Expect Higher Priced Electricity, Gas

Source:

"Prices of electricity, gasoline and natural gas are expected to rise in the short term. . ."

Prices of residential electricity, motor gasoline and natural gas are expected to rise in the short term and over the next few years, according to the Energy Information Administration's latest Energy Outlook Report.

The report shows that residential electricity pricing will average 11.6 cents per kilowatt hour (kWh) in 2010, up from 11.5 cents per kWh in 2009, reaching 11.9 cents per kWh in 2011.

NREL analysts recently reported that the rate premium that customers pay for green power continues to drop. The average net price premium for utility green power products has decreased from 3.48 cents/kWh in 2000 to 1.75 cents/kWh in 2009.

EIA projects that spot pricing for natural gas will be $4.48 per million Btu (MMBtu) this year (up $0.04 per MMBtu from last month's forecast), which is a $0.53-per-MMBtu increase over the 2009 average. The Henry Hub spot price is expected to average $5.34 per MMBtu in 2011, due to a decline in natural gas drilling, according to the report.

Regular-grade gasoline price is expected to average $2.86 per gallon in 2010 and $2.98 per gallon in 2011. Summer pricing will settle at about $2.94 per gallon, up from $2.44 per gallon last summer.

EIA's long-term outlook shows that the strongest growth in fuel use will be renewable fuels to generate electricity and to produce liquid fuels for the transportation sector. The agency attributes the growth to several factors including the federal renewable fuels standard (RFS), various state renewable portfolio standard (RPS) programs and stimulus funding in combination with rising fossil fuel prices.

U.S. consumption of liquid fuels is expected to grow over the next 25 years but the nation's reliance on petroleum imports will decrease. Biofuels will account for all growth in liquid fuel consumption over the next 25 years, while consumption of petroleum-based liquids will be flat.

The following chart shows energy price trends from 2008 to 2011:

Energy price trends from 2008 to 2011

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