The Short-term Energy Outlook is the EIA’s periodic analysis of where energy fundamentals appear to be heading based on current data and assumptions. The reports cover supply/demand dynamics and pricing for oil, natural gas, refined products, coal, power, renewables, emissions and the US economy. This edition of the EIA’s STEO – released earlier this week – is the first to contain 2015 forecasts.

EIA Administrator Adam Sieminski issued the following comments with regard to the report:

Gasoline Prices:

“Gasoline prices are expected to trend downward over the next two years, averaging $3.46 per gallon in 2014 and $3.39 per gallon in 2015, driven down by continued growth in U.S. crude oil production and lower crude oil prices.”

Crude Oil Prices:

“December marked the sixth consecutive month in which Brent crude oil prices averaged between $108 per barrel and $112 per barrel. Brent oil’s annual average price was $109 per barrel in 2013, $3 lower than in 2012.”

“EIA expects the downward trend in Brent crude oil prices to continue over the next two years as growing non-OPEC oil supply continues to outpace world consumption, with Brent crude oil prices averaging $105 per barrel in 2014 and $102 per barrel in 2015.”

“The monthly average West Texas Intermediate crude oil price discount to Brent, which fell to as low as $3 per barrel in July of 2013, averaged $13 per barrel in December.  EIA expects this wide discount to persist in 2014 and 2015, averaging $12 per barrel in both years.”

Crude Oil Supply:

“EIA expects annual U.S. crude oil production to come close to setting a new record high in 2015.”

“Projected domestic crude oil production is set to increase by 1 million barrels per day this year to 8.5 million barrels per day, and then rise to 9.3 million barrels per day in 2015.  U.S. oil production in 2015 could be the highest since 1972.”

“The growth in domestic production has contributed to a significant decline in petroleum imports.  The share of total U.S. liquid fuels consumption met by net imports is expected to decline to 24% in 2015, which would be the lowest level since 1970.”

“Rising U.S. crude oil production will make a major contribution to the record 1.9 million barrel-per-day increase in global oil output expected from non-OPEC countries during 2014.”

Natural Gas:

“Following a cold December and several large weekly withdrawals of stored natural gas, EIA is revising downward its estimate of the amount of U.S. natural gas held in storage at the end of the winter heating season by more than 200 billion cubic feet. EIA now expects inventories will total about 1.5 trillion cubic feet at the end of this March.”

“U.S. onshore natural gas production is expected to continue increasing over the next two years, with strong output growth in the Marcellus Shale offsetting production declines in the Gulf of Mexico. Overall U.S. natural gas production is expected to grow 2.1% this year and 1.3% in 2015.”

Coal: 

“After two years of declining production, U.S coal output is expected to increase in 2014.”

“U.S. coal production this year is forecast to rise almost 4%, or 36 million short tons, as higher natural gas prices make coal more competitive for power generation.”

“The share of U.S. electricity generated by coal is expected to increase from 39.1% last year to 40.2% this year. However, coal’s share of generation falls to 38.6% in 2015 as more U.S. coal-fired power plants are retired.”

Electricity:

“Improvements in appliance and lighting energy efficiency have helped slow the growth in residential electricity use in recent years. Average household consumption is expected to decline 1.1% this year and another 0.4% in 2015.”

“While residential electricity consumption may decline because of more energy-efficient appliances and lighting, the improving economy will cause a boost in electricity use by the U.S. industrial sector, which is forecast to consume 2.2% more electricity this year and 2.5% more in 2015.”

Renewables:

“U.S. wind power generation capacity is forecast to increase 8.8% this year and grow another 15% in 2015.”

“Utility-scale solar power generation capacity is expected to rise 40% between the end of 2013 and the end of 2015.”

You can read the full report here.