Wednesday, September 7, 2016

EIA's Short Term Energy Outlook; US Gasoline Demand To Set Records; US On Glide Path To Net Exporter Of Natural Gas By 2Q17 -- September 7, 2016

Gasoline/Refined Products:
  • U.S. retail gasoline prices are expected to continue falling through the end of 2016, even though gasoline demand this year is expected to be the highest ever.
  • The average pump price for December is on track to be the lowest for the month in eight years. [Prices would be still lower if it weren't for ethanol mandates.]
  • Gasoline retail prices are down this year because of a combination of modest crude oil prices and abundant supplies of gasoline from high levels of refinery production.
Crude Oil:
  • The decline in U.S. oil production this year and in 2017 is not expected to be as steep as in previous forecasts, because of improved drilling rig efficiencies and more rigs drilling.
  • Builds are expected in global oil inventories during the second half of 2016. However, the pace of builds will be slower than in 2015 and early 2016, but this should still limit upward pressure on oil prices in the months ahead. [Great news for consumers.]
  • Drawdowns in global oil inventories are expected to start in mid-2017, which will contribute to higher oil prices in the second quarter of next year. [Self-fulfilling prophecy.]
Natural Gas:
  • After a brief slowdown in early 2016, U.S. natural gas production is expected to increase during the second half of this year and continue rising through 2017.
  • The United States is on track to become a natural gas net exporter in the second quarter of next year.
  • Hurricane Hermine led to the evacuation of several offshore oil and natural gas production platforms and caused some shut-in production. The hurricane-related shut-ins contributed to estimated Gulf of Mexico natural gas production in August that was 5% lower than the July level, but overall U.S. production was still up slightly. [Bottomline: Hurricane Hermine -- a non-event.]
  • This summer’s higher electricity sales because of warmer weather are more than offset by lower power use during the recent milder winter, resulting in an overall decline in electricity demand by the residential sector for 2016.
  • While coal use for electricity generation will be lower this year, the amount of electricity from coal is expected to increase in 2017 in response to higher natural gas prices.
  • Improved water conditions on the West Coast have increased electricity generation from hydropower in California this summer, and the state has also increased its generation from other renewable energy sources such as wind and solar.
  • Total U.S. solar power generating capacity by the end of 2017 is expected to be almost double the generating capacity from two years earlier. [Percent-wise: unchanged or actually lower than total energy consumed.]

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