The US Energy Information Administration (EIA) has released its latest forecasts indicating shifts in the country’s electricity production for the second half of 2024. Anticipating higher natural gas prices, the EIA predicts increased generation from renewables and coal, driven by growing electricity demand.
According to the EIA’s July Short-Term Energy Outlook, natural gas prices are expected to rise by approximately 36% compared to the first half of the year. This price hike is forecasted to reduce natural gas-based electricity generation, which has been a cornerstone of US power supply.
Joe DeCarolis, administrator of the EIA, noted, “The increase in electricity demand coupled with decreased natural gas generation creates a gap between supply and demand.”
Looking ahead to specific energy sources, the EIA projects a substantial 42% increase in solar electricity generation in the second half of 2024 compared to the same period in 2023. Additionally, wind generation is expected to rise by 6%, hydropower by 3%, and coal by 3% during this timeframe. DeCarolis added, “With rising natural gas costs, utilities are expected to turn increasingly to renewables, especially solar, to meet electricity needs. Coal may also see renewed interest due to its relative cost-effectiveness.”
Meanwhile, gasoline prices in the US have been influenced by higher inventories, reduced demand, and global oil prices trending below recent highs. Since reaching their peak in April, gasoline prices have decreased by an average of $0.19 per gallon, settling at $3.48 per gallon as of July 1st, which is $0.05 lower than the same period last year, according to EIA data.
Looking globally, Brent crude oil prices are forecasted to average $89 per barrel in the second half of 2024 and $91 in the first quarter of 2025, up from an average of $84 per barrel in the first half of the year. This increase is attributed to expectations of declining global crude oil supplies amidst rising liquid fuel consumption worldwide.
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Discussing broader trends, Paul Hasselbrinck, an upstream analyst at GlobalData, noted, “The outlook for oil demand growth is driven primarily by petrochemical needs in China and energy demands in India, contrasting with expected lower demand in developed economies by the end of the decade.”
The EIA has revised its earlier projections for global oil demand in 2024, now anticipating slower growth. Concurrently, global oil output is expected to expand more rapidly than previously estimated, leading to a more balanced market.
Hasselbrinck emphasized that lower oil prices could significantly impact countries like Brazil, Mexico, and Argentina, where production costs exceed those of OPEC+ nations. These countries heavily rely on national oil revenues and may need to navigate potential losses while managing their oil resources.
He also highlighted potential challenges for the US and Canada, including increased reliance on imports from the Middle East and OPEC+ countries, posing risks to energy security, or the need to bolster domestic oil industries to remain competitive globally.