Annual Energy Outlook 2014

Release Date: May 7, 2014 | Next Release Date: March 2015 | See schedule | full report

By Section

Market Trends

Projections by the U.S. Energy Information Administration (EIA) are not statements of what will happen but of what might happen, given the assumptions and methodologies used for any particular case. The Reference case projection is a business-as-usual estimate, given known market, demographic, and technological trends. Most cases in the Annual Energy Outlook 2014 (AEO2014) generally assume that current laws and regulations are maintained throughout the projections. Such projections provide a baseline starting point that can be used to analyze policy initiatives. EIA explores the impacts of alternative assumptions in other cases with different macroeconomic growth rates, world oil prices, rates of technological progress, and policy changes.

While energy markets are complex, energy models are simplified representations of energy production and consumption, regulations, and producer and consumer behavior. Projections are highly dependent on the data, methodologies, model structures, and assumptions used in their development. Behavioral characteristics are indicative of real-world tendencies rather than representations of specific outcomes.

Energy market projections are subject to much uncertainty. Many of the events that shape energy markets are random and cannot be anticipated. In addition, future developments in technologies, demographics, and resources cannot be foreseen with certainty. Many key uncertainties in the AEO2014 projections are addressed through alternative cases.

EIA has tried to make these projections as objective, reliable, and useful as possible. However, they should serve as an adjunct to, not as a substitute for, a complete and focused analysis of public policy initiatives.

Economic Trends Growth in business fixed investment offsets slow growth in labor force Economic activity varies considerably across the economic growth cases For energy-intensive industries, output growth is strong early, then slows after 2025
International Range of oil price cases represents uncertainty in world oil markets Trends in petroleum and other liquids markets are defined largely by the developing nations World production of liquid fuels from biomass, coal, and natural gas increases
U.S. energy demand In the United States, average energy use per person declines from 2012 to 2040 Industrial and commercial sectors lead U.S. growth in primary energy use Renewables and natural gas lead rise in primary energy consumption
Residential sector energy demand Residential energy intensity drops across a wide range of technology assumptions Electricity use per household declines from 2012 to 2040 in the Reference case Continuing efficiency gains restrain growth in residential electricity use Extending tax credits supports increased residential use of renewable energy sources
Commercial sector energy demand Commercial sector energy intensity varies with technology improvements Energy use continues to shift from personal computing equipment to networked computing Efficiency gains for advanced technologies reduce commercial energy consumption growth Renewable technologies drive more additions to distributed generation capacity
Industrial sector energy demand Growth in industrial energy consumption is slower than growth in shipments Reliance on natural gas, natural gas liquids, and renewables rises as industrial energy use grows Bulk chemicals feedstock mix reflects both relative fuel prices and demand for chemicals For manufacturing applications, heat and power use varies with economic assumptions Energy consumption in the metal-based durables industries increases rapidly Nonmanufacturing energy intensity reductions are tempered by the mining industry
Transportation sector energy demand Transportation sector energy consumption declines in the Reference case CAFE and greenhouse gas emissions standards boost light-duty vehicle fuel economy Miles traveled per licensed driver remains below its historic high through 2040 Sales of vehicles using nongasoline technologies grow by nearly 400 percent from 2012 to 2040 Natural gas use for transportation fuel grows but still makes up a modest share of total use
Electricity Growth in electricity use slows but still increases by 29% from 2012 to 2040 By 2035, natural gas surpasses coal as the largest source of U.S. electricity generation Most new capacity uses natural gas and renewables Additions to power plant capacity slow after 2016 but accelerate beyond 2023 Growth in power generating capacity parallels rising sales of electricity Costs and regulatory uncertainties vary across options for new capacity Nuclear electricity generation varies with license renewals, uprates, and operating costs Solar photovoltaics and wind dominate renewable capacity growth Total generation from wind, solar, and other renewables surpasses hydropower California leads renewable electricity generation growth
Natural gas Industrial and electric power sectors drive growth in U.S. natural gas consumption Natural gas prices rise with an expected increase in production costs Natural gas prices depend on economic growth and resource recovery rates among other factors With production growing faster than use, the U.S. becomes a net exporter of natural gas U.S. natural gas production, use, and exports all are affected by oil prices Shale gas provides the largest source of growth in U.S. natural gas supply U.S. exports to North American and overseas gas markets increase as gas production rises LNG export growth depends on price and productivity assumptions U.S. natural gas production rates depend on resource availability and production costs Marcellus shale gas production growth changes U.S. natural gas transportation patterns Natural gas-fired generation grows strongly in the electric power sector
Petroleum and other liquids Led by transportation, petroleum and other liquids consumption declines Crude oil leads initial growth in liquids supply, next-generation liquids grow slowly after 2020 U.S. crude oil production rates depend on resource availability and production costs Lower 48 onshore tight oil development spurs increase in U.S. crude oil production Domestic production of tight oil leads to lower imports of light sweet crude oil Increasing U.S. oil supply reduces net imports of petroleum and other liquid fuels U.S. consumption of biofuels grows but does not approach EISA2007 applicable volumes A variety of factors leads to a shift in consumption from motor gasoline to diesel fuel Shifts in demand for liquid fuels change petroleum refinery yields and crack spreads Consumption of biofuels blended into motor gasoline increases in response to RFS targets
Coal Coal production growth limited by competitive fuel prices and little new coal-fired capacity Outlook for U.S. coal production is affected by fuel price uncertainties Expected declines in mining productivity lead to further increases in average minemouth prices
Emissions from energy use Concerns about future GHG policies affect builds of new coal-fired generating capacity Energy-related carbon dioxide emissions remain below their 2005 level through 2040 Power plant emissions of sulfur dioxide are reduced by further environmental controls Energy-related carbon dioxide emissions are sensitive to potential policy changes Carbon dioxide fees first favor, then discourage, natural gas-fired generation

Economic Trends

International

U.S. energy demand

Residential sector energy demand

Annual Energy Outlook 2014

Market Trends

Economic Trends

International

U.S. energy demand

Residential sector energy demand

Commercial sector energy demand

Industrial sector energy demand

Transportation sector energy demand

Electricity

Natural gas

Petroleum and other liquids

Coal

Emissions from energy use

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Documentation and Assumptions