How Fast the Energy Outlook is Shifting
Each month, the Energy Information Administration publishes a "Short-Term Energy Outlook." The most recent issues was released on November 12. That was just three weeks ago, and consider how fast things have changed and continue to change.
Consider the following:
- The EIA noted that the average price of a barrel of crude oil averaged $133 in July. By October, the average price fell to $77. According to this November 12 assessment, the EIA projected that oil woudl average $63.50 during 2009.
But keep in mind that on Wednesday, December 3, oil closed in New York below $47.
- The EIA reported that on November 10, the price of a gallon of regular gas was $2.22, which was more than $1.80 below the mid-July highs. The EIA projected the average price of gasoline to be $2.37 per gallon for 2009.
However, on December 1, the U.S. average price of regular gas was $1.81.
- The EIA noted that residential heating oil for the current heating season (October to March) is projected to average $2.75 per gallon, down from 17 percent last year.
- Average natural gas prices in October averaged $6.94 per thousand cubic feet was down 94 cents versus September. The EIA projected an average price of $6.82 for 2009.
On December 3, natural gas closed at $6.35.
- Interestingly, however, residential natural gas prices are expected to average $13.02 per thousand cubic feet during the current heating season, which would be a 2 percent increase from last winter. Why would that be the case with the recent decline in natural gas prices? The EIA attributed this to "the pass-through of some higher-priced natural gas that was put in storage earlier in the year to meet winter demand."
Of course, the reason for these dramatic declines in energy are all about an economy currently in recession, with continued economic troubles projected for 2009. For example, the EIA projected that real U.S. GDP will decline by 1.4 percent in 2009.
None of this, however, changes the need for Congress to implement rational energy policies that remove governmental barriers to energy exploration and development. Indeed, we need pro-growth energy policies no matter what the current state of the market happens to be.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.
www.sbecouncil.org
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