Energy Efficiency s Role in Getting America Out of Its Energy Straightjacket

Transcription

1 Energy Efficiency s Role in Getting America Out of Its Energy Straightjacket R. Neal Elliott, Ph.D., P.E. Industrial Program Director ACEEE

2 Jan-06 Industrial Energy Prices Energy Price ($/MBtu) Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Electricity Fuel Oil Natural Gas Coal Source: EIA 2005

3 Interaction Between Energy Markets Fuel switching mean oil and gas linked NatGas likely to become more of a global market Coal Supplies tighten NatGas increasingly the marginal fuel for electricity, putting pressure on electric prices Electricity prices will be driven up by fuel prices and increased demand

4 The Energy Straightjacket No current supply limitations rather deliverability limitations Demand surging in all energy markets Oil markets constrained by refining Coal markets constrained by mining and rail capacity Electricity constrained by available fuel Limited fuel switching options

5 Natural Gas Markets Lower 48 Gas Production vs. Deliverability (Bcf per day) Source: EEA 2005

6 Coal Markets Tightening Coal demand up on high gas prices Industrial consolidation reduced spare capacity need major new investments Rail capacity limited shortage of rail cars Later winter 2005 storms damaged western rail lines

7 Source: EIA 2005 Coal Production Flat

8 Coal Markets Tightening 300, , Supply (Days) 200, , , Coal (Thousand Short Tons) 50, Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Quarterly Consumption Quarter-End Stocks Days Supply Source: ACEEE from EIA Data 2006

9 Coal Stocks at Electric Power Plants Source: EIA 2006

10 Average Weekly Coal Spot Prices Source: Platts Coal Outlook 2005

11 Oil Markets Tight Crude Production Near Capacity Refined Products Very Tight Limited Refining means Competition between Refined Products Gasoline and Distillate Markets Vulnerable to Disruptions Storms, instability, terrorism Global Price Driven by Increasing Demand in U.S., China and India Thunder Horse

12 20,000 19,000 18,000 17,000 16,000 15,000 14,000 13,000 12,000 11,000 10,000 Source: EIA 2006 Refining Capacity vs. Production Katrina & Rita Gross Input Operable Capacity Jan-85 Jan-87 Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Thousand Barrels Per Day Jan-81 Jan-83

13 The Weather Wild Card Extreme weather affects production of oil, gas and coal Late winter snows disrupted western coal Hurricanes disrupted both production and processing Extreme weather increases demand 3 cool summer and 4 warm winters Summer 2005 ~4% above normal, but >75% warmer than 2004 We have had a warm fall, cold December, and warm January

14 Impacts on Oil & Gas Production 1,800,000 10,000 1,600,000 Katrina Rit 9,000 Shut in Oil Production (bpd) 1,400,000 1,200,000 1,000, , , ,000 Ivan Wilma 8,000 7,000 6,000 5,000 4,000 3,000 2,000 Shut in Gas Production (MMcf/d) 200,000 1, Days since evacuation Source: DOI Minerals Management Service

15 Source: EIA 2006 Natural Gas Storage

16 Role for Energy Efficiency Supply solutions take years to come to market If modest increases in demand produced large price increases, then small decreases should produce large price reductions Efficiency energy can produce savings in both the near-term and longer-term

17 Impact of Energy Efficiency on Henry Hub Natural Gas Pricing EEA May 2004 National EE only Midwest EE only Historic NatGas Price ($/MMcf) Source: EEA 2004 and ACEEE 2005

18 Gas Consumption Reductions from Energy Efficiency 1,000, ,000 0 NatGas Savings (MMcf) -500,000-1,000,000-1,500,000-2,000,000-2,500,000-3,000,000 POWER GENERATION GAS DEMAND INDUSTRIAL GAS DEMAND COMMERCIAL GAS DEMAND RESIDENTIAL GAS DEMAND Source: ACEEE 2005

19 Conclusions We can do something about high energy prices encourage energy efficiency Only viable near-term options supply options will take 2-7 years Electric efficiency critical because of expanded natural gas generation National decision makers need to lead NOW consumers are motivated but need direction Sooner we start the sooner states will see benefits

20 Contact Information R. Neal Elliott, Ph.D., P.E. Industrial Program Director ACEEE 1001 Conn. Ave, NW, Suite 801 Washington, DC For more information and updates on Natural Gas and Energy Efficiency visit: