Forecast overview

• Electricity generation capacity. Beginning with the March Short-Term Energy Outlook (STEO), we will publish electricity generation capacity for all fuels. These data will appear in the newly created Table 7e. More information about this change is available in Between the Lines.

• Weather. Preliminary data from the National Oceanic and Atmospheric Administration for January and February indicate the first two months of 2023 may be close to the warmest on record for that period in data going back to 1895. The mild weather was concentrated in the eastern part of the United States.

• Natural gas consumption. We expect U.S natural gas consumption to average 99.1 billion cubic feet per day (Bcf/d) in the first quarter of 2023 (1Q23), down 5% from 1Q22. The decline in consumption is the result of very mild temperatures that have reduced demand for space heating. The largest decline is in residential and commercial consumption, which we expect will be 11% less in 1Q23 than in 1Q22.

• Natural gas inventories and price. As a result of less natural gas consumption than we had expected, we forecast that the United States will close the withdrawal season at the end of March with more than 1.9 trillion cubic feet of natural gas in storage, 23% more than the five-year average and 27% more than we forecast in the January STEO. The Henry Hub natural gas spot price in our forecast averages about $3 per million British thermal units (MMBtu) in 2023, down by more than 50% from last year. We had expected almost $5/MMBtu in the January STEO forecast.

• Electric power prices. Our forecast indicates that wholesale electricity prices fall in 2023. The decline in price reflects the forecast drop in natural gas prices from 2022 to 2023. Natural gas is the most-used fuel for power generation in the United States. In addition, increasing electricity generation from renewable sources contributes to lower power prices.

• Global Liquid fuels consumption. We expect global liquid fuels consumption to increase by 1.5 million barrels per day (b/d) in 2023 from 2022 and by an additional 1.8 million b/d in 2024. China is the main driver of growth in 2023 as the country shifts away from its zero-COVID policy, a shift that will increase travel. Growth in 2024 is more evenly distributed among countries as global GDP growth accelerates from 2.0% in 2023 to 3.2% in 2024.

• Global liquid fuels production. Our previous forecast of oil production in Russia included a steep decline in the coming months resulting from the EU’s ban on seaborne petroleum products from Russia that began February 5. Russia recently announced a crude oil production cut of 0.5 million b/d for March, and we expect declines to be more than that, with Russia’s production falling by 0.7 million b/d in March. Despite the declines in March, recent petroleum exports from Russia have outpaced expectations, and we have revised our oil production forecast for Russia upwards by 0.4 million b/d in 2023. Overall, we expect global oil and liquid fuels production will average 101.5 million b/d in 2023, up 1.6 million b/d from 2022.

• U.S. gasoline consumption. We raised our forecast for U.S. gasoline consumption in 2023 and 2024 by about 2% compared with last month’s outlook. Data revisions from the Federal Highway Administration resulted in a lower estimate of 2022 vehicle miles traveled (VMT). We now estimate VMT fell in 2022 compared with 2021. For the same period, we also reduced our estimate of vehicle fuel efficiency. The reduction in our vehicle efficiency estimate more than offset the lower VMT. These changes to historical data carried through to the forecast and resulted in us raising our forecast for gasoline consumption.

You can find more information in the detailed table of forecast changes.