Peter F. Drucker famously said, "Trying to predict the future is like trying to drive down a country road at night with no lights – while looking out the back window."

With that in mind, this morning, the U.S. Energy Information Administration ("EIA") released its Short-Term Energy Outlook (nicknamed "STEO"). The full report predicting the future of energy, complete with charts and graphs, can be found here.

So what are the EIA's main take-away points when predicting the future of energy?

Oil:

  • While Brent crude oil spot prices averaged $46 per barrel in August, the forecasts show the prices to average only $43 per barrel for 2016. The EIA predicts Brent crude oil prices to get better in 2017 – forecasting an average of $52 per barrel in 2017.
  • The oil price rollercoaster is predicted to continue to be a bumpy ride – as the current STEO states that "[t]he current values of futures and options contracts suggest high uncertainty in the price outlook."
  • Global petroleum and other liquid fuels inventory builds are expected to slow in 2016, while global petroleum and other liquid fuel consumption is estimated to continue to increase – with China and India in the spotlight on consumption growth.

Natural Gas:

  • The mild winter last year "left inventories at record-high levels."
  • Current natural gas stock levels remain substantially higher than previous average levels.
  • The U.S. is expected to become a net exporter of natural gas beginning in the second quarter of 2017.

Coal:

  • In 2016, U.S. coal production is expected to decrease by 18%, "which would be the largest annual decline in terms of both tons and percentage based on data going back to 1949."
  • In 2017, total U.S. coal production is expected to see a bump primarily in the Appalachian and interior regions due to the "advantage of lower transportation costs and higher heat content per ton" – with a 4% increase expected

Renewables:

  • The EIA "expects total renewables used in the electric power sector to increase by 9.5% in 2016 and 5.8% in 2017."

We will let you decide whether these energy predictions are going to be accurate...or if Peter Drucker was right and it is like driving down a dirt road at night with no lights on (hopefully at least looking out of the windshield, not the back window!).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.