The price of crude oil continued to rise this week surpassing $70 as the economies of the world break out of a recession created by Covid-19.
Although some uncertainty remains concerning global economic recovery, the U.S. economy will rise throughout the remainder of 2021 and 2022, according to a report by the Energy Information Administration (EIA) at the Department of Energy.
“The U.S. economy continues to rise after reaching multiyear lows in the second quarter of 2020,” EIA stated. “The short-term energy outlook assumes U.S. gross domestic product (GDP) will grow by 6.7 percent in 2021 and 4.9 percent in 2022.” GDP declined 3.5 percent last year.
Crude oil closed at $70 per barrel for West Texas Intermediate (WTI) on the New York Stock Exchange (NYMEX) on June 8. Brent crude oil, which is traded on the international exchange, has closed at more than $70 for several days.
EIA estimates the price of Brent oil will remain strong amid expectations of global demand rises. “We expect Brent prices will remain near current levels in the third quarter of 2021, averaging $68 per barrel,” EIA stated. EIA does not forecast oil prices in the U.S.
EIA estimates global oil consumption at 96.2 million barrels per day (b/d) in May, which is an increase of 11.9 million barrels per day from May 2020 but 3.7 million barrels per day less than in May 2019. “We forecast that global consumption of petroleum and liquid fuels will average 97.7 million b/d for all of 2021, which is a 5.4 million b/d increase from 2020,” EIA stated.
Gasoline consumption is expected to rise, too, going from 7.8 million barrels b/d to 9.1 million b/d this summer (April to September) and average 8.7 million b/d throughout 2021.
Gasoline prices are expected to average $2.92 per gallon this summer compared to $2.07 last year.
EIA predicts natural gas prices at Henry Hub will remain strong averaging $4.09 per million British thermal units (MMBtu) in 2021. Natural gas price at Henry Hub averaged $2.91 per MMBtu in May. “In 2022, we expect the Henry Hub price will average $2.93 amid slowing growth in LNG exports and rising U.S. natural gas production,” EIA stated.
EIA forecast gains for wind and solar generating capacity in 2021 and 2022. “We estimate that the U.S. electric power sector added 14.8 gigawatts (GW) of new wind capacity in 2020. We expect 16.0 GW of new wind capacity will come online in 2021 and 5.3 GW in 2022. Utility-scale solar capacity rose by an estimated 10.5 GW in 2020. Our forecast for added utility-scale solar capacity is 15.5 GW 2021 and 16.6 GW for 2022. We expect significant solar capacity additions in Texas during the forecast period.”
Alex Mills is the former President of the Texas Alliance of Energy Producers.