The U.S. Energy Information Administration (EIA) predicts a shift in electricity generation for the latter half of 2024, driven by rising demand and natural gas prices. In its July Short-Term Energy Outlook (STEO), the EIA anticipates a 36% increase in natural gas prices compared to the first half of the year. This is expected to reduce electricity production from natural gas, the primary fuel source for U.S. power generation.
Electricity demand is forecasted to rise by 2% in the latter half of 2024 compared to the same period in 2023. To meet this demand, renewables like solar, wind, and hydropower, along with coal, are expected to play larger roles.
“EIA Administrator Joe DeCarolis noted, ‘With natural gas prices climbing, utilities will seek more cost-effective alternatives. Given the recent expansion of renewable capacity, particularly solar, we anticipate renewables will largely fill the gap in our power mix. Additionally, utilities are likely to turn to coal as a more economical option for the remainder of the year.'”
Solar electricity generation is projected to increase by 42% in the second half of 2024 compared to the same period in 2023, with wind, hydropower, and coal generation also expected to rise by 6%, 3%, and 3%, respectively.
The warmer start to 2024 contributed to a 5% increase in U.S. electricity generation in the first half of the year compared to 2023, driven by higher air-conditioning usage due to elevated temperatures. EIA expects a further 2% growth in electricity generation in the latter half of 2024, driven by ongoing demand growth in the commercial sector, although moderated by temperatures similar to those in the second half of the previous year.
Looking at crude oil, EIA forecasts Brent crude prices to average $89 per barrel in the latter half of 2024 and $91 in the first quarter of 2025, up from $84 per barrel in the first half of this year. This increase reflects expectations of reduced global oil supplies amid rising global liquid fuel consumption.
Regarding household expenditures on gasoline, EIA expects U.S. households to allocate approximately 2.3% of disposable income to gasoline in 2024, slightly decreasing to 2.2% in 2025. This forecast accounts for improvements in vehicle efficiency and household income, which are expected to offset increases in gasoline prices and consumption.