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Short-Term Energy Outlook

Release Date: Aug. 9, 2022  |  Forecast Completed: Aug. 4, 2022  |  Next Release Date: Sep. 13, 2022  |  Full Report    |   Text Only   |   All Tables   |   All Figures

Forecast Highlights

Global liquid fuels

  • The August Short-Term Energy Outlook (STEO) is subject to heightened uncertainty resulting from Russia’s full-scale invasion of Ukraine, how sanctions affect Russia’s oil production, the production decisions of OPEC+, the rate at which U.S. oil and natural gas production rises, and other contributing factors. Less robust economic activity in our forecast could result in lower-than-forecast energy consumption.
  • We forecast the spot price of Brent crude oil will average $105 per barrel (b) in 2022 and $95/b in 2023.
  • U.S. crude oil production in our forecast averages 11.9 million barrels per day (b/d) in 2022 and 12.7 million b/d in 2023, which would set a record for most U.S. crude oil production in a year. The current record is 12.3 million b/d, set in 2019.
  • We estimate that 98.8 million b/d of petroleum and liquid fuels was consumed globally in July 2022, an increase of 0.9 million b/d from July 2021. We forecast that global consumption of petroleum and liquid fuels will average 99.4 million b/d for all of 2022, which is a 2.1 million b/d increase from 2021. We forecast that global consumption of petroleum and liquid fuels will increase by another 2.1 million b/d in 2023 to average 101.5 million b/d.
  • The U.S. retail price for regular grade gasoline averaged $4.56 per gallon (gal) in July, and the average retail diesel price was $5.49/gal. We expect retail gasoline prices to average $4.29/gal in the third quarter of 2022 (3Q22) and fall to an average of $3.78/gal in 4Q22. Retail diesel prices in our forecast average $5.02/gal in 3Q22 and $4.39/gal in 4Q22.
  • U.S. refineries average 93% utilization in 3Q22 in our forecast, as a result of high wholesale product margins. Elevated prices for gasoline and diesel reflect refining margins for those products that are at or near record highs amid low inventory levels.

Natural Gas

  • In July, the Henry Hub spot price averaged $7.28 per million British thermal units (MMBtu), down from $7.70/MMBtu in June and $8.14/MMBtu in May. Average natural gas prices fell over the last two months primarily because of additional supply in the domestic market following the shutdown of the Freeport LNG export terminal on June 8. However, prices increased by almost 50%, from $5.73/MMBtu on July 1 to $8.37/MMBtu on July 29, because of continued high demand for natural gas from the electric power sector. We expect the Henry Hub price to average $7.54/MMBtu in the second half of 2022 and then fall to an average of $5.10/MMBtu in 2023 amid rising natural gas production.
  • U.S. natural gas inventories ended July at 2.5 trillion cubic feet (Tcf), which was 12% below the 2017–2021 average. We forecast that natural gas inventories will end the 2022 injection season (end of October) at close to 3.5 Tcf, which would be 6% below the five-year average.
  • We forecast that U.S. LNG exports will average 10.0 Bcf/d in 3Q22 and 11.2 Bcf/d for all of 2022, a 14% increase from 2021. This increase is the result of additional U.S. LNG export capacity that has come online and Freeport LNG resuming operations sooner than we had initially expected. In the first half of 2022, the United States became the largest LNG exporter in the world. We forecast LNG exports will average 12.7 Bcf/d in 2023.
  • U.S. consumption of natural gas in our forecast averages 85.2 Bcf/d in 2022, up 3% from 2021. Consumption in the electric power sector continues to increase as a result of limited switching from natural gas-fired generators to coal-fired generators for power generation, despite elevated natural gas prices. In addition, rising U.S. natural gas consumption reflects increased consumption in the residential and commercial sectors as a result of colder temperatures on average in 2022 than in 2021. We forecast that natural gas consumption will average 83.8 Bcf/d in 2023, about 1.3 Bcf/d (2%) lower than in 2022.
  • We forecast U.S. dry natural gas production to average 97.1 Bcf/d in August and 96.6 Bcf/d during all of 2022, which would be 3.0 Bcf/d (3%) more than in 2021. We expect dry natural gas production to average 100.0 Bcf/d in 2023.

Electricity, coal, renewables, and emissions

  • We expect U.S. sales of electricity to ultimate customers to increase in the forecast by 2.5% in 2022, mostly because of rising economic activity but also because of hot summer weather in much of the country. Forecast U.S. sales of electricity decline by 0.3% in 2023.
  • The largest increases in U.S. electricity generation in our forecast come from renewable energy sources, mostly solar and wind. We expect renewable sources will provide 22% of U.S. generation in 2022 and 24% in 2023, up from 20% in 2021.
  • We forecast the U.S. residential electricity price will average 14.6 cents per kilowatthour (kWh) in 2022, up 6.1% from 2021. Higher retail electricity prices largely reflect an increase in wholesale power prices driven by rising natural gas prices. Annual average wholesale prices for 2022 range from an average of $62 per megawatthour (MWh) in Florida to $95/MWh in the ISO New England and New York ISO markets.
  • The U.S. electric power sector added 13 gigawatts (GW) of utility-scale solar photovoltaic (PV) capacity in 2021. Solar capacity additions in the forecast period total 20 GW for 2022 and 24 GW for 2023, and they represent an addition of 31 billion kWh of electric power generation in 2022 and 41 billion kWh in 2023.
  • U.S. coal production is forecast to increase by 21 million short tons (MMst) to 599 MMst in 2022 and to 601 MMst in 2023. We expect coal consumption to be slightly lower in 2022 at 541 MMst, relative to 546 MMst in 2021. This forecast decline is a result of constraints on coal generation and mine shutdowns as well as coal transportation limitations. As coal plant shutdowns continue and natural gas prices fall, coal consumption is expected to decline by 9% to 493 MMst in 2023. Coal exports increase from 85 MMst in 2021 to 87 MMst in 2022 and to 98 MMst in 2023.
Price Summary
  2020202120222023
aWest Texas Intermediate.
bAverage regular pump price.
cOn-highway retail.
dU.S. Residential average.
WTI Crude Oila
(dollars per barrel)
39.1768.2198.7189.13
Brent Crude Oil
(dollars per barrel)
41.6970.89104.7895.13
Gasolineb
(dollars per gallon)
2.183.024.073.59
Dieselc
(dollars per gallon)
2.563.294.814.14
Heating Oild
(dollars per gallon)
2.443.004.523.96
Natural Gasd
(dollars per thousand cubic feet)
10.7612.2714.5614.95
Electricityd
(cents per kilowatthour)
13.1613.7214.5614.93

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