Forecasting next year, never mind events in 2030, is a tough job, but somebody’s got to do it.
Prognosticating America’s future for oil and related energy trends falls on the statistical shoulders of the Energy Information Administration. Predictions must be taken with a grain of salt, of course. But since the government has gone to so much trouble to crunch the data, the least we could do is take a look.
That said, the EIA yesterday dispensed its latest prophecy on the long term on the various energies consumed, produced and imported from the vantage of the 50 states. Officially, the numbers are an advance release of the agency’s 2007 Annual Energy Outlook, scheduled for publication early next year. Unofficially, the data offer another warning of what may coming.
Availing ourselves of the advance release, we went immediately to the oil numbers. Alas, we found no reason to think that all is well on the long-term energy front, as the chart below advises. Consider that the EIA predicts that over the 25 years through 2030, domestic crude oil production will advance by a paltry 0.2% a year. Consumption, by contrast, will rise by 1.0% a year over that stretch. To underscore the obvious: a large gap between production and consumption will bedevil these United States for the next generation, much as it has for the past generation. How might the future gap be sated? Imports, of course. Once again, more of the same. To wit, the EIA projects that imports will rise 1.0% a year through 2030.
For anyone who routinely follows the news in the oil market, such forecasts will come as no shock. Then again, that doesn’t make the prediction any less humbling.
Yes, so-called alternative fuels will play a larger role in the years ahead, the EIA counsels. But in order for new energy sources to have a relatively meaningful impact, their role must grow at a rate that’s faster than the economy’s overall increase in energy consumption. That will prove difficult, perhaps impossible, the EIA suggests.
Consider that the biggest projected relative change in energy consumption in the next 25 years will be in coal, the EIA predicts. As the chart below notes, coal’s usage will rise by more than 3% by 2025, measured as a share of total U.S. energy consumption. Yes, oil and natural gas are expected to decline in relative terms, but it will be replaced primarily by another fossil fuel, or so we’re told.
To quote the EIA directly,
Despite the rapid growth projected for biofuels and other nonhydroelectric renewable energy sources and the expectation that orders will be placed for new nuclear power plants for the first time in more than 25 years, oil, coal, and natural gas still are projected to provide roughly the same 86-percent share of the total U.S. primary energy supply in 2030 that they did in 2005 (assuming no changes in existing laws and regulations). The expected rapid growth in the use of biofuels and other nonhydropower renewable energy sources begins from a very low current share of total energy use; hydroelectric power production, which accounts for the bulk of current renewable electricity supply, is nearly stagnant; and the share of total electricity supplied from nuclear power falls despite the projected new plant builds, which more than offset retirements, because the overall market for electricity continues to expand rapidly in the projection.
The more things change….