The New Energy Market Outlook Raises Projected World Oil Price Path and Adds More Coal and Nuclear Power
This is the headline announcing the new Annual Energy Outlook (AEO2006). The lead paragraph is:
World oil markets have been extremely volatile for the past several years and the Energy Information Administration (EIA) now believes that the reference case oil price path in recent editions of the "Annual Energy Outlook" did not fully reflect the causes of that volatility and their implications for future oil prices. In the "Annual Energy Outlook 2006" (AEO2006) reference case, released today by EIA, world oil supplies are assumed to be tighter, as the combined productive capacity of the members of the Organization of the Petroleum Exporting Countries (OPEC) does not increase as much as previously projected. World crude oil prices, expressed in terms of the average price of imported light, low-sulfur crude oil to U.S. refiners, are projected to fall from current levels to about $47 per barrel in (2004 dollars) in 2014, then rise to $54 per barrel in 2025 and $57 per barrel in 2030. The projected crude oil price in 2025 is about $21 per barrel higher than projected in last year's reference case.
The higher world oil prices in AEO2006 lead to greater domestic crude oil production and increase the demand for unconventional sources of transportation fuel, such as ethanol and biodiesel. Higher oil prices stimulate domestic coal-to-liquids production
and, in some of the alternative scenarios with even higher oil prices, domestic gas-to-liquids and shale oil production.
I've been waiting to see what EIA would do in their next forecast. It is in the right direction, a lot more realistic than previous projections, but the prices are still not as high as I would expect. Data in the report is only for the U.S. They show an average increase of oil prices of only 1.3% in 2004 dollars and an increase in consumption of 1.1% per year. Renewable energy is projected to increase at a rate of only 1.8% per year which is disappointing.
The tables that are available now are the guts of the full report that will be issued in February and are what most people refer to, so there is not too much to wait for in the full report. The entire press release, which gives a very good summary of the data, with figures, can be seen by clicking the "press release" link in the lower right hand corner of the link in the following paragraph
The reference case projections from the AEO2006 and an overview of the results are available here. The reference case represents a baseline projection under existing policies and a given set of assumptions regarding economic, energy market, and technology conditions.