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Annual Energy Outlook 2011

Release Date: April 26, 2011   |  Next Early Release Date: January 23, 2012  |   Report Number: DOE/EIA-0383(2011)

Market Trends AEO 2011Market Trends

Projections by U.S. Energy Information Administration (EIA) are not statements of what will happen but of what might happen, given the assumptions and methodologies used for any particular case. The Reference case projection is a business-as-usual trend estimate, given known technology and technological and demographic trends. EIA explores the impacts of alternative assumptions in other cases with different macroeconomic growth rates, world oil prices, and rates of technology progress. The main cases in the Annual Energy Outlook 2011 (AEO2011) generally assume that current laws and regulations are maintained throughout the projections. Thus, the projections provide policy-neutral baselines that can be used to analyze policy initiatives.

While energy markets are complex, energy models are simplified representations of energy production and consumption, regulations, and producer and consumer behavior. Projections are highly dependent on the data, methodologies, model structures, and assumptions used in their development. Behavioral characteristics are indicative of real-world tendencies rather than representations of specific outcomes.

Energy market projections are subject to much uncertainty. Many of the events that shape energy markets are random and cannot be anticipated. In addition, future developments in technologies, demographics, and resources cannot be foreseen with certainty. Many key uncertainties in the AEO2011 projections are addressed through alternative cases.

EIA has endeavored to make these projections as objective, reliable, and useful as possible; however, they should serve as an adjunct to, not a substitute for, a complete and focused analysis of public policy initiatives.


Real gross domestic product returns to its pre-recession level by 2011
Inflation, interest rates remain low, unemployment exceeds 6 percent
Output growth for energy-intensive industries slows
Energy expenditures decline relative to gross domestic product

International oil markets

Non-OECD nations account for 84 percent of growth in world energy use
U.S. reliance on imported natural gas falls, and exports rise
Oil price cases depict uncertainty in world oil markets
Liquids demand in developing nations is driven by rate of GDP growth
Unconventional liquids gain market share as price rise

U.S. energy demand

U.S. average energy use per person and per dollar of GDP declines through 2035
Industrial and commercial sectors lead growth in primary energy use
Renewable sources lead rise in primary energy consumption

Residential sector energy demand

Residential energy use per capita varies with end-use technology assumptions
Electricity use increases despite improved efficiency of electric devices
AEO reflects improvement in efficiency standards
As tax credits expire, gains in residential renewable energy use are slowed

Commercial sector energy demand

End-use efficiency improvements could lower energy consumption per capita
Growth in electricity use dominates the outlook for commercial energy demand
Core technologies lead efficiency gains in the commercial sector
Improved interconnection supports growth in distributed generation

Industrial sector energy demand

Heat and power energy consumption increases in manufacturing industries
Industrial fuel mix changes as demand increases from low levels in 2009
Iron and steel and non-energy-intensive industris show fastest output growth
Delivered energy use in industry sectors trends upward after recession ends
Chemical industry use of fuels as feedstocks recovers before declining

Transportation sector energy demand

Growth in transportation energy use slower than historical trend
CAFE and greenhouse gas emissions standards boost vehicle fuel economy
Travel demand for personal vehicles increases more slowly than in the past
New technologies promise better vehicle fuel efficiency
Unconventional vehicle technologies exceed 40 percent of new sales in 2035


Residential and commercial sectors dominate electricity demand growth
Coal-fired plants continue to lead electricity output
Most new capacity additions use natural gas and renewables
Annual capacity additions slow significantly after 2012
Growth in generating capacity tracks rising demand for electricity
Cost and regulatory uncertainties vary across options for new capacity


EPACT2005 tax credits stimulate some nuclear builds


Biomass and wind lead growth in renewable generation
Renewable capacity growth spurred by end-use increases
State portfolio standards increase renewable electricity generation

Natural gas

Price disparity between crude oil and natural gas shifts drilling to liquids-rich shales
Natural gas prices vary with economic growth and technology progress
Shale gas provides largest source of growth in U.S. natural gas supply
Economic growth and technology progress affect natural gas supply
Increases in shale gas production support growth in total natural gas supply
U.S. net imports of natural gas decline as domestic production rises

Liquid Fuels

Transportation uses lead growth in liquid fuels consumption
Biofuels and natural gas liquids lead growth in total liquids supply
U.S. oil production increases as projected oil prices rise
U.S. oil production is more responsive to price changes than to technology gains
Imports of liquid fuels vary with world oil price assumptions
Renewable fuels standard leads to increased production of biofuels
Future refinery operations and investments target diesel output
Higher limit on ethanol blending spurs consumption growth in the near term


Early declines in coal production are more than offset by growth after 2014
Long-term outlook for coal production varies considerably across cases
Growth in average minemouth prices slows compared to recent history
Substantial changes in coal prices would have moderate effects on demand

Emissions from energy use

Concerns about GHG legislation affect the long-term outlook for coal
Growth of carbon dioxide emissions slows in the projections
Sulfur dioxide emissions decreadse due to the Clean Air Interstate Rule
Nitrogen oxide emissions also decline in the Reference case