$50 a Barrel Oil Forecast for Next 25 Years
WASHINGTON, DC, December 12, 2005 (ENS) - Oil prices will remain near the $50 per barrel mark over the next 25 years, increasing the pressure for more domestic crude oil production and increasing the demand for unconventional sources of transportation fuel, such as ethanol and biodiesel, says an annual federal government report issued today.
The report backs away from last year's prediction that the price of crude would fall to around $33 per barrel by 2025.
World crude oil prices are projected to fall to about $47 per barrel by 2014 in constant dollars, not adjusted for inflation, according to the 2006 Annual Energy Outlook published by the Energy Information Agency (EIA), the independent statistical and analytical agency within the U.S. Energy Department.
Energy Secretary Samuel Bodman said, “Today’s forecast from EIA emphasizes something we already know - demand for energy around the world will continue to grow as economies expand and prosperity spreads."
As a result of both supply and demand changes, the Energy Outlook says, growth in U.S. petroleum imports is expected to be less than projected last year.
U.S. petroleum imports, which met 58 percent of oil demand in 2004, are projected to meet 60 percent of demand in 2025, down from the EIA's 68 percent projection last year.
Higher oil prices lower the growth of demand for the commodity, the EIA projects, particularly through the effect of high prices on fuel choice and vehicle efficiency decisions in the transportation sector, even though the report does not assume adoption of proposed new fuel economy standards that are now in the public comment process.
"We will see more hybrids on the road as tax incentives continue to spur consumer interest and make them more affordable," Bodman said.
Higher oil and natural gas prices will lead to a projected increase in coal consumption, the EIA forecasts, saying that growth in coal consumption is projected to accelerate after 2020, as coal captures electricity market share from natural gas and as coal use for coal-to-liquids production grows.
Coal remains the primary fuel for electricity generation through 2030, with the coal share of total generation increasing from 50 percent in 2004 to 57 percent in 2030, the EIA projects. Over this period, utilization at existing plants increases and large amounts of new coal-fired capacity are added, mainly after 2020, the agency says.
"Higher oil prices stimulate domestic coal-to-liquids production and, in some of the alternative scenarios with even higher oil prices, domestic gas-to-liquids and shale oil production," the EIA says.
New nuclear power plants are projected for the United States. Nuclear generating capacity is projected to increase from 100 gigawatts in 2004 to 109 gigawatts by 2030, with three gigawatts of uprates at existing plants and six gigawatts of new plants stimulated by provisions in the Energy Policy Act of 2005.
Bodman said, "Nuclear power will expand as companies receive protections against bureaucratic delay; expanded use of coal, America’s most abundant energy resource, can occur in an environmentally friendly manner thanks to investments in clean coal technology; and the use of renewable energy will continue to grow as development and deployment are assisted by new tax incentives."
Carbon dioxide emissions from energy use are projected to increase at an average annual rate of 1.2 percent between 2004 and 2030.
The carbon intensity of the economy, measured as energy-related carbon dioxide emissions per dollar of gross domestic product, declines at an average annual rate of 1.7 percent per year from 2004 through 2030.
The EIA report did not assume that oil development will take place in the Arctic National Wildlife Refuge (ANWR) in Alaska, which proponents say would produce about one million barrels of oil a day by 2025. A proposal to open the refuge to oil and gas exploration is under consideration in Congress.
But Secretary Bodman again urged the opening of the refuge to drilling. "We will continue to encourage the participants in the Alaska Natural Gas Pipeline to complete their negotiations and begin development so that the vast natural gas resources in Alaska can reach the lower 48 states; and we must expand domestic production of oil and natural gas in environmentally responsible ways, starting with ANWR," he said today.
For renewable sources of energy, the EIA report includes the impact of the extension and expansion of the federal tax credit for selected renewables through December 31, 2007, as enacted in the Energy Policy Act as well as state renewable programs.
Total electricity generation from renewable energy sources is projected to grow by 1.7 percent per year, from 358 billion kilowatthours in 2004 to 559 billion kilowatthours in 2030.