Oil will continue to dominate the US energy market in 2050

Although renewable energy will be the fastest growing energy source in the United States for the next three decades, oil and natural gas will remain the most consumed energy sources in the United States until 2050.

That’s the projection in the reference case at the US Energy Information Administration. Annual Energy Outlook 2022, which explores long-term energy trends in the United States. The reference case, reflecting only current laws and regulations, expects total energy consumption to grow through 2050, driven by population and economic growth.

Renewable energies will boom, especially in electricity generation, the EIA said in its long-term projection. However, oil will still account for the largest share of total energy consumption in the United States through 2050, followed by natural gas.

These estimates show that oil and gas are not going away anytime soon and that the United States and the world will continue to need them in the long term despite the rise of wind and solar power, the rise of electric vehicles (EVs), and battery storage. buildings.

Gasoline will remain the number 1 transportation fuel

Despite the rise of electric vehicles, motor gasoline will remain the most prevalent transportation fuel in the US for the next three decades, according to the EIA Outlook Reference Case.

The share of conventional car sales will decline due to the growing share of hybrid, plug-in and battery electric vehicles. Combined sales of light-duty internal combustion engine vehicles will decline from 92 percent today to 79 percent in 2050. This suggests that even with electric vehicle sales rising, the gasoline car will remain king in America within of three decades.

Last year, light-duty vehicles (LDVs) accounted for more than half, or 54 percent, of the energy consumed in the US transportation sector. By 2050, that share will fall, but will still remain higher. than half, at 51 percent, according to EIA estimates.

The Biden Administration is pushing for greater electrification in the transportation sector, with the goal of making 50 percent of all new vehicles sold in the United States by 2030 zero-emission vehicles. President Joe Biden promised last year to replace the federal vehicle fleet of nearly 650,000 with electric cars as part of its climate agenda.

Short-term headwinds for the rise of electric vehicles

Despite the Administration’s favorable policies toward greener transportation and clean energy, growth could slow in the near term due to soaring prices for key metals used in battery manufacturing. Lithium, nickel and cobalt prices surged earlier in the year amid higher demand as all the world’s automakers are revealing plans to boost electric vehicle production and sales. The Russian war in Ukraine caused another surge in commodity prices in recent weeks, and some manufacturers have started to rise the prices of their vehicles, as battery manufacturers are raising the prices of battery cells.

Due to rising raw material costs, Contemporary Amperex Technology Co. Ltd. (CATL), the world’s largest battery manufacturer, announced today in a statement to Reuters that it had raised the prices of some of its battery cells.

Rising costs for raw materials and logistics have already brought Tesla up their prices for China and the United States. This month, Tesla raised its prices for the second time in less than a week.

“Tesla and SpaceX are experiencing significant recent inflationary pressure in raw materials and logistics,” Elon Musk tweeted In the past week.

Automobiles and Industry Main Oil Consumers by 2050

The transport sector and industrial processes will be the main consumers of oil and other liquids in the United States, says the EIA. US industrial sector energy consumption will grow more than twice as fast as any other end-use sector between 2021 and 2050. In the industrial sector, the largest growth in oil demand is for hydrocarbon gas liquids (HGL) used as raw material. Oil will continue to be an important fuel for non-manufacturing industries such as agriculture, construction and mining, as well as for refining processes.

US oil production is seen at a record 13 million bpd in 2023

Driven by rising oil prices, U.S. crude oil production is expected to rise in 2023 to a record annual average of 13.0 million bpd, the EIA said in its report. Short term energy outlook (STEO) for March earlier this month. The current estimate is now raised from the 12.6 million bpd forecast for 2023 in the February outlook.

US production of natural gas and oil and other liquids will rise amid growing demand for exports and industrial uses, says the EIA’s annual outlook.

“Driven by rising prices, U.S. crude oil production in the Reference Case returns to pre-pandemic levels in 2023 and stabilizes in the long term,” the administration said.

In the short term, US oil production will increase amid skyrocketing oil prices, but not enough to plug the huge gap in global oil supply that Russia is expected to vacate as soon as next month.

While the Biden Administration has finally asked its own producers to increase production, which they cannot do in a month or two, the US oil and gas industry has reiterated that the United States must treat its oil and gas as an asset rather than a liability and invest in long-term energy security.

By Tsvetana Paraskova for Oilprice.com

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