WASHINGTON -- The U.S. Department of Energy's (DOE) Energy Information Administration (EIA) released its Short-Term Energy Outlook & Winter Fuels Outlook (Oct. 12, 2005) last week.
Warnings from previous Outlooks about the potential adverse impacts of an active hurricane season on domestic energy supply and prices are unfortunately being reflected in the challenging realities brought about by Hurricanes Katrina and Rita. The impact of the hurricanes on oil and natural gas production, oil refining, natural gas processing and pipeline systems have [image-nocss] further strained already-tight natural gas and petroleum product markets on the eve of the 2005-2006 heating season (October through March).
On the supply side, this Outlook reflects a Medium Recovery baseline scenario for recovery of energy operations in the Gulf of Mexico based on information available to EIA as of the end of the first week of October.
Highlights:
Average Winter Heating Expenditures. This winter, residential space-heating expenditures are projected to increase for all fuel types compared to year-ago levels. On average, households heating primarily with natural gas are expected to spend about $350 (48%) more this winter in fuel expenditures. Households heating primarily with heating oil can expect to pay, on average, $378 (32%) more this winter. Households heating primarily with propane can expect to pay, on average, $325 (30%) more this winter. Households heating primarily with electricity can expect, on average, to pay $38 (5%) more. Should colder weather prevail, expenditures will be significantly higher. These averages provide a broad guide to changes from last winter, but fuel expenditures for individual households are highly dependent on local weather conditions, the size and efficiency of individual homes and their heating equipment, and thermostat settings. Energy Product Prices. Prices for petroleum products and natural gas will remain high due to tight international supplies of crude and hurricane-induced supply losses. Under the baseline weather case, Henry Hub natural gas prices are expected to average around $9 per thousand cubic feet (mcf) in 2005 and around $8.70 per mcf in 2006. Retail gasoline prices are expected to average close to $2.35 per gallon in 2005 and about $2.45 in 2006. Residential electricity prices are expected to average 9.3 cents per kilowatthour (kwh) in 2005 and about 9.5 cents per kwh in 2006, with significant regional differences depending on the fuel mix used to generate electricity in each region of the country. Under a colder weather scenario, prices for natural gas and all petroleum products are projected to be somewhat higher. Crude Oil Prices. The price of West Texas Intermediate (WTI) crude oil is projected to average close to $58 per barrel in 2005 and $64 to $65 per barrel in 2006. Continued high crude oil prices had been expected prior to Hurricanes Katrina and Rita. Hurricane Recovery. Complete recovery of energy infrastructure from hurricane damage will take many months. However, considerable recovery should occur by the end of 2005. The restart of two major refineries in Western Louisiana and another in Pascagoula, Mississippi over the past week is particularly encouraging as is the resumed although limited operation of the Henry Hub. Weather Forecast. NOAA projects a 0.4% colder winter in the Lower 48 States, in terms of heating degree-days, relative to normal winter weather, which would be 3.2% colder than last winter. U.S. Energy Demand. Total U.S. energy demand is projected to decline from 25.2 quadrillion Btu in the third quarter of 2005 to 25.1 quadrillion Btu in the fourth quarter due to hurricane-related destruction and higher energy prices. Total energy demand is projected to increase 0.3% between 2004 and 2005, compared with 1.5% from 2003 to 2004. Demand growth is projected to rebound in 2006.Click here to read the full text of and to view charts for EIA's Short-Term Energy Outlook & Winter Fuels Outlook.
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