This is an excerpt from EERE Network News, a weekly electronic newsletter.

December 17, 2003

Natural Gas Outlook for 2025: Higher Costs, Reduced Demand

Tight natural gas supplies will lead to a price increase of nearly 50 percent by 2025, according to a report released on December 16th by DOE's Energy Information Administration (EIA). In fact, the EIA's "Annual Energy Outlook 2004" predicts a price increase of more than 40 percent as early as 2015. The projected price increases are larger than the EIA had predicted last year, and have led the EIA to reduce its projected future demand for the fuel. With high natural gas prices, EIA expects both renewable energy and coal to play a greater than anticipated role in the nation's future production of electricity.

The EIA projects the total electricity produced from renewable energy sources and combined heat and power plants to increase 53 percent by 2025, to 518 billion kilowatt-hours per year. Meanwhile, the amount of electricity generated from coal will increase 57 percent, to more than 3 trillion kilowatt-hours per year. The total use of renewable energy (including its use for fuels and heating) will increase more than 55 percent by 2025, with growth in industrial uses of biomass, ethanol fuels, and most forms of renewable electricity generation.

Of course, the EIA still projects demand for natural gas to increase nearly 38 percent by 2025, outstripping our nation's ability to meet the demand domestically. While still expecting an Alaskan natural gas pipeline to help meet that demand beginning in 2018, the EIA predicts a 24-fold increase in U.S. imports of liquefied natural gas (LNG) to help meet the demand growth in the meantime. See the EIA press release or go directly to the overview of the Annual Energy Outlook 2004.

While the EIA is taking a dim view of future natural gas prices, its short-term view is more positive. EIA currently expects this year's heating bills for homes using natural gas to increase only 6 percent, while those using electric heat should see their bills increase only about 2 percent compared to last year. Fuel oil users should pay about 4 percent less this year than last, and propane users should see their bills stay about the same. See December's "Short Term Energy Outlook."