Annual Energy Outlook 2006 with Projections to 2030 - Usinfo.org

Forecast ComparisonsThe world oil price measure does vary by projection.In some cases, the measure is the WTI spot price,Brent equivalent, weighted average U.S. refineracquisition cost of imported crude oil, or a basket ofcrude oils. For AEO2006, EIA redefined its world oilprice path to represent the average U.S. refinersacquisition price of imported low-sulfur light crude oil(see “Issues in Focus” for discussion). Those pricesare considered comparable to the WTI prices mostoften cited in the trade press as a proxy for worldoil prices. The different price measures used in thevarious projections do not wholly explain the differentprice expectations among the projections. Forinstance, GII publishes a WTI spot price forecast thatis considerably lower than the AEO2006 referencecase prices, and PIRA publishes a WTI spot price forecastthat is considerably higher than the AEO2006reference case prices in most years (Table 20).Recent variability in crude oil prices demonstratesthe uncertainty inherent in projections for crude oilmarkets. The oil price paths projected by severalorganizations, including EIA, illustrate the uncertainty.For example, for 2010, the price range in theprojections is from a low of about $28 per barrel byAltos to a high of almost $48 per barrel projected byPEL. The range in the projections widens in 2020,from a low of $32 per barrel (GII and DB) to a high of$63 per barrel (PIRA). In 2030, the band of prices representedby the published projections narrows to $23per barrel, probably in part because the PIRA forecasthorizon ends in 2020.To construct the world oil price cases for AEO2006,EIA employed input from a Delphi group of energyanalysts. In August 2005, an informal, nonrandomsample of expert oil analysts from outside DOE wereinvited to participate, with the stipulation that theresponses were to reflect the analysts’ personal viewsand not necessarily the views of the organizationswith which they were affiliated. In addition, the analystswere told that their responses would be anonymous.Seventeen analysts were surveyed, and eightresponses were received. The median response fromthe Delphi group was generally higher than any of theother published projections, though still fallingwithin the range defined by the AEO2006 low andhigh price cases (Table 20). The group expected oilprices to continue rising through the 2005-2030 timeperiod, to nearly $73 per barrel in 2030—more than$20 per barrel higher than the nearest alternative,the Deferred Investment Scenario published by IEA.Total Energy ConsumptionThe AEO2006 projects higher growth in end-use sectorconsumption of petroleum, natural gas, and coalthan occurred from 1980 to 2004 but lower growth inelectricity consumption (Table 21). Much of the projectedgrowth in petroleum consumption is driven byincreased demand in the transportation sector, withcontinued growth in personal travel and freighttransport projected to result from demographictrends and economic expansion. Natural gas consumptionis expected to increase in the residential,commercial, and industrial sectors, despite relativelyhigh prices. Natural gas is cleaner than other fuels,does not require on-site storage, and has tended to bepriced competitively with oil for heating. Coal consumptionas a boiler fuel in the commercial andindustrial sectors is expected to decline slightly, withpotential use in new boilers limited by environmentalrestrictions; however, the projections for industrialcoal consumption include its use in CTL plants, atechnology that is expected to become competitive atthe high oil prices assumed in AEO2006.While strong growth in electricity use is projected tocontinue in the AEO2006 projections, the pace slowsfrom historical rates. Some rapidly growing applications,such as air conditioning and computers, slow aspenetration approaches saturation levels. Electricalefficiency also continues to improve, due in large partto efficiency standards, and the impacts tend to accumulatewith the gradual turnover of appliance stocks.The AEO2006 projections are generally consistentwith the outlook from GII; however, GII projectsslightly faster growth in petroleum and natural gasconsumption and slightly slower growth in electricityTable 21. Forecasts of average annual growth ratesfor energy consumption, 2004-2030 (percent)ProjectionsHistoryEnergy use 1980-2004 AEO2006 GIIPetroleum* 0.9 1.2 1.3Natural gas* 0.2 0.7 0.9Coal* -1.5 2.0 -0.4Electricity 2.2 1.6 1.5Delivered energy 0.7 1.1 1.1Electricity losses 1.9 1.2 0.9Primary energy 1.0 1.2 1.1*Excludes consumption by electricity generators in the electricpower sector; includes consumption for end-use combined heat andpower generation.Energy Information Administration / Annual Energy Outlook 2006 109