Global Energy Outlook for 2013

...oil to rule over next decade

...2013 energy outlook
Energy Information Administration


Crude oil production, particularly from tight oil plays, rises sharply over the next decade

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The advent and continuing improvement of advanced crude oil production technologies continue to lift projected domestic supply. Domestic production of crude oil increases sharply inAEO2013, with annual growth averaging 234 thousand barrels per day (bpd) through 2019, when production reaches 7.5 million bpd (Figure 1). The growth results largely from a significant increase in onshore crude oil production, particularly from shale and other tight formations. After about 2020, production begins declining gradually to 6.1 million bpd in 2040 as producers develop sweet spots first and then move to less productive or less profitable drilling areas.

Natural gas production is higher throughout the AEO2013 Reference case projection than it was in AEO2012, with natural gas increasingly serving the industrial and electric power sectors, as well as an expanding export market

Relatively low natural gas prices, facilitated by growing shale gas production, spur increased use in the industrial and electric power sectors, particularly over the next 15 years. Natural gas use (excluding lease and plant fuel) in the industrial sector increases by 16 percent, from 6.8 trillion cubic feet per year in 2011 to 7.8 trillion cubic feet per year in 2025. Although natural gas also continues to capture a growing share of total electricity generation, natural gas consumption by power plants does not increase as sharply as generation because new plants are very efficient. After accounting for 16 percent of total generation in 2000, the natural gas share of generation rose to 24 percent in 2010 and is expected to continue increasing, to 27 percent in 2020 and 30 percent in 2040. In the AEO2013 Reference case, natural gas also reaches other new markets, such as exports, as a fuel for heavy-duty freight transportation (trucking), and as a feedstock for producing diesel and other fuels.

Motor gasoline consumption is lower in AEO2013 relative to the level in AEO2012, reflecting the introduction of more stringent corporate average fuel economy standards; growth in diesel fuel consumption is moderated by increased use of natural gas in heavy-duty vehicles

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AEO2013 incorporates the greenhouse gas (GHG) and corporate average fuel economy (CAFE) standards for light-duty vehicles (LDVs)1through the 2025 model year, which increases the new vehicle fuel economy from 32.6 miles per gallon (mpg) in 2011 to 47.3 mpg in 2025. The increase in vehicle efficiency reduces gasoline use in the transportation sector by 0.5 million bpd in 2025 and by 1.0 million bpd in 2035 inAEO2013 compared to theAnnual Energy Outlook 2012(AEO2012) Reference case (Figure 2). Furthermore, the improved economics of liquefied natural gas (LNG) for heavy-duty vehicles results in an increase in natural gas use in heavy-duty vehicles that offsets a portion of diesel fuel consumption. The use of petroleum-based diesel fuel is also reduced by the increased use of diesel produced using gas-to-liquids (GTL) technology. Natural gas use in vehicles reaches 1.7 trillion cubic feet (including GTL) by 2040, displacing 0.7 million bpd of other motor fuels.2

The United States exports more natural gas than projected in the AEO2012 Reference case

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U.S. dry natural gas production increases throughout the projection period (Figure 3), outpacing domestic consumption by 2020 and spurring net exports of natural gas. Higher volumes of shale gas production in AEO2013 are central to higher total production volumes and an earlier transition to net exports than was projected in theAEO2012 Reference case. U.S. exports of LNG from domestic sources rise to approximately 1.6 trillion cubic feet in 2027, almost double the 0.8 trillion cubic feet projected inAEO2012.

Industrial production expands in response to the initial competitive advantage of low natural gas prices

Industrial production grows more rapidly in AEO2013 due to the benefit of strong growth in shale gas production and an extended period of relatively low natural gas prices, which lower the costs of both raw materials and energy, particularly through 2025. Specific industries benefit from the greater availability of natural gas at relatively low prices. For example, industrial production grows by 1.7 percent per year from 2011 to 2025 in the bulk chemicals industries—which also benefit from increased production of natural gas liquids—and by 2.8 percent per year in the primary metals industries, as compared with 1.4 percent and 1.1 percent per year, respectively, in the AEO2012Reference case. In the long term, growing competition from abroad in these industries limits output growth, as other nations develop and install newer, more energy-efficient facilities. The higher level of production also leads to greater industrial natural gas demand (excluding lease and plant fuel), which grows to more than 8.3 quadrillion Btu in 2035 in AEO2013, compared to 7.2 quadrillion Btu in 2035 in AEO2012. Most of the increase in industrial energy demand is the result of higher output in the manufacturing sector.

Renewable fuel use grows at a much faster rate than fossil fuel use

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The share of generation from renewables grows from 13 percent in 2011 to 16 percent in 2040. Electricity generation from solar and, to a lesser extent, wind energy sources grows as recent cost declines make them more economical. However, the AEO2013projection is less optimistic thanAEO2012 about the ability of advanced biofuels to capture a rapidly growing share of the liquid fuels market. As a result, biomass use in AEO2013 totals 4.2 quadrillion Btu in 2035 (compared to 5.4 quadrillion Btu in AEO2012) and 4.9 quadrillion Btu in 2040, up from 2.7 quadrillion Btu in 2011.

With improved efficiency of energy use and a shift away from the most carbon-intensive fuels, U.S. energy-related carbon dioxide (CO2) emissions remain more than 5 percent below their 2005 level through 2040

Total U.S. energy-related CO2 emissions do not return to their 2005 level (5,997 million metric tons) by the end of the AEO2013 projection period (Figure 4). Emissions from motor gasoline demand inAEO2013 are lower than in AEO2012 as a result of the adoption of fuel economy standards, biofuel mandates, and shifts in consumer behavior. Emissions from coal use in the generation of electricity are lower as power generation shifts from coal to lower-carbon fuels, including natural gas and renewables.


1U.S. Environmental Protection Agency and National Highway Traffic Safety Administration, "2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards: Final Rule," Federal Register, Vol. 77, No. 199 (Washington, DC: October 15, 2012), website

2Liquid motor fuels include diesel and liquid fuels from GTL processes. Liquid fuel volumes from GTL for motor vehicle use are estimated based on the ratio of onroad diesel and gasoline to total diesel and gasoline.

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Ten Things to Know Today

Frances Catanio/The Week

1. NASCAR CRASH INJURES 28: NASCAR driver Kyle Larson's car hit a fence at the Drive4COPD 300 race at Daytona Speedway in Florida on Saturday after he was involved in a 12-car wreck, injuring 28 spectators, including two critically. Daytona Speedway president Joie Chitwood said Daytona would conduct a safety review of its fencing and is replacing the section that was hit by Larson's car. A mesh crossover gate in the fencing won't be replaced for Sunday's Daytona 500. "We don't anticipate moving any fans," Chitwood said. "We had our safety protocols in place. Our security maintained a buffer that separates the fans from the fencing area." [USA Today]

2. ITALIANS VOTE IN CRUCIAL ELECTION: Italy voted on Sunday in one of the most closely watched and unpredictable elections in years. The vote is being followed closely by investors, whose memories are "still fresh of the potentially catastrophic debt crisis that saw Mario Monti, an economics professor and former bureaucrat, summoned to serve as prime minister in place of Silvio Berlusconi 15 months ago." Opinion polls give the center-left a narrow lead but the prospect of a huge protest vote against the austerity measures imposed by Monti's government could shift the result of the election. Berlusconi's center-right has also revived. [Reuters]

3. PISTORIUS' BROTHER FACES CULPABLE HOMICIDE CHARGE: Carl Pistorius, the brother of Olympic double-amputee runner Oscar Pistorius is facing a culpable homicide charge stemming from a 2008 car crash that left a female motorcyclist dead. Carl was in court last Thursday as his brother Oscar was facing a bail hearing for the charge of premeditated murder he faces for shooting his girlfriend Reeva Steenkamp to death on Feb. 14. Oscar says that he shot Steenkamp because he believed her to be an intruder who was locked inside the bathroom of his home. Prosecutors allege that the Olympian had been arguing with Steenkamp before he intentionally shot her. Oscar Pistorius was released on bail on Friday.  [Associated Press] 

What else is on the list? Visit our friends at The Week: 

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How YOUR State Will Suffer Under Sequestration

all 50 states to take a hit

Paul Brandus (Feb. 24, 2013)

The White House is out tonight with a detailed look at what it says will be the damage done to each state when sequestration - big, indiscriminate budget cuts - begin later this week. Administration officials laid out the details in a conference call Sunday. Not to be outdone, Michael Steel, the spokesman for House Speaker John Boehner, released this statement: 

"Republicans in the House have voted - twice - to replace President Obama's sequester with smarter spending cuts. The White House needs to spend less time explaining to the press how bad the sequester will be and more time actually working to stop it." 

Here's the "sequester damage" report for your state (according to White House analysis): 

1.      Alabama        

2.      Alaska        

3.      Arizona        

4.      Arkansas        

5.      California        

6.      Colorado        

7.      Connecticut        

8.      Delaware        

9.      District of Columbia

10.  Florida        

11.  Georgia        

12.  Hawaii        

13.  Idaho        

14.  Illinois        

15.  Indiana        

16.  Iowa        

17.  Kansas        

18.  Kentucky        

19.  Louisiana        

20.  Maine        

21.  Maryland        

22.  Massachusetts        

23.  Michigan        

24.  Minnesota        

25.  Mississippi        

26.  Missouri        

27.  Montana        

28.  Nebraska        

29.  Nevada        

30.  New Hampshire        

31.  New Jersey        

32.  New Mexico        

33.  New York        

34.  North Carolina        

35.  North Dakota        

36.  Ohio        

37.  Oklahoma        

38.  Oregon        

39.  Pennsylvania

40.  Rhode Island

41.  South Carolina

42.  South Dakota

43.  Tennessee

44.  Texas

45.  Utah

46.  Vermont

47.  Virginia

48.  Washington

49.  West Virginia

50.  Wisconsin

51.  Wyoming

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Best Oscars Moment EVER: The Streaker

the best part: David Niven's response

Paul Brandus (Feb. 24, 2013)

In 1974, David Niven, cool as a cucumber, after a man somehow got through security and streaked a worldwide TV audience. Niven's response is a classic. 

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Michelle Obama Gettin' Jiggy With Jimmy Fallon

Paul Brandus (Feb. 23, 2013)

It's hard to see a more sedate First Lady - say Mamie Eisenhower or Lady Bird Johnson - doing this, but Michelle Obama, in the name of a good cause, showed no hesitation about this dance routine on NBC's "Late Night with Jimmy Fallon." The First Lady is promoting her "Let's Move" campaign to get kids to eat right and exercise - and as you can see, dancing burns a lot of calories. What do you think? 


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1980: Disaster in the Iranian desert...