Energy Information Administration says residential electricity prices cooling
CASPER — The Energy Information Administration expects that U.S. residential electricity prices will increase by about 1% in 2024, the slowest rate of year-over-year growth since 2020.
The price slow down stems in part from the cost of natural gas, which makes up the largest share of U.S. electricity generation.
Aggressive production in 2023 followed by a mild winter in 2024 resulted in high inventories that have kept benchmark prices below $2.50/MMBtu, the EIA’s August Short Term Energy Outlook report shows.
The price relief may not last, though, as producers have trim supplies, and new Liquified Natural Gas export facilities are set to expand in Texas and increase demand for American methane. The agency forecasts Brent crude oil prices to increase sooner from about $80 today to around $87 by the end of the year as a result of production cuts from OPEC+; the lower global inventory is likely to push prices up.
“The good news from a consumer perspective is that even though we expect oil prices to increase, we expect gasoline prices through this year and next year to remain lower than they were in 2023,” said EIA Administrator Joe DeCarolis. “U.S. motorists are using less gasoline than they did before the pandemic, and we expect that to help keep gasoline prices from climbing with oil prices.”
Other highlights from the August outlook report include:
- Natural gas. The EIA expects about 2% less natural gas will be consumed to generate electricity in the United States in August than in July, as U.S. temperatures trend closer to normal and demand for air conditioning eases. U.S. natural gas consumption to generate electricity set a monthly record in July, even as Hurricane Beryl left millions of homes and businesses in Texas without electricity for several days at the beginning of the month.
- Jet fuel. The EIA expects that U.S. jet fuel consumption will exceed pre-pandemic levels in 2025. U.S. jet fuel consumption is primarily driven by commercial air travel demand, which can be influenced by economic activity, employment, and the cost of air travel. Sources of uncertainty in the forecast include aircraft supply chain issues that could worsen aircraft shortages and air traffic controller shortages.
This story was published on August 9, 2024.
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