What's Ahead for U.S. Oil and Gas Supply/Demand (17722 bytes)
The U.S. Energy Information administration predicts improved production technology will push future oil and gas prices lower than previously forecast.
EIA Administrator Jay Hakes said, "EIA projects faster penetration over the next 15 years of new technology, such as 3D seismology and horizontal drilling and completion techniques, that will increase the amount of economically recoverable oil and gas resources and reduce production costs.
"Similarly, technological advances in the coal mining industry, such as longwall mining, contribute to higher productivity and reduce production costs. The combined effects of these factors result in lower prices relative to last year's forecast."
A shift in the U.S. economy from energy intensive manufacturing toward service industries and greater fuel efficiencies also will contribute to slightly lower estimates of energy consumption.
PRICES
The Changing Outlook For Prices in 2010 (4914 bytes)
EIA's 1995 energy outlook projects that those factors and increased crude production by members of the Organization of Petroleum Exporting Countries will cause the 2010 world oil price forecast to drop to $24.12/bbl in 1993 dollars, or 16% lower in real terms than the $28.88 forecast a year ago.
U.S. natural gas prices will be $3.39/Mcf in 2010, about 5% lower than the $3.56 forecast a year ago.
The 2010 minemouth price of coal shows the most dramatic change from previous EIA forecasts, sliding to $22-77/ton, or 28% below the 1994 forecast price. Hakes said that is due to lower demand in the electric utility and export sectors and because "the coal industry has been very aggressive in productivity gains," averaging 4%/year recently.
Hakes said there is less inflationary pressure predicted than in the recent past. Although lower prices often tend to boost consumption, lower prices forecast for 2010 will not be accompanied by higher demand.
CONSUMPTION
With production declining and demand increasing during most of the forecast period, the share of U.S. petroleum consumption met by net imports will reach 59% in 2010 in terms of barrels per day, compared with 44% in 1993. Growth in natural gas consumption will be met by increases in domestic production and imports, mainly from Canada. Production will increase at an average rate of 0.8%/year between 1993 and 2010, satisfying more than half the growth in consumption by 2010.
Renewable energy production will grow significantly through the period, at 1.6%/year, mainly in electricity generation.
The agency's reference case forecast calls for economic growth of 2.2%/year in the gross domestic product, 1.2% in the labor force, and 1.1% in productivity. It predicts OPEC production at 47 million b/d in 2010 in the reference case..
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