The US Energy Information Administration (EIA) forecasts an increase in demand for petroleum products during the 2021 summer driving season as the impacts of COVID-19 diminish in the United States. EIA’s annual Summer Fuels Outlook, released today with EIA’s Short-Term Energy Outlook (STEO), expects a 15% increase in US highway travel this summer but still less highway travel than in the summer of 2019.
EIA also forecasts the Brent crude oil price will average $64 per barrel this summer, a 78% increase from last summer’s average of $36 per barrel. That price increase paired with an increase in gasoline and diesel demand will likely increase the cost of regular gasoline and diesel fuel this summer.
EIA expects the retail price of regular-grade gasoline in the United States will average $2.78 per gallon this summer, compared with last summer’s average of $2.07/gal. For diesel fuel, EIA expects retail prices to average $2.91/gal this summer, up from an average of $2.43/gal last summer.
The increase in fuel consumption we are forecasting for the summer driving season is a reflection of optimism about the US economy as COVID-19 vaccinations and fiscal stimulus support continued recovery. There remains a lot of uncertainty, but rising levels of employment, disposable income, and consumer spending point to an improving US economy.—EIA Acting Administrator Stephen Nalley
Retail gasoline prices recently reached their highest levels in almost two years, hitting an average of $2.87/gal on 22 March. Increasing US refinery production along with rising crude oil supply from OPEC, its partner countries, and US tight oil producers should help bring those prices down. EIA forecasts retail gasoline prices to gradually fall to an average of $2.62/gal by September.
EIA’s STEO forecast relies on the macroeconomic model from IHS Markit, from which EIA assumes US GDP growth will be 8.5% higher this summer than last.
Other highlights from this STEO include:
EIA estimates that the world consumed 96.0 million b/d of petroleum and liquid fuels in March, an increase of 4.7 million b/d from March 2020. EIA forecasts that global consumption of petroleum and liquid fuels will average 97.7 million b/d for all of 2021—up by 5.5 million b/d from 2020. EIA forecasts that consumption will increase by 3.7 million b/d in 2022 to average 101.3 million b/d. The higher forecast is primarily a result of higher global GDP growth forecasts from Oxford Economics, which increased 0.4 percentage points from the March STEO to 6.2% for 2021.
EIA expects that the share of electric power generated with natural gas in the United States will average 36% in 2021 and 35% in 2022, down from 39% in 2020. The forecast share for natural gas declines in response to a 39% increase in the price of natural gas delivered to electricity generators from an average of $2.39/MMBtu in 2020 to $3.31/MMBtu in 2021. The higher expected natural gas prices cause the forecast share of generation from coal to rise from 20% in 2020 to 22% this year, and to 23% next year. New additions of solar and wind generating capacity contribute to the forecast that the share of US generation from renewable energy sources will rise from 20% in 2020 to 21% in 2021 and to 22% in 2022. The nuclear share of US generation declines from 21% in 2020 to 20% in 2021 and to 19% in 2022, reflecting the retirement of capacity at some nuclear power plants.
EIA expects US coal production to total 585 MMst in 2021, 46 MMst (9%) more than in 2020. In 2022, EIA expects coal production to grow by an additional 16 MMst (3%). EIA expects that coal used to generate electric power will increase by 13% to 495 MMst in 2021 and by 4% to 514 MMst in 2022. The increase in coal production in 2021 will be the largest on a percentage basis in the Interior region, owing to increased domestic electricity generation. In 2022, EIA expects it will be largest in the Appalachia region, partly as a result of metallurgical coal exports rising to 54 MMst next year, up 27% from 2020 levels.
EIA estimates that US energy-related CO2 emissions decreased by 11% in 2020. This decline in emissions was the result of less energy consumption related to the economic contraction resulting from the COVID-19 pandemic. In 2021, EIA forecast energy-related CO2 emissions will increase by about 5% from the 2020 level as economic activity increases and leads to rising energy use. EIA also expects energy-related CO2 emissions to rise in 2022, but by a slower rate of 2%. After declining by 19% in 2020, coal-related CO2 emissions will rise by 13% in 2021 and by 4% in 2022.