The boom won’t last forever, and will level off around 2020. But when domestic oil supplies do start slipping, we won’t feel it too much at first, because our vehicles will be using a lot less fuel.
Total miles traveled will be up an average 0.9% per year between now and 2040. But factor in greater fuel economy, and the total amount of energy used in light duty vehicles will decline by a quarter between now and 2040, to 12.1 quadrillion Btu annually.
Yet as we use ever less total oil, natural gas will continue to surge. The EIA sees a remarkable 56% volume increase between now and 2040, at which point production will reach 37.6 trillion cubic feet per year.
We’ll begin exporting our excess natural gas, ramping up LNG exports to 3.5 tcf (or 9 billion cubic feet per day) by 2029. That implies at least three big LNG export facilities eventually get built.
Though chemical companies like Dow Chemical DOW +3.1% have been freaked out by the prospect of their primary natgas feedstock getting exported out from under them, the EIA insists that low natural gas prices will continue to boost American industry. Shipments of bulk chemicals will grow by 3.4% per year to 2025 (a year ago that expectation was for 1.9% a year). Compounded, that implies that the U.S. chemical industry will be about 45% bigger (in volume terms) in 2025 than now. Do you believe it?
Environmentalists already believe that natural gas is tolling the deathknell for coal. But coal is going nowhere fast, with the EIA forecasting its use remaining flat over the next 25 years.
And although natgas is already a bigger primary energy source than coal (at 27% of U.S. total energy for gas, versus 18% for coal), it won’t be until 2034 that natgas finally overtakes coal as an electric generation source.
Whether or not it really takes that long, no matter how you slice it, carbon-intensive energy sources will continue to fuel America for the foreseeable future.
At least the carbon intensity of our economy will keep going down. Total U.S. energy-related emissions of carbon dioxide will be 9% under 2005 levels in 2020 and 7% under 2005 levels in 2040.
That might not look impressive at first glance, but it is when you consider EIA’s other assumptions. The agency figures that between now and 2040 the U.S. real GDP will grow at an average annual rate of 2.4%. That implies that the U.S. economy will be 85% bigger by 2040.
Imagine growing your own household by 85% while reducing your own carbon footprint by 7%. Not easy to do.
The assumption is that we’ll be making massive advances in carbon efficiency in the years to come. More efficient buildings, cars, lighting, etc. And that carbon efficiency is all the more impressive because, according to EIA, we’ll be making it without much help from the biggest zero-carbon energy source of all — nuclear power. They forecast that because of plant retirements and a lack of new constructions, we’ll have 10% less nuclear power generation in 2040 than today.
How much of this forecast will truly come to pass? Probably very little. Just a few years ago no one would have predicted the American Oil & Gas Boom or seen any possibility whatsoever that natural gas would be set to grow tremendously while nuclear power languished.
In looking at the EIA projections, I find it hard to believe that renewable energy sources (excluding biofuels) will barely budge from 8% of the nation’s total energy pie today to just 10% in 2040. (Currently petroleum provides 37%, gas 27%, coal 18% and nuclear 8%.)
But maybe the renewable figure feels implausible because I’ve been brainwashed by the wind and solar and biofuels lobby into thinking that they have more scale than they really do. What really strikes home when looking at EIA data sets is just how slowly most energy systems change over time, and what a challenge it is to build scale from a tiny base. Thanks EIA, for some much needed perspective.
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