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Energy—What the Future Holds for State Policymakers. National Governors Association NGA Center for Best Practices Estes Park 10 October 2005. Today’s Presentation. The Facts What It Means What We Can Do Now What We Can Start Doing (Finally) Wrap-Up. Are we on the verge of a crisis?.

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Energy what the future holds for state policymakers
Energy—What the Future Holds for State Policymakers

National Governors Association

NGA Center for Best Practices

Estes Park

10 October 2005


Today s presentation
Today’s Presentation

  • The Facts

  • What It Means

  • What We Can Do Now

  • What We Can Start Doing (Finally)

  • Wrap-Up


Are we on the verge of a crisis
Are we on the verge of a crisis?

  • Probably not



The bottom line
The Bottom Line

  • Energy prices have risen dramatically

  • Price may be reaching all-time highs

  • The era of high prices is here to stay

  • Some people are not going to be able to pay their

  • heating bills this winter.


Energy what the future holds for state policymakers

Katrina exacerbates prices but will abate.


The facts
The Facts begin to change


Energy what the future holds for state policymakers

U.S. Energy Consumption by Fuel, 1970-2025 begin to change

(quadrillion Btu)

Petroleum

History

Projections

Take-away:

We are consuming more

fuel-based sources

Natural Gas

Coal

Nuclear

Nonhydropower Renewables

Hydropower

Annual Energy Outlook 2005


Energy what the future holds for state policymakers

U.S. Crude Oil Production by Source, 1970-2025 begin to change

(million barrels per day)

History

Projections

Lower-48 Onshore

Lower-48 Offshore

Alaska

Annual Energy Outlook 2005


Energy what the future holds for state policymakers

U.S. Petroleum Production, Consumption, and Net Imports, begin to change

1960-2025 (million barrels per day)

History

Projections

58%

Consumption

Net Imports

56%

Production

Annual Energy Outlook 2005


Real gasoline prices
Real Gasoline Prices begin to change

Over $3 today


Heating oil prices
Heating Oil Prices begin to change

$3 today


Energy what the future holds for state policymakers

U.S. Natural Gas Production, Consumption, and Net Imports, begin to change

1960-2025 (trillion cubic feet)

History

Projections

20%

Net Imports

Consumption

15%

Production

Natural Gas Net Imports, 2003 and 2025

(trillion cubic feet)

Annual Energy Outlook 2005


Energy what the future holds for state policymakers

Natural Gas Spot Price, 2004-2006 begin to change

(dollars per thousand cubic feet)

History

Projections

Average

is $9

Price was

$2.50 in 2003

Short-Term Energy Outlook, September 2005


What it means
What It Means begin to change


Why we haven t felt more impact yet
Why We Haven’t Felt More Impact—Yet? begin to change

  • Increases have been gradual

  • Lower energy intensity

  • Low inflationary pressure

  • Growing economy

  • No serious supply problems

  • No panic or anxiety


Crossroads
Crossroads begin to change

  • Prices are reaching all time highs


Issue 1
Issue #1 begin to change

  • Energy has been under-priced in US

    • All the other OECD countries manage demand through high taxes

  • Its not that prices are too high; they have been too low


Issue 2
Issue #2 begin to change

  • US is the most wasteful country

    • US uses 3 times as much electricity per capita as Japan

  • Huge potential to use energy more efficiently without drastic lifestyle changes

  • There is money to be made selling efficiency


Per capita use
Per capita use* begin to change

US: 7.8

Germany: 4.2

China: 1.1

Brazil: 1.1

India: 0.5

  • n metric tonnes of oil equivalent


Issue 3
Issue #3 begin to change

  • Energy pricing is being globalized

    • Oil prices are driven by Chinbra*, they used to be driven by US

    • Natural gas was priced domestically, now it is priced globally

    • Coal pricing in US is becoming globalized

  • Prices are out of our control

    • *China, India, Brazil=Chinbra


Issue 4
Issue #4 begin to change

  • Failure of environmental alternatives

    • Despite RPS in 19 states, renewables will remain a single digit contributor

    • Cars are off limits to politicians

    • Demand-side incentives never take off


Energy what the future holds for state policymakers

U.S. Electricity Generation by Fuel, 1970-2025 begin to change

(billion kilowatthours)

History

Projections

Coal

Natural Gas

Nuclear

Renewables

Petroleum

Annual Energy Outlook 2005


Energy what the future holds for state policymakers

U.S. Carbon Dioxide Emissions, 1980-2025 begin to change

(million metric tons)

History

Projections

8,029 in 2025

5,789 in 2003

6,528 in 2010

Carbon Dioxide Emission Intensity, 1980-2025

(metric tons per million 2000 dollars of GDP)

558 in 2003

501 in 2010

396 in 2025

Annual Energy Outlook 2005


The blame game
The Blame Game begin to change

  • Very little blame game so far

  • New energy legislation has mini-fine for gouging

  • Oil companies keeping out of trouble—so far


What states must do
What states must do begin to change

  • Be ready to deal with people unable to pay their heating oil and natural gas bills

  • Urge people to conserve


What states can do
What States Can Do begin to change

  • Raise energy taxes

    • Gasoline

    • Natural gas

    • SUV registration

  • Strengthen RPS laws

  • Educate


States need to fix environmental problems
States need to fix begin to changeenvironmental problems

  • Still too many gasoline formulations

  • Clean air battles have gone on too long-time to build cleaner and more efficient fleets

  • Be sure state electricity regulators get it right


Wrap up
Wrap-up begin to change

  • Chances are we have averted a crisis

    • But there are crisis scenarios that could happen

  • We have avoided paradigm change for decades now

  • Are we are on the verge of change?


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