EIA Press Release Energy Information Administration
U.S. ENERGY INFORMATION ADMINISTRATION
Washington, DC 20585
FOR IMMEDIATE RELEASE

JANUARY 11, 1996

New EIA Forecast Shows Less Nuclear Power, Lower Fuel Prices than Earlier Projections As Horizon Extends to 2015

In today's release of its Annual Energy Outlook 1996, the Energy Information Administration (EIA) projects a 32-percent reduction in nuclear power generation by 2015 and lower fuel prices than in past forecasts. This is the first EIA forecast to extend projections of energy consumption, production, prices, and imports to 2015. The longer forecast horizon reveals new information about potential impacts on the U.S. energy picture of:

nuclear power plant retirements
macroeconomic growth and demographics
technological innovation
resource assessments
Nuclear power. The forecast assumes that about 40 percent of the current nuclear generation capacity will retire by 2015, as it reaches the end of its 40-year operating life. A resulting 32-percent reduction in the use of nuclear power between 1994 and 2015 was not evident in earlier projections, as most of the retirements would occur after the previous forecast horizon of 2010. Use of coal and natural gas for electricity generation increases to fill the gap and to meet growing electricity demand.

Macroeconomic growth and demographics. Following 2010, there will be a notable shift of the baby-boomers into retirement. This has an immediate impact on the size and composition of the labor force and contributes to a slowdown in economic growth after 2010.

Technology. Because of the longer horizon, EIA's forecast considers a wider slate of energy technologies for energy production, conversion, and consumption, such as fuel cells and photovoltaics. The impacts of new and more advanced technologies are key forecast elements.

Resource Assessments and Prices. Higher resource assessments, technology improvements, and productivity gains are the primary reasons for EIA's projections of significantly lower prices for natural gas and coal than in prior forecasts.

Other Forecast Highlights:

EIA projects the average price of natural gas at the wellhead in 2010 to be $2.15 per thousand cubic feet (1994 dollars)--compared with its earlier projection of nearly $3.50 released in January 1995. EIA projects an average wellhead price of $2.57 per thousand cubic feet in 2015. The lower price projections reflect higher assessments of the domestic resource base for natural gas. Lower drilling costs combined with higher average gas discoveries per well also contribute to the lower price projections.
The average price of coal at the minemouth is also sharply lower than in earlier projections and actually declines through most of the forecast period. EIA projects a price of $17.43 a ton in 2010, compared to last year's $23.30 forecast. The minemouth price declines to $17.39 a ton in 2015. These prices reflect assumed flat real wages for miners and production shifts to Western mines where productivity is higher than in the East.
Electricity prices also are lower than in last year's forecast and remain essentially flat, partly due to the lower prices for the fuels used to generate electricity.
The Annual Energy Outlook 1996 also assumes higher oil production from the Organization of Petroleum Exporting Countries (OPEC). As a result, the projected world oil price of $23.70 a barrel in 2010 is about $1 a barrel lower than last year's projection. In 2015, the price is projected to be $25.43 a barrel.
Despite lower prices, total energy consumption in 2010 remains about the same as in last year's forecast. Technology improvements and slower projected growth in some energy-intensive industries restrain the rate of increase.
Lower prices for fossil fuels slow the market penetration of renewable energy technologies through 2010; renewable technologies begin to penetrate more rapidly after that. Slower penetration of renewables results in higher projections for carbon emissions in 2010. Carbon emissions increase further--to 1,735 million metric tons--by 2015.
This year's Outlook includes a wide range of cases that analyze the changes caused by varying key assumptions in the forecasts, primarily different technology and productivity assumptions. These cases supplement others that assume higher or lower economic growth rates and higher or lower world oil prices than those in the reference forecast.

The Outlook includes the analysis of all legislation in place as of October 1, 1995, including many of the provisions of the Climate Change Action Plan. It also includes legislation lifting the 22-year-old ban on exports of Alaskan crude oil, although the measure was not passed until November 28, 1995. However, the forecast does not include modifications of the oil and gas royalties in the Gulf of Mexico contained in the same legislation; nor does it include impacts of pending legislation or legislation and programs for which funds have not been appropriated.

To obtain camera copy for the attached graphs contact Thomas Welch, 202-586-1178. Copies of the Annual Energy Outlook 1996 are available from the U.S. Government Printing Office or through EIA's National Energy Information Center, Room 1F-048, Forrestal Building, Washington, DC 20585, 202/586-8800. The complete text of the Annual Energy Outlook 1996, as well as the projections, underlying assumptions, and more detailed, regional projections will be available soon on EIA's Internet Web Site: http://www.eia.gov.

-EIA-

EIA Program Contact: Mary J. Hutzler, 202/586-2222

EIA Press Contact: Thomas Welch, 202/586-1178

DOE News Media Contact: Barbara Semedo, 202/586-5806

EIA-96-01

File Last Modified: January 16, 1996

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