The U.S. Energy Information Administration (EIA) has forecasted a modest 1% increase in residential electricity prices for 2024, marking the slowest rate of annual growth since 2020. This projected rise comes as a result of decreasing natural gas prices, which have been on a downward trend since late 2023. Natural gas, which is the primary source of electricity generation in the U.S., is now contributing to lower retail electricity rates.
In contrast, the EIA anticipates a rise in Brent crude oil prices, projecting they could reach approximately $87 per barrel by the end of the year, up from the current level of just below $80 per barrel. This anticipated increase is attributed to ongoing production cuts by OPEC+ that are expected to diminish global oil inventories through early 2025, potentially driving up oil prices.
Despite the expected increase in oil prices, EIA Administrator Joe DeCarolis offered a positive outlook for consumers. He noted that gasoline prices are expected to remain lower than in 2023, despite the rise in oil prices. DeCarolis attributed this to a reduction in gasoline consumption by U.S. motorists since the pandemic, which is likely to help stabilize gasoline prices.
Additional insights from the EIA’s August Short-Term Energy Outlook include:
Natural Gas Consumption: The EIA forecasts a 2% reduction in natural gas consumption for electricity generation in August compared to July. This decrease is attributed to more typical summer temperatures and a reduction in air conditioning demand. July had set a record for natural gas consumption for electricity generation, exacerbated by Hurricane Beryl’s impact on power supplies in Texas.
Jet Fuel: The EIA projects that U.S. jet fuel consumption will surpass pre-pandemic levels by 2025. This increase is driven by commercial air travel demand, influenced by economic conditions, employment rates, and travel costs. However, uncertainties such as potential aircraft supply chain disruptions and air traffic controller shortages could impact this forecast.
The EIA’s outlook provides a mixed picture of the energy landscape, with modest gains in electricity prices counterbalanced by favorable gasoline price trends and an expected recovery in jet fuel consumption.
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