The latest Annual Energy Outlook report can be summed up like this: In the short term, some relief. In the long term, look out.
The U.S. Department of Energy predicts that over the next eight years, oil prices will drop below $50 per barrel in 2004 inflation-adjusted dollars.
But looking down the road another 10 or 15 years, consumers can expect high oil prices again.
According to the Annual Energy Outlook 2006, from the department’s Energy Information Administration, world crude oil prices are expected to be — in adjusted dollars — $47 per barrel in 2014, $54 per barrel in 2025 and $57 per barrel in 2030.
The $54 projection for two decades from now is $21 higher than the department’s estimate of just a year ago, reflecting the volatility of the world’s oil supply, the report says.
As the combined productive capacity of the members of the Organization of Petroleum Exporting Countries grows at a slower rate than previously projected, and world demand increases, oil supplies will tighten, driving prices up, according to the report.
The one bit of good news in the report is that natural gas prices are expected to retreat and stay below $5 a thousand cubic feet through 2016. Natural gas prices soared to more than $14 per thousand cubic feet recently.
Other projections include:
· Expect to see greater use of alternative fuels and changes in consumers’ automobile buying habits.
· Greater domestic crude production and increased demand for unconventional sources of transportation fuels, such as ethanol and biodiesel, according to the report.
· More domestic coal-to-liquids production and, if prices get extremely high, even domestic production from shale and conversion of natural gas to liquids.
· Growth in petroleum imports is expected to be less than was projected last year.
· Coal consumption should rise from 1.1 billion short tons in 2004 to 1.8 billion in 2030.
· Also expected to increase is nuclear generating capacity.
The Packer, Chicago Sun Times