Higher Oil Prices Forecast to Increase Domestic Fuel Demand

Cindy Zimmerman

Energy Information AdminIn the latest Long Term Energy Outlook report issued by the Energy Information Administration, higher oil prices are expected to increase demand for “unconventional sources of transportation fuel, such as ethanol and biodiesel.” The report revises projections for world oil prices upward based on the “volatility” of world oil markets. They are now calling for oil to be $54 a barrell in 2025, $21 more than the previous forecast, and be up to $57 a barrell by 2030. Production of “renewable energy” is projected to increase 1.8 percent by 2030 – but that category includes “grid-connected electricity from conventional hydroelectric; wood and wood waste; landfill gas; municipal solid waste; other biomass; wind; photovoltaic and solar thermal sources; non-electric energy from renewable sources, such as active and passive solar systems, and wood; and both the ethanol and gasoline components of E85, but not the ethanol components of blends less than 85 percent.” Consumption of “renewable products” is expected to increase the same amount during that time period, while consumption of “petroleum products”, which includes ethanol blended with gasoline at lower levels than 85 percent is expected to increase just over one percent. (Link to full report)

Biodiesel, Ethanol, Government