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Energy Information Administration short-term energy outlook summary Agency says sharply higher fuel bills expected this winter, based on higher oil and gas prices, predicted colder weather than last year Petroleum News Alaska
Household heating expenditures could be up by as much as 19 to 44 percent this winter, the U.S. Department of Energy’s Energy Information Administration said in its October short-term energy summary.
The agency said higher oil and gas prices, as well as the likelihood that this winter will be colder than last winter, could produce sharply higher fuel bills, with the 19-44 percent range dependent on the type of fuel used.
EIA said the magnitude of the expected increases largely reflects the extraordinarily low costs enjoyed by consumers last winter.
Crude oil prices on rise The EIA noted that crude oil prices have risen from a low monthly average of $9.39 per barrel in December 1998 to $23 per barrel this month. Crude costs are projected to continue to rise through December, the agency said, peaking at $24.50 a barrel, and then ease slightly (by about $2 a barrel) throughout 2000.
On average, the crude oil price for the year 2000 is projected be $5 per barrel higher than this year’s price, leading to higher prices for all petroleum products through the next year.
OPEC compliance continues strong OPEC’s continued strong compliance with earlier production cuts is expected to have a large impact on world oil inventories. Estimates of the amount of excess global oil stocks range between 200 million and 400 million barrels. The forecast expects about 350 million barrels to be drawn down by the end of this year, which implies that the global oil stock situation will either be at or below normal levels at that time.
Natural gas storage only slightly below last year Assuming normal weather, this winter natural gas wellhead prices are projected to average about 40 percent more than last winter’s. Natural gas spot and futures wellhead prices have been quite volatile since August, indicating that some observers are uncertain about the winter supply and storage situation. Our analysis indicates that storage levels are currently about equal to the relatively high levels of one year ago. This, in addition to continued high levels of gas imports, leads to the expectation that wellhead gas prices, while still trending well above last year’s levels, may remain below $3 per thousand cubic feet this winter unless very cold weather intervenes.
1999 electricity demand growth modest The outlook for electricity demand in 1999 is modest growth of 1.2 percent. In 2000, electricity demand is expected to grow by 1.8 percent. Heating degree-days this winter are expected to be 8 percent higher than those of last winter, which was quite mild. Thus, 3.4 percent higher electricity demand is indicated for this winter compared to demand during last winter.
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