The Annual Energy Outlook 2008 (AEO2008) presents projections and analysis of US energy supply, demand, and prices through 2030. The projections are based on results from the Energy Information Administration's National Energy Modeling System. The AEO2008 includes the reference case, additional cases examining energy markets, and complete documentation.

Energy Trends to 2030

In preparing projections for AEO2008, EIA evaluated a wide range of trends and issues that could have major implications for U.S. energy markets between today and 2030. This overview focuses on one case, the reference case, which is presented and compared with the AEO2007 reference case (see Table 1). Readers are encouraged to review the full range of alternative cases included in other sections of AEO2008.

As in previous editions of the Annual Energy Outlook (AEO), the reference case assumes that current policies affecting the energy sector remain unchanged throughout the projection period. The reference case provides a clear basis against which alternative cases and policies can be compared. Although current laws and regulations may change over the next 25 years, and new ones may be created, it is not possible to predict what they will be or how they will be implemented.

EIA published an “early release” version of the AEO2008 reference case in December 2007. Later that month, EISA2007 was enacted. The provisions in EISA2007 will have a major impact on energy markets, particularly liquid fuels. Given the year-long life of AEO2008 and its use as a baseline for analyses of proposed policy changes, EIA decided to update the reference case to reflect the provisions of EISA2007.

A short summary of the impact of including EISA- 2007 is provided in the box on pages 3 and 4. Trends in energy supply and demand are affected by many factors that are difficult to predict, including energy prices, U.S. and worldwide economic growth, advances in technologies, and future public policy decisions both in the United States and in other countries.

As noted in AEO2007, energy markets are changing in response to readily observable factors, which include, among others: higher energy prices; the growing influence of developing countries on worldwide energy requirements; recently enacted legislation and regulations in the United States; changing public perceptions on issues related to emissions of air pollutants and greenhouse gases (GHGs) and the use of alternative fuels and; and the economic viability of various energy technologies.

Projections in the AEO2008 reference case have been updated to better reflect trends that are expected to persist in the economy and in energy markets. For example, the projection for U.S. economic growth, a key determinant of U.S. energy demand, is lower in AEO2008 than it was in AEO2007, reflecting an updated assumption for productivity improvement.

Other key changes in the AEO2008 projections include:

• Higher price projections for crude oil and natural gas
• Higher projections for delivered energy prices, reflecting both higher wellhead and minemouth prices and higher costs to transport, distribute, and refine fuels per unit supplied
• Slower projected growth in energy demand (particularly for natural gas but also for liquid fuels and coal)
• Faster projected growth in the use of nonhydroelectric renewable energy, resulting from a revised representation of State renewable portfolio standard (RPS) provisions
• Higher projections for domestic oil production, particularly in the near term
• Slower projected growth in energy imports, both natural gas and oil
• Slower projected growth in energy-related emissions of carbon dioxide (CO2).

Coal, liquid fuels (excluding the biofuels portion of total liquids supply), and natural gas meet 80 percent of total U.S. primary energy supply requirements in 2030—down from an 85-percent share in 2006, reflecting the incorporation of EISA2007 provisions, slower economic growth, higher energy prices, lower total energy demand, and increased use of renewable energy when compared with AEO2007.

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Energy Information Administration
Office of Integrated Analysis and Forecasting
U.S. Department of Energy
Washington, DC 20585.
June 2008

Visit Annual Energy Outlook Official Web Site

PREFACE:

The Annual Energy Outlook 2008 (AEO2008), prepared by the Energy Information Administration (EIA), presents long-term projections of energy supply, demand, and prices through 2030. The projections are based on results from EIA’s National Energy Modeling System (NEMS). EIA published an “early release” version of the AEO2008 reference case in December 2007; however, the Energy Independence and Security Act of 2007 (EISA2007), which was enacted later that month, will have a major impact on energy markets, and given the year-long life of AEO2008 and its use as a baseline for analyses of proposed policy changes, EIA decided to update the reference case to reflect the provisions of EISA2007.

The report begins with an “Overview” summarizing the AEO2008 reference case and comparing it with the Annual Energy Outlook 2007 (AEO2007) reference case. The Overview also includes a section that provides a comparison between the AEO2008 released in December and the current version. The next section, “Legislation and Regulations,” discusses evolving legislation and regulatory issues, including a summary of recently enacted legislation, such as EISA2007, and provides an update on the handling of aspects of previously enacted legislation, such as the loan guarantee program set up by Title XVII of the Energy Policy Act of 2005 (EPACT2005). This section also provides a summary of State renewable fuel requirements and emissions regulations and a discussion of how selected Federal fuel taxes and tax credits are handled in AEO2008.

The “Issues in Focus” section includes discussion of a scenario under which electricity generation options other than natural gas are restricted and natural gas supply is limited; the competitive factors that influence imports of liquefied natural gas (LNG); and the implications of changing the basis for measuring heating and cooling degree-days. It also discusses the implications of uncertainty in energy project costs and the basis of the world oil price and production trends in AEO2008.

The “Market Trends” section summarizes the projections for energy markets. The analysis in AEO2008 focuses primarily on a reference case, low and high economic growth cases, and low and high energy price cases. Results from a number of other alternative cases are also presented, illustrating uncertainties associated with the reference case projections for energy demand, supply, and prices. Complete tables for the five primary cases are provided in Appendixes A through C. Major results from many of the alternative cases are provided in Appendix D.

AEO2008 projections are based on Federal, State, and local laws and regulations in effect on or before December 31, 2007. The potential impacts of pending or proposed legislation, regulations, and standards (and sections of existing legislation that require implementing regulations or funds that have not been appropriated) are not reflected in the projections.

In general, historical data used in the AEO2008 projections are based on EIA’s Annual Energy Review 2006, published in June 2007. Other historical data, taken from multiple sources, are presented for comparative purposes; documents referenced in the source notes should be consulted for official data values.

AEO2008 is published in accordance with Section 205c of the Department of Energy (DOE) Organization Act of 1977 (Public Law 95-91), which requires the EIA Administrator to prepare annual reports on trends and projections for energy use and supply.

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