Preface
The Annual Energy Outlook 2008 (AEO2008), prepared by the Energy Information
Administration (EIA), presents long-term projections of energy supply,
demand, and prices through 2030. The projections are based on results from
EIA’s National Energy Modeling System (NEMS). EIA published an “early release”
version of the AEO2008 reference case in December 2007; however, the Energy
Independence and Security Act of 2007 (EISA2007), which was enacted later
that month, will have a major impact on energy markets, and given the year-long
life of AEO2008 and its use as a baseline for analyses of proposed policy
changes, EIA decided to update the reference case to reflect the provisions
of EISA2007.
The report begins with an “Overview” summarizing the AEO2008 reference
case and comparing it with the Annual Energy Outlook 2007 (AEO2007) reference
case. The Overview also includes a section that provides a comparison between
the AEO2008 released in December and the current version. The next section,
“Legislation and Regulations,” discusses evolving legislation and regulatory
issues, including a summary of recently enacted legislation, such as EISA2007,
and provides an update on the handling of aspects of previously enacted
legislation, such as the loan guarantee program set up by Title XVII of
the Energy Policy Act of 2005 (EPACT2005). This section also provides a
summary of State renewable fuel requirements and emissions regulations
and a discussion of how selected Federal fuel taxes and tax credits are
handled in AEO2008.
The “Issues in Focus” section includes discussion of a scenario under which
electricity generation options other than natural gas are restricted and
natural gas supply is limited; the competitive factors that influence imports
of liquefied natural gas (LNG); and the implications of changing the basis
for measuring heating and cooling degree-days. It also discusses the implications
of uncertainty in energy project costs and the basis of the world oil price
and production trends in AEO2008.
The “Market Trends” section summarizes the projections for energy markets.
The analysis in AEO2008 focuses primarily on a reference case, low and
high economic growth cases, and low and high energy price cases. Results
from a number of other alternative cases are also presented, illustrating
uncertainties associated with the reference case projections for energy
demand, supply, and prices. Complete tables for the five primary cases
are provided in Appendixes A through C. Major results from many of the
alternative cases are provided in Appendix D.
AEO2008 projections are based on Federal, State, and local laws and regulations
in effect on or before December 31, 2007. The potential impacts of pending
or proposed legislation, regulations, and standards (and sections of existing
legislation that require implementing regulations or funds that have not
been appropriated) are not reflected in the projections.
In general, historical data used in the AEO2008 projections are based on
EIA’s Annual Energy Review 2006, published in June 2007. Other historical
data, taken from multiple sources, are presented for comparative purposes;
documents referenced in the source notes should be consulted for official
data values.
AEO2008 is published in accordance with Section 205c of the Department
of Energy (DOE) Organization Act of 1977 (Public Law 95-91), which requires
the EIA Administrator to prepare annual reports on trends and projections
for energy use and supply.
Projections in AEO2008 are not statements of what will happen but of what
might happen, given the assumptions and methodologies used. The projections
are business-as-usual trend estimates, given known technology and technological
and demographic trends. AEO2008 assumes that current laws and regulations
are maintained throughout the projections. Thus, the projections provide
a policy-neutral reference case that can be used to analyze policy initiatives.
Because energy markets are complex, models are simplified representations
of energy production and consumption, regulations, and producer and consumer
behavior. Projections are highly dependent on the data, methodologies,
model structures, and assumptions used in their development. Behavioral
characteristics are indicative of real-world tendencies rather than representations
of specific outcomes.
Energy market projections are subject to much uncertainty. Many of the
events that shape energy markets are random and cannot be anticipated.
In addition, future developments in technologies, demographics, and resources
cannot be foreseen with certainty. Many key uncertainties in the AEO2008 projections are addressed through alternative cases.
EIA has endeavored to make these projections as objective, reliable, and
useful as possible; however, they should serve as an adjunct to, not a substitute
for, a complete and focused analysis of public policy initiatives. |
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