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Tepid energy demand forecast by feds EIA report: Low demand and ample supplies will temper energy prices this winter By Steve Sutherlin PNA Managing Editor
The economy is not expected to provide impetus to growth in energy demand this winter, the Energy Information Administration of the U.S. Department of Energy said in its October short-term forecast. Activity levels in the industrial sector are expected to be particularly weak. Assuming normal weather, relatively weak demand and generally ample fuel inventories portend sharply lower fuel prices compared to last winter. Most of last year’s dramatic increase in average residential natural gas costs is expected to be undone this winter.
Oil prices subside World oil prices spiked in September following the terrorist attack, but then fell sharply as OPEC reassured world markets that it would maintain plentiful supplies on world markets. World oil demand was weakening even before the crisis.
The U.S. average imported crude oil price in September was an estimated $22 per barrel, down about $1.90 per barrel from August levels, while the price of U.S. benchmark West Texas intermediate crude averaged about $26 per barrel in September. Tightening of world oil markets in the fourth quarter predicated on continued world demand growth is unlikely.
Lower residential heat costs expected Winter — defined as the period from October 2001 to March 2002 — is expected to bring lower heating bills than last winter, particularly for homes that heat with natural gas.
Heating demand is expected to be 7 percent below levels of last winter, with inventories of key heating fuels — especially natural gas — noticeably above year-ago levels, which should help insulate prices from an unanticipated surge in demand. Crude oil prices and consumer fuel prices are expected to be significantly lower than last winter.
The agency expects residential natural gas prices will be down 29 percent, residential heating oil prices will be down 13 percent and propane prices will fall 17 percent from last winter’s levels. Combined reductions in prices and expected usage rates are expected to lower winter heating bills for typical households by about 34 percent for natural gas-heated homes, 17 percent for oil-heated households, 23 percent for residences using propane as a main heating fuel, and 3 to 4 percent for households heating with electricity. The predictions assume normal winter weather.
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