|Projected US CO2 growth from fossil fuels. Source: EIA. Click to enlarge.|
The US Energy Information Administration (EIA) estimates in the April 2010 release of its Short-Term Energy and Summer Fuels Outlook that CO2 emissions from fossil fuels, which declined by 6.6% in 2009, will increase by 2.1% in 2010 and 1.1% in 2011 as economic growth fuels higher energy consumption. However, even with increases in 2010 and 2011, projected CO2 emissions in 2011 are lower than annual emissions from 1999 through 2008.
EIA projects that world oil consumption will grow by 1.5 million barrels per day (bbl/d) in 2010 and 1.6 million bbl/d in 2011, similar to the forecast of last month. This growth is the result of an expected recovery in the global economy, with world gross domestic product (GDP, on an oil-weighted basis) assumed to rise by more than 3 percent per year. EIA has revised its assessment for Asia upwards and Europe downwards for 2010 in response to preliminary first-quarter data for those regions. Most of the growth in oil consumption is expected in the Asia-Pacific and Middle East regions.
Non-OPEC supply is projected to increase by 600,000 bbl/d in 2010, about 50,000 bbl/d more than last month's Outlook, because of a revised forecast for production in North America. Non-OPEC supplies are then expected to fall slightly in 2011, as declining production in mature areas more than offsets any new production growth. The largest source of growth in 2010 is the United States, followed by Brazil, Azerbaijan, and Kazakhstan. Offsetting this projected supply growth in 2010 are further declines in mature fields in Mexico, the United Kingdom, and Norway.
US crude oil production averaged 5.32 million bbl/d in 2009, up about 370,000 bbl/d from 2008. Projected growth in domestic crude oil production moderates to 200,000 bbl/d in 2010 and 70,000 bbl/d in 2011. The primary contributors to the production growth in 2009 and 2010 are the Thunder Horse, Tahiti, Shenzi, and Atlantis offshore fields in the Federal Gulf of Mexico (GOM).
Several new GOM hubs and fields are scheduled to begin production this year, such as the Great White field in the Perdido Spar and the Petrobras floating production storage and offloading (FPSO) vessel operating in the Chinook and Cascade fields. Despite this new production, projected GOM production declines by 100,000 bbl/d in 2011 because of declining output from existing wells. Offsetting the projected decline in GOM production are forecast increases in production from lower-48 non-GOM fields of 50,000 bbl/d and 200,000 bbl/d in 2010 and 2011, respectively.
EIA forecasts that regular-grade motor gasoline retail prices will average $2.92 per gallon during this summer’s driving season (the period between 1 April and 30 September), up from $2.44 per gallon last summer. The forecast has the annual average regular grade retail gasoline price increasing from $2.35 per gallon in 2009 to $2.84 in 2010 and to $2.96 in 2011, primarily because of projected rising crude oil prices. Average US pump prices for regular gasoline are likely to exceed $3 per gallon at times during the driving season, according to EIA, and already exceed $3 per gallon in some areas such as California. Projected annual average retail diesel fuel prices are forecast at $2.95 and $3.12 per gallon in 2010 and 2011, respectively.
During this summer season, EIA projects that motor gasoline consumption will increase by 0.5% over last summer, substantially lower than the 0.8% growth rate recorded last summer. Gasoline consumption last summer was stimulated by both the beginning of economic recovery and a $1.37-per-gallon decline in gasoline prices from the previous year. In addition, there was a reversal in the trend of public transportation usage, which fell by 3.8% in 2009 after having risen by 4% in 2008. This summer, the stimulus to demand from the continuing modest economic recovery is constrained by the projected $0.48-per-gallon average increase in gasoline prices over last summer.
Motor gasoline is supplied by four sources: domestic crude oil refinery output; domestic production and imports of fuel ethanol for gasoline blending; primary inventories; and net imports of gasoline and gasoline blending components. Refinery production of gasoline will be under considerable downward pressure from growth in fuel ethanol blending and the current high level of gasoline inventories. This summer’s domestic refinery gasoline supply is expected to decline by about 120,000 bbl/d from last summer’s average.
Fuel ethanol blending into gasoline increased from an average of 645,000 bbl/d during the summer of 2008 to 717,000 bbl/d during the summer of 2009 and is projected to average 816,000 bbl/d this summer, about 8.9% of the total gasoline consumed.
The growth in ethanol blending is driven by the Renewable Fuel Standard, which requires an increase in renewable fuels from a total of 10.6 billion gallons in 2009 to 12.3 billion gallons in 2010 (excluding the biomass-based diesel fuel volume requirement). The growth in ethanol consumption is being met primarily by domestic production. EIA expects the month-to-month growth in ethanol plant capacity and production to slow significantly in 2010 as the boom in ethanol plant construction and startups over the last 3 years comes to an end.
Forecast distillate fuel consumption, which includes both diesel fuel and heating oil, is about 50,000 bbl/d, or 1.4%, higher than last summer’s average. Distillate fuel is supplied by four sources: domestic refinery output; biodiesel blending; primary inventories; and net imports. Refinery production this summer is projected to average about 40,000 bbl/d lower than last summer.
Biodiesel is a small part of the distillate pool. Biodiesel blending averaged 28,000 bbl/d last summer and is expected to grow to about 40,000 bbl/d this summer as refiners and blenders adjust to the 650-million-gallon biodiesel blending mandate for 2010 under the Renewable Fuel Standard.
Distillate inventories are projected to start the summer season at 143.1 million barrels, almost matching last year’s record-high 143.6 million barrels, and 24 million barrels higher than the previous 5-year average. Distillate stocks normally build during the summer season in preparation for winter heating demand. This summer’s projected 15-million-barrel stock build is lower than the average 23-million-barrel build over the five previous summers and the 29 million barrel build last summer.
Continuing strong world demand for distillate fuels contributed to US net exports of distillate fuel averaging 430,000 bbl/d during last summer. Before 2008, the United States was typically a net importer of distillate fuel, averaging 160,000 bbl/d over the summers of 2000 through 2007. Projected distillate net exports this summer decline slightly, averaging about 410,000 bbl/d.