U.S. Energy Outlook 2020–2021
The U.S. Energy Information Administration (EIA) says the American energy market will continue thriving over the next 48 months.
In the agency’s recently released Short-Term Energy Outlook, the EIA concludes the United States will remain a net exporter of crude oil and other petroleum products through at least 2021. Secretary of Energy Dan Brouillette said in a statement:
From being a net exporter of oil, to growing our renewable generation, the Trump Administration has created an environment for growth and prosperity in American energy. While our energy production and exports continue to soar, we are simultaneously leading the world in reducing energy-related carbon emissions. Data released today by EIA projects the U.S. will continue this trend, predicting further CO2 emissions reductions in 2020 and 2021.
The EIA forecasts renewable energy generation will grow from a 17% share of U.S. electricity generation in 2019 to 22% in 2021.
As a result of increasing renewable energy generation and carbon cutting policies, energy-related carbon dioxide (CO2) emissions will decrease by 2% in 2020 and by 1.5% in 2021.
Please take note of that last forecast again: [Thanks to] carbon cutting policies, the energy-related carbon dioxide (CO2) emissions will decrease by 2% in 2020 and by 1.5% in 2021.
That's right — the climate change advocates have won.
If nothing was done to address carbon emissions, forecasts show the world slowly heating up. However, that was only if nothing was done.
But something was done. ClimateActionTracker.org writes, “Current policies presently in place around the world are projected to reduce baseline emissions and result in about 3.0°C warming above pre-industrial levels.”
The “baseline” projection in the chart above projects the world without policies. Point is, climate change advocates were successful; they already got what they asked for. So they can stop fighting, right?
They can stop writing their global warming books and making documentaries? They can stop attending speaking engagements and climate conferences, right? They can stop posting on Twitter and Facebook, right?
Hahahaha (gasp) hahahaha! Fat chance!
Despite forecasts of decreasing carbon emissions, climate warriors are still going to act like the sky is falling. They'll continue to get attention. However, I think the Greta Thunbergs of the world will soon become less powerful as more and more people learn that policies have already fixed the carbon problem. And I believe that will benefit the crude oil and petroleum product market.
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The EIA expects Brent crude oil spot prices to average $65 per barrel in 2020 and $68 per barrel in 2021. That's compared to the average of $64 per barrel in 2019.
The agency predicts WTI crude oil prices will average around $60 per barrel through 2020 and 2021.
The EIA forecasts the U.S. will remain as the world’s largest crude oil producer averaging 13.3 million b/d in 2020 (up from 12.2 million b/d in 2019) and 13.7 million b/d in 2021, noting, “Most of the production growth in the forecast occurs in the Permian region of Texas and New Mexico.”
As a result, the U.S. will continue to be less reliant on foreign oil. The EIA says net imports of crude oil and petroleum products to the U.S. fell by nearly 80% between 2018 and 2019. They say, “The United States has exported more total crude oil and petroleum products than it has imported since September.”
Meanwhile, the agency says American crude oil exports to are set to increase by 75% between 2020 and 2021.
Today, the Permian Basin is the largest producing oil field in the world — even bigger than Saudi Arabia’s Ghawar. The EIA reports oil production from the Permian currently at 4.2 million barrels per day. That's compared to Ghawar's production of 3.8 Mbbls/d.
The Permian Basin is also the largest oil and gas region in the world right now in terms of production, but estimates of its underdeveloped energy resources are growing.
The United States Geological Survey (USGS) recently reported an increase in technically recoverable resources from the Permian. It now says the Texas Permian Basin contains 46.3 billion barrels of oil, 281 trillion cubic feet of natural gas, and 19.9 billion barrels of natural gas liquids.
What that means is there could be more tight oil and gas in and around Texas than anyone ever thought, just waiting to be discovered and developed.
Resident Permian Basin expert Keith Kohl says, “For sure, there are billions of barrels of recoverable oil in and around the Permian Basin that haven’t even been counted yet — potentially trillions of dollars just waiting to be found.”
Right this minute, the Texas Permian is booming with activity. So much, in fact, that infrastructure around the area is being strained. Local authorities are dealing with electricity, water, and housing shortages as well as heavy truck traffic and quickly deteriorating roads.
Soon developers are going to be looking elsewhere. And that's when these secret oil and gas basins in and around Texas are going to explode in popularity.
Until next time,
As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bull and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.
Energy Demand will Increase 58% Over the Next 25 Years
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