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- Planet Fitness to anchor Town Plaza shopping center (9/18/17)1
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$50-a-barrel oil will stay, experts say
The prognosticators were more favorable on natural gas prices.
WASHINGTON -- Oil prices will persist near or above $50 a barrel for years and force a shift to more fuel-efficient cars and alternative fuels, the government said Monday, discarding earlier predictions that costs would drop to around $30 a barrel.
The Energy Department forecast was more positive on natural gas prices. It said they would retreat from the recent spikes -- to more than $14 per thousand cubic feet -- and settle at under $5 in the long term as demand weakens, especially for electricity production.
The analysis reflected a significant change from the department's projections a year ago when it predicted oil prices in constant dollars -- not counting normal inflation -- would retreat in the long term and settle at about $31 a barrel by 2025.
The report issued Monday said that oil prices will remain in the mid-$40 range or higher in coming years and average $54 a barrel by 2025, increasing to an average of $57 a barrel by 2030 when adjusted for inflation. Crude oil prices have been hovering around $60 a barrel, briefly soaring as high as $70 earlier this year.
The long-term forecast, which attempts to gauge the nation's energy picture 20 years from now, assumed no major policy shift such as future restrictions on so-called "greenhouse" gases -- including carbon dioxide from burning fossil fuels -- to combat climate change.
Nor did it assume the government will allow oil development in the Arctic National Wildlife Refuge in Alaska, which supporters said would produce a flow of one million additional barrels of oil a day by 2025, adding substantially to domestic production. A proposal to open the refuge to drilling currently is being heatedly debated in Congress.
Any major policy shift such as curbing fossil fuel use to counter global warming "would change the picture dramatically" especially in the use of coal for generating electricity, said Guy Caruso, head of the Energy Information Administration, the Energy Department's statistical agency which issued the report.
Demand for crude oil and natural gas is expected to continue to increase, but not as sharply as had been projected a year ago.
And the report projected a growth in electricity production from nuclear power plants with construction of at least six large reactors, beginning after 2014. A year ago the agency said it saw no new reactors on the horizon.
At the same time, the agency said energy production would result in a steady 1.2 percent a year increase in the amount of heat-trapping carbon dioxide that will flow into the atmosphere. Annual carbon emissions from burning fossil fuels will be 28 percent higher in 2025 than they are today, the EIA said.
With oil prices expected to remain high, the use of unconventional transportation fuels such as ethanol and biodiesel will grow in acceptance, the agency said. The EIA report also projected a sharp increase in the use of more efficient hybrid gasoline-electric cars and trucks and more fuel efficient diesel technology.
"We will see increases in fuel efficiency ... all directly related to the (new) price assumptions" for oil, said Caruso at a news conference. U.S. demand for oil is expected to be 2 million barrels a day less than what the EIA projected a year ago, or about 26 million barrel a day, or six million barrels more that what is used today.
The EIA projected that U.S. reliance on oil imports will remain about the same as today with the country in 2025 projected to be importing about 60 percent of the oil and refined products it uses. A year ago the EIA said these imports would grow to 68 percent by 2025.
The agency said it added about $21 to the projected future price of a barrel of crude because analysts no longer believe today's tight global oil market would ease in the coming decades. This is primarily due to a belief that OPEC oil production would be about 11 million barrels a day less in 2025 than previously had been projected.
"The oil is there," said Caruso, dismissing suggestions by some oil economists that global oil reserves may be peaking. But Caruso said "it appears the pace of investment in oil production is less than what was anticipated a year ago" among OPEC countries. He did not name specific countries.
The EIA's long-term energy outlook report also:
--Scaled back the expected growth of liquefied natural gas imports into the United States. It said an increase of worldwide demand for LNG will reduce the amount coming into U.S. facilities.
--Said that coal would remain the primary fuel for producing electricity through 2030.
--Predicted that despite higher oil costs and some increases in efficiency, overall U.S. energy demand would increase by 1.1 percent a year between now and 2030.
On the Net:
Energy Information Administration: www.eia.doe.gov