The EIA Short-Term Energy Outlook always has something of interest in it and today was no exception, here are a few excerpts highlighting their view on the Gulf recovery and prices of energy.
Hurricanes Katrina and Rita damaged, set adrift, or sunk 192 oil and natural gas drilling rigs and producing platforms, the most significant blow to the U.S. petroleum and natural gas industries in recent memory. At the beginning of November almost 53 percent of normal daily Federal Gulf of Mexico oil production and 47 percent of Federal Gulf of Mexico natural gas production remains shut in.
Hurricane recovery is underway but it will take many months for a complete recovery. In this scenario, Gulf of Mexico shut-ins for December 2005 are projected to average 33.1 percent for crude oil (10.4 percent of total U.S. production) and 20.6 percent for natural (4.2 percent of total U.S. natural gas production). For refinery capacity, 1.7 percent is projected to be offline. ... It now appears unlikely that anything close to complete recovery will occur before the end of the second quarter of 2006.
This short-term forecast projects that total energy demand is likely to respond to higher prices and hurricane-related destruction by showing relatively flat growth between 2004 and 2005, compared with 1.5-percent growth between 2003 and 2004. However, energy demand is expected to recover in 2006 at a rate of about 2 percent.
Prices for crude oil, petroleum products, and natural gas are projected to remain high during the remainder of 2005 and through 2006 because of tight international supplies and hurricane-induced supply losses. The price of West Texas Intermediate (WTI) crude oil is expected to average $57 per barrel in 2005 and $64-$65 per barrel in 2006. Retail regular gasoline prices are expected to average $2.29 per gallon in 2005 and $2.43 in 2006. Henry Hub natural gas prices are expected to average $9.15 per thousand cubic feet (mcf) in 2005 and $9.00 per mcf in 2006.
The single most interesting item being that they predict the price of WTI to average $64-$65 per barrel in 2006 because of "tight international supplies". Their outlook seems to be much more pessimistic than in previous years. It couldn't be that they are considering the implications of peak oil? It should be kept in mind that since about 62% of our oil is imported that when 10.4% of our production is lost that amounts to 3.3% of our consumption which must be made up with increased imports, releases from our strategic oil reserves or decreased demand. The U.S. crude oil supply is about 16 million barrels per day (mbd) so 3.3% translates to about 0.5 mbd.
The complete Short-Term Energy Outlook can be found here.