications, business, and households.
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from this relationship indicate a probable total requirement for energy
in 1965 approximately equal to that obtained by correlating the in-
creases in gross industrial production with increases in the total net
supply of energy.*
The index of the supply of energy in the European Satellites as a
whole for 1950-58 was developed from data for the individual countries.
The supply of energy consists of domestic production of primary fuels
plus the net trade balance in primary and secondary fuels. Estimates
of supplies of energy for 1950-58 are believed to be accurate within the
range of plus or minus 5 percent.
The preparation and visual inspection of scattergrams and the com-
putation of annual increments (first differences) in the series shown
in Table 5** indicated that straight regression lines should be fitted
by a formula of the type Y = a + b X (using the method of least
squares). The regression of the index of the supply of energy on the
index of industrial production was computed to determine the increase
in the supply of energy associated with a 1-percent increase in indus-
trial production during 1950-58 (1950 = 100). (See equations in the
legends of Figures 1, 3, It, 5, 6, 7, and 8.xxx) As an aid in deter-
mining the levels of production that could be supported by a given
quantity of energy, the regression of the index of industrial produc-
tion on the index of the supply of energy also was computed. (See
Figure 2.t)
In the method described above, it was possible to use the indexes
shown in Table 5" for the European Satellites as a whole, and for all
individual Satellites, without any adjustment. For Hungary, however, a
small increase in the index of industrial production in 1954 and an
actual decline in the index in 1956 tend to obscure the secular trend of
industrial development and the supply of energy during 1950-58. The so-
called "New Course" program that began in 1953 and the uprising in the
fall of 1956 were the principal causes of the deviations in the general
trend of industrial development.
Several methods were considered for smoothing the curves, based on
the original Hungarian data, to eliminate the atypical observations in
1954 and 1956. (a) Curves for the index of industrial production and
for the index of the supply of energy were smoothed to approximate
See p. 41, below.
** P. 25, above.
*** Following pp. 4, 10, 12, and 14, above.
t Following p. It, above.
tt P. 25, above.
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logarithmic curves. Thus the indexes were adjusted and the formula for
logarithmic curves (Y = AXB, or log y = log A + B log X) was used to
compute values for the deviant years more typical of the secular trend.
(b) The atypical years were eliminated from a linear regression of the
indexes of the supply of energy on the indexes of industrial production.
(c) All data were used on a straight linear regression. All methods
for Hungary showed no appreciable difference in the amount of energy
required in 1965 to meet the planned rate of increase in industrial pro-
duction. Consequently, as was true for the other European Satellites
individually and for the Satellites as a whole, a straight regression
line was fitted to a scattergram of the original index numbers.
2. Estimated Requirements for Energy
Future requirements of industry for energy will depend on the
future level of industrial production. Because no plan goals have been
set for industrial development in the European Satellites as a whole,
two basic methods were used to estimate probable requirements for energy.
The first method* was to extrapolate the index of gross industrial pro-
duction for the Satellites as a whole (as shown in Table 5**) at the
average annual rate of increase of 9.3 percent from 1958 through 1975.
The second methodxxx was to add the estimated requirements for energy
of the individual Satellites for the year 1965.
The estimate of a 9.3-percent average annual rate of increase in
industrial uoduction for the European Satellites as a whole during
1958-65 was derived as follows. (a) Plan goals for 1965 are available
for all of the Satellites except Rumania. For Rumania, an estimated
annual rate of increase based on plans for 1959 was continued through
1965.t (b) The planned or .estimated average annual rates of increase
in industrial production for the individual Satellites during the period
1959-65 were weighted by crude estimates of the relative share of each
country in the total industrial output of the Satellites.tt The re-
sulting average annual rate of increase in industrial production for
the Satellites as a whole was 9.3 percent.
The average annual rate of increase of 9.3 percent in industrial
production from 1965 through 1975 was extrapolated, not as an estimate
of probable accomplishment but rather as a hypothesis for determining
* See I, p. 2, above.
** P. 25, above.
xxx See II, p. 6, above.
t For the planned average annual increase in industrial production in
the individual Satellites during 1959-65, see Table 1, p. 7, above.
tt See p. 37, above.
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whether or not available supplies of energy would be adequate to main-
tain that rate of industrial development.
Extrapolating the index of gross industrial production at an aver-
age annual rate of increase of 9.3 percent from 1959 through 1975
yielded an index of industrial production of 467 for 1965 and 1,138
for 1975 (1950 = 100). Indexes of the supply of energy that would be
required to support these levels of industrial production were calcu-
lated of the basis of the relationship between the increase in indus-
trial production and the increase in the supply of energy established
for 1950-58. This relationship was described by the regression equa-
tion Yc = 52.98 + 0.470 X. The index numbers for industrial production
for 1965 and 1975 became the X values in this formula. The result was
an index of the supply of energy of 272 for 1965 and 588 for 1975.
These indexes were then converted to terms of standard fuel by multi-
plying them by 151.8 million tons, the amount of standard fuel avail-
able in the European Satellites as a whole in 1950. This methodology
was used to derive the eftimated requirement for energy of 413 million
tons of standard fuel in 1965 and 893 million tons in 1975 (and the
related ranges*).
The planned average annual rate of increase in the individual Euro-
pean Satellites (and the estimated rate for Rumania) were applied to
the indexes of gross industrial production for 1958 shown for the in-
dividual countries in Table 5.** In this manner an index number (1950 =
100) was obtained for industrial production in 1965 for each of the
Satellites. These indexes were used as the X values in the regression
equations that were found to describe the regression of energy on in-
dustry in the individual Satellites during 1950-58. Indexes of require-
ments for energy in 1965 were obtained for each individual Satellite
and then were multiplied by the supply of energy in 1950 (in terms of
standard fuel) in the appropriate country (see Table 4***). The re-
sults were the estimates of the requirements for energy (in terms of
standard fuel) of the individual Satellites for 1965 (see Table 11').
Summation of these estimated requirements for the individual Satellites
resulted in an estimated requirement of 415 million tons of standard
fuel for the Satellites as a whole in 1965. No estimate of require-
ments in 1975 was made by this method, for the goals for industrial
production in 1975 for all Satellites were not available.
There are slight differences in the result produced by the two
methods. Although the average annual rate of increase of 9.3 percent
for the European Satellites as a whole during 1959-65 was derived from
* *
See I, p. 2, above.
P. 25, above. See also II, p. 6, above.
P. 23, above.
t P. 7, above.
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the rates of increase for the individual Satellites, some slight dif-
ference in results might have been introduced by the weighting, by
rounding, and by the regression equations developed on the basis of
data for 1950-58. The two methods of estimating the probable require-
ments for energy of the Satellites as a whole in 1965 appear equally
valid, and the results are quite compatible.
To confirm the reliability of estimates obtained by the two related
methods mentioned above, a third method was employed, using different
data. Correlation of crude estimates of industrial consumption of
energy in East Germany, Poland, and Hungary with indexes of net indus-
trial production for these three countries prepared by this Office in-
dicates that the energy required to support the planned level of in-
dustrial production in these three countries in 1965 will be about
190 million or 200 million tons of standard fuel, depending on data
used. Average consumption of energy for nonindustrial purposes in
these three countries accounted for about 30 percent of the total con-
sumption of energy in 1950 and 27 percent in 1958. If it is assumed
that nonindustrial consumption of energy as a percentage of the total
consumption of energy will continue to decrease at about the same rate
as it did during 1950-58, nonindustrial consumption will account for
approximately 25 percent of the total consumption in 1965. Consequently,
the total requirement for energy for the three countries in 1965 would
be approximately 253 million or 267 million tons of standard fuel. Cor-
relation of the total supply of energy with gross industrial production
results in an estimated requirement for these three countries in 1965
of 264 million tons of standard fuel.
If it is assumed that the experience of these three Satellites is
typical of that of the European Satellites as a whole and that nonindus-
trial consumption of energy accounted for 30 percent of the total con-
sumption in 1950 and 27 percent in 1958, it is possible to correlate
industrial consumption of energy (1950 = 70 percent of the consumption
of energy) with net industrial production. Projection of the relation-
ship revealed by such correlation indicates that fulfillment of plans
for industrial production in the Satellites in 1965 would require an
industrial consumption of energy of about 315 million tons of standard
fuel. If it is assumed that in 1965 nonindustrial consumption of
energy in the Satellites will be 25 percent of the total consumption
of energy, the total requirement for energy will be about 420 million
tons of standard fuel. Correlation of the total net supply of energy
with gross industrial production results in an estimated requirement
of 413 million tons of standard fuel. These estimates of the require-
ments for energy are very close and are considered to be more reason-
able than the estimate of 445 million tons that is indicated by corre-
lation of the total supply of energy with net industrial production.
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For the first two methods, ranges were attached to all estimates
of requirements for energy (and conversely to all estimates of levels
of production that could be supported by a given supply of energy) on
the basis of plus or minus three standard errors of estimate from the
regression line. Just as the regression line is used to describe the
secular trend, the standard error of estimate is used to establish
normal limits for short-term fluctuations about that trend. In a
normal distribution for one observation, 99.73 percent of the cases
fall within a range of plus or minus three standard errors of esti-
mate from the regression line. The normality of the distribution of
data in this report was not tested. However, for any bivariant dis-
tribution whatsoever, no less than 89 percent of the known cases fall
within plus or minus three standard errors of estimate from the re-
gression line at the mean.
The limits established for the regression line were based on the
computed mean observation. These limits are very precise for the area
near the mean. The limits, however, become less reliable the further
the observations are from the mean.
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