U.S. ENERGY INFORMATION ADMINISTRATION
WASHINGTON DC 20585
FOR IMMEDIATE RELEASE
July 7, 1997
EIA Anticipates Rise in Demand for Natural Gas
Several factors are increasing the probability of higher gas demand for the rest of 1997. Nuclear power plant outages, higher air conditioning use this summer, a thriving economy and the gradual decline of hydroelectric output from record highs, set the stage for increased gas demand in the electric power and industrial sectors, according to the Energy Information Administration (EIA).
EIA's latest Short-Term Energy Outlook, released today, expects U.S. total gas demand to be up 1.2 percent for the year, 3.5 percent during the second half. Demand increases could erode the stock cushion left by the mild winter of 1996-1997. Underground gas storage was about 200 billion cubic feet (3.4 percent) above 1996 levels at the end of June, but is expected to be about even with 1996 levels by the start of the heating season. Even with normal weather next winter, gas demand in the first quarter of 1998 is expected to be 7.3-percent higher than it was in the first quarter of 1997.
Although strong natural gas prices are already expected next winter, additional demand pressure from either a particularly hot summer or early cold spell next fall could upset what is emerging as a rather delicate short-term balance for natural gas demand and supply.
Other highlights from the EIA quarterly Short-Term Energy Outlook include:
- World oil prices are down from 1996 levels and are expected to average bewteen $19 and $20 for the forecast period, which extends through the end of 1998. World oil prices tumbled by more than $5.00 per barrel from January through April 1997 due to unusually warm winter weather combined with increasing world crude oil supplies, including 600,000-700,000 barrels per day from Iraq. Prices may creep up over the next few months as demand for gasoline rises, but EIA projects lower average annual world oil prices in 1997 and 1998 than in 1996, as gains in world production offset demand.
- Retail petroleum product prices are generally expected to follow crude prices downward with average 1997 levels for retail motor gasoline and diesel fuel oil prices falling below their 1996 averages.
- Gasoline demand is expected to increase by 1.9 percent in 1997, and by 2.3 percent in the third quarter, buoyed by a 3.2-percent increase in highway travel during this peak season. Solid economic growth and lower gasoline prices are expected to contribute to continued growth in highway travel and a similar increase in gasoline demand in 1998.
- EIA projects an average natural gas wellhead price in 1997 about 2.1 percent higher than in 1996, due to this year's very high first quarter price spike. This assumes that the weather is normal, particularly in the late autumn, when inventories are still building. A cold snap during this time period could cause stock drawdowns leading to high wellhead prices for the winter. The price should decline in 1998, again assuming normal weather and increases in domestic production and Canadian imports.
- U.S. coal production reached a record 1,057 million short tons in 1996. Production is expected to grow by 2.7 percent in 1997 and by an additional 1.0 percent in 1998. Production in the Western region should continue to rise over the forecast period, while production in the interior declines and Appalachian growth slows.
The Short-Term Energy Outlook is published quarterly in January, April, July, and October. Monthly updates are now available on the Internet. Users can view and download both the updated forecast analysis and the forecasting model from the EIA Home Page on the World Wide Web system. To access the most recent Short-Term Energy Outlook and updates, open the Uniform Resource Locator (URL) http://www.eia.doe.gov. Select "Forecasting" from the menu. The direct Internet address is: http://www.eia.doe.gov/emeu/steo/pub/contents.html.
Copies of the quarterly Short-Term Energy Outlook, Third Quarter 1997 are available from the U.S. Government Printing Office, 202/512-1800, or through EIA's National Energy Information Center (NEIC), 202/586-8800.
| The report described in this press release was prepared by the Energy Information Administration, the independent statistical and analytical agency within the U.S. Department of Energy. The information contained in the report and the press release should be attributed to the Energy Information Administration and should not be construed as advocating or reflecting any policy position of the Department of Energy or any other organization. |
EIA Program Contact: David Costello, 202/586-1468
EIA Press Contact: Thomas Welch, 202/586-1178
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