The EIA on the 11th April released a short term energy output, predicting a fast rise, both in American’s energy production and imports.
Predictions made by the agency on United States energy outlook are in most cases bullish. There are indications that the agency expects a rise in prices of natural gas. This points to the fact that in the short term, the agency expects demand to exceed supply.
From the Energy Information Administration (EIA) report, the United States average oil production in 2016 is estimated at 8.9 million barrels per day. By projection, the agency estimated U.S 2017 oil production around 9.2 million barrels per day and 9.9 million for 2018. This is an increase of 11% within two years.
As the production of natural gas declined last year, IEA expects gas production increase by 0.8 billion cubic feet per day.
There is expectation that higher prices in natural gas will rise from $2.88 of last year to $3.10 in 2017 while in 2018, there is an increased expectation of $3.45 which will likely result in decline in electricity supply through shortage of natural gas. It is amazing that natural gas has been predicted to fall from 34% to 32% next year.
Also, coal is expected to increase from 30% to 31%. Increment from 9% to 19% is also expected in non hydro power renewable energy (solar and wind).
As for crude oil prices, WTI has been predicted by the EIA report to stay at $52 in 2017 while it increases to $55.10 in 2018.
More so, a rise from $2.23/ gallon in 2016 to $2.46/ gallon in 2017 is expected from the Unites States domestic gas prices.
Activity in the Gulf of Mexico (GOM) was also covered by the EIA report. GOM surpassed the high set in 2009 with 1.6 million barrels per day annual high for 2016. It is expected that GOM oil production increases to 1.7 million barrels per day in 2017 and 1.9 million barrels per day in 2018.
On total Unites States crude oil imports which noticeably rose for the first time in many years, IEA reported that it increased by 514 million barrels of oil per day and reached 7.9 mmbop/d. This is still lower than the 10.1mmbop/d peak reached in 2005. Majority of the United States crude imports are from Canada.
Why this event is so important:
- Rise in Energy Production and Imports: The EIA predicts a fast rise in both American energy production and imports. This suggests an expected increase in overall energy consumption within the country.
- Bullish Outlook: The EIA’s predictions for the United States’ energy outlook are generally optimistic, indicating a positive outlook for the energy sector.
- Natural Gas: The EIA expects a rise in natural gas prices, implying that demand for natural gas will exceed supply in the short term. This could result in a potential decline in electricity supply due to a shortage of natural gas.
- Oil Production: The EIA projects an increase in U.S. oil production over the coming years. The estimated oil production for 2017 is around 9.2 million barrels per day, with a further increase to 9.9 million barrels per day in 2018. This indicates an 11% increase within two years.
- Natural Gas Production: While natural gas production declined in the previous year, the EIA anticipates a production increase of 0.8 billion cubic feet per day.
- Energy Mix: The EIA’s report suggests a shift in the United States’ energy mix. It predicts a decrease in the share of natural gas from 34% to 32% in the next year, while coal is expected to increase from 30% to 31%. Furthermore, there is an expected increment in non-hydro power renewable energy (such as solar and wind) from 9% to 19%.
- Crude Oil Prices: The EIA projects that WTI crude oil prices will remain around $52 in 2017 and increase to $55.10 in 2018.
- Domestic Gas Prices: The EIA expects an increase in domestic gas prices in the United States, rising from $2.23 per gallon in 2016 to $2.46 per gallon in 2017.
- Gulf of Mexico (GOM) Production: The EIA report covers activity in the Gulf of Mexico, noting that GOM oil production reached an annual high of 1.6 million barrels per day in 2016. The EIA predicts further increases to 1.7 million barrels per day in 2017 and 1.9 million barrels per day in 2018.
- Crude Oil Imports: The EIA reports a noticeable rise in total U.S. crude oil imports after several years of decline. The imports increased by 514 million barrels of oil per day, reaching 7.9 million barrels per day. However, this is still lower than the peak of 10.1 million barrels per day reached in 2005. The majority of the United States’ crude oil imports come from Canada.
Overall, this information is important because it provides insights into the expected trends and dynamics of the United States’ energy sector, including production, prices, imports, and the changing energy mix. It can be useful for stakeholders in the energy industry, policymakers, and anyone interested in understanding the future of energy in the United States.
