Energy Flip-Flop: Consumption, Prices Could be Lower for Decades
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Just when you began to get used to the idea of $4 a gallon gasoline and $3.50 a gallon home heating oil in a world ever-hungrier for oil, the world did another flip-flop.
The world economy stumbled, energy prices fell, and it could be two decades before they're on their feet, off and running again.
That's the new long-term energy outlook according to the Energy Information Administration of the U.S. Energy Department, whose business it is to track energy supplies, consumption and prices, week to week and years into the future.
The EIA expects flat oil consumption until 2030, slower growth in energy use, slowing of carbon dioxide emissions and reduced U.S. dependence on imported petroleum.
For the first time in 20 years, the EIA projects, "virtually no growth in U.S. oil consumption," as the result of new CAFE standards, new requirements for increased use of renewable fuels, and an assumed rebound in oil prices, as the world economy recovers.
In the short term, the EIA expects energy prices to fall further. This would be welcome news for U.S. consumers and amount to a big shot in the arm for the economy overall, as consumers can divert what would otherwise be spending on gasoline and oil heat to other, discretionary purchases.
As of earlier in December, regular-grade gasoline and diesel fuel were both more than $2 per gallon below their highs in mid-July. The average 2009 price for regular-grade gasoline will be $2.03 per gallon, with diesel averaging $2.47, the EIA estimates.
Residential heating oil this season is expected to average $2.53 a gallon, down 24% from last season. Residential propane prices are projected down 14% from last winter, at $2.10. Residential natural gas is expected to be about the same as last year, down 1.3%. Read the EIA report here.