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Thursday, October 18, 2018

U.S. oil imports projected to fall by EIA

This week, the U.S. Energy Information Administration (EIA) released revised long-run reference case energy projections which incorporate the estimated impact of the Energy Independence and Security Act of 2007 (EISA2007) that was signed into law in December 2007. The full Annual Energy Outlook 2008 (AEO2008) report, including projections with differing assumptions on oil prices, the rate of economic growth, and the characteristics of new technologies, will be released in April 2008, along with regional projections and a report on the major assumptions underlying the projections.


Total consumption of liquid fuels is forecast to grow at an average annual rate of 0.4% in the revised AEO2008 reference case, from 20.7 million barrels per day (mbd) in 2006 to 22.8 mbd in 2030. This growth is led by growth in transportation uses, which account for 68% of the total demand for liquid fuels in 2006, increasing to 73% in 2030. Improvements in the efficiency of vehicles, planes, and ships are more than offset by the overall growth in travel.


EISA2007 requires new light-duty vehicles, including both cars and trucks, to reach a corporate average fuel economy (CAFE) of 35 miles per gallon (MPG) by 2020, based on the Environmental Protection Agency (EPA) test value used to measure compliance with the CAFE standard. The higher fuel economy standards for new vehicles in EISA2007 significantly improve the in-use fuel economy of the stock of light-duty vehicles. In the reference case, the average in-use fuel economy for the stock of light-duty vehicles in 2030 increases to 38% above its 2006 level.


EISA2007 will also result in a shift in the mix of transportation vehicle fuels. Total biofuel consumption reaches 2.8 quadrillion Btu (29.7 billion gallons) in 2030 in the revised AEO2008 reference case, 2.3 quadrillion Btu (24.4 billion gallons) more than in 2006. This represents 11.3% of total motor vehicle fuel, on a Btu basis, in 2030.


U.S. crude oil production is forecast to grow from 5.1 mbd in 2006 to a peak of 6.3 mbd in 2018, primarily due to increased production from the deep waters of the Gulf of Mexico and from the expansion of enhanced oil recovery operations in onshore areas supported by higher crude oil prices. Domestic production is subsequently forecast to decline to 5.6 mbd in 2030, as increased production from new smaller discoveries is inadequate to offset the declines in large fields in Alaska and the Gulf of Mexico (Figure 1). Total domestic liquids supply, including crude oil, natural gas plant liquids, refinery processing gains, and other refinery inputs or fuels (e.g., ethanol, biodiesel, biomass-to-liquids, and liquids from coal) grows from 8.3 mbd in 2006 to 10.5 mbd in 2030.



With strong growth in biofuels and the impact of higher fuel economy standards in the transportation sector due to EISA2007, the reliance on imported crude oil and products is forecast to decline. While net crude oil imports are forecast to grow to 11.1 mbd in 2030 and net product imports (including net ethanol imports) to be 1.3 mbd in 2030, net U.S. import dependence is forecast to fall to 54% in 2030 in the revised AEO2008, down from 60% in 2006.


The result is less reliance on traditional petroleum products and imported oil. However, even with the increase in the use of biofuels and higher vehicle efficiency standards, petroleum products still supply 88% of total transportation energy demand (encompassing energy used by airplanes, rail, ships and pipelines as well as motor vehicles) in the revised AEO2008 reference case – but this is compared with 96% in 2006.


Contact: Erik Ranheim