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EIA ReportsU.S. ENERGY INFORMATION ADMINISTRATION New EIA Outlook Reflects Ongoing Transition in Energy Markets The Annual Energy Outlook 2008 (AEO2008) reference case, released today by the Energy Information Administration (EIA), includes several important changes from earlier AEOs to better reflect trends in the economy and energy markets that are expected to persist. Energy markets are changing in response to the higher energy prices experienced since 2000, the greater influence of developing countries on worldwide energy requirements, recently enacted legislation and regulations in the United States, and changing public views related to the use of alternative fuels, emissions, and the acceptability of various energy technologies, among other factors. EIA has raised the world oil price path in the AEO2008 (Figure 1). In the last few years, global economic growth has been strong, despite high oil prices. While current oil prices are above EIA’s reference case projection of long-run prices--driven by shortages of experienced personnel, equipment, and construction materials in the oil industry, political instability in some major producing regions, and recent strong economic growth in developing nations--it now appears that, in the mid-term, the cost of liquids will be higher than previously projected. In the AEO2008 reference case, real (2006 dollars) world crude oil prices decline gradually from current levels to $58 per barrel in 2016, as expanded investment brings new supplies to the world market. After 2016, real prices rise as higher cost supplies are brought to market. In 2030, the average real price of crude oil is $72 per barrel in 2006 dollars. As result of higher energy prices and slower U.S. economic growth (gross domestic product grows at 2.6 percent per year between 2006 and 2030 in AEO2008 compared to 2.9 percent per year in AEO2007), total primary energy consumption in the AEO2008 reference case grows more slowly then in previous AEOs, increasing at an average rate of 0.9 percent per year, from 100.0 quadrillion Btu in 2006 to 123.8 quadrillion Btu in 2030—7.4 quadrillion Btu less than in the AEO2007 reference case (Figure 2). The AEO2008 reference case projects greater renewable energy use than AEO2007. Marketed renewable energy consumption between 2006 and 2030 grows from 6.8 to 12.2 quadrillion Btu, compared with 9.9 quads in the AEO2007 reference case. The higher level of renewable energy consumption is partially a result of higher energy prices in the AEO2008 reference case, but it also reflects a revised representation of State renewable portfolio standards. The updated representation of these programs results in significant additional growth of renewable generation from wind, biomass, and geothermal resources. Without changes in current carbon emissions policies that are not assumed in the AEO2008 reference case, carbon dioxide (CO2) emissions grow sharply, but to lower levels than in AEO2007 because of lower primary energy consumption. Energy-related CO2 emissions are projected to grow by 25 percent in the AEO2008 between 2006 and 2030, compared to 35 percent in the AEO2007 reference case (Figure 3).
The reference case projections from the AEO2008 and an overview of the results are available at www.eia.doe.gov/oiaf/aeo/index.html. The reference case represents a baseline projection under existing policies and a given set of assumptions regarding economic, energy market, and technology conditions. The full AEO2008 report, including projections with differing assumptions on the price of oil, the rate of economic growth, and the characteristics of new technologies, will be released in early 2008, along with regional projections and a report on the major assumptions underlying the projections.
EIA Program Contact: John Conti, 202/586-2222, john.conti@eia.doe.gov EIA-2007-11 Contact:
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