EIA says to expect ‘historically high’ energy prices through 2023

U.S. energy prices are expected to remain high through 2023 as a result of economic recovery and the Russian invasion of Ukraine, according to the U.S. Energy Information Administration (EIA).

The EIA released Tuesday (June 7) the June Short-Term Energy Outlook that shows the prices of oil, natural gas, coal and electricity will remain high through next year.

“We continue to see historically high energy prices as a result of the economic recovery and the repercussions of Russia’s full-scale invasion of Ukraine,” said EIA Administrator Joe DeCarolis. “Although we expect the current upward pressure on energy prices to lessen, high energy prices will likely remain prevalent in the United States this year and next.”

The share of renewables in U.S. electricity generation is expected to rise as a result of the high prices of natural gas and coal. Renewables are largely expected to offset the decline in coal’s share. Wind and solar generation are projected to account for more than 11% of U.S. electricity generation this summer, up from less than 10% in summer 2021. The natural gas share is projected to fall over the next two years but at a slower rate than coal.

Following are other highlights in the Short-Term Energy Outlook:

• International benchmark Brent crude oil price will be an average of $108 per barrel in the second half of 2022 as tight global inventories and geopolitical uncertainties put upward pressure on crude oil prices amid pre-pandemic production levels.
• U.S. refinery use will average 94% in the third quarter of 2022, nearly the highest level in the past five years. Refining margins are projected to be above the five-year average as a result of a 5% decrease in refinery capacity from 2019 to 2022.
• The Henry Hub natural gas price will rise to an average of $8.69 per million British thermal units in the third quarter of 2022, up from $8.13 in May. The rise can be attributed to strong demand for U.S. liquefied natural gas exports and natural gas in the electric power sector. This will keep U.S. natural gas inventories below the previous five-year average.
• Electricity generation will rise by 2.1% in 2022, with the largest increase from renewable energy. Solar power will account for nearly half of all the new U.S. generating capacity added this year, with 20 gigawatts of solar capacity expected to be added.

Link here for the June Short-Term Energy Outlook.