EIA Expects Continued High Energy Prices through 2023

The U.S. Energy Information Administration (EIA) forecasts that a variety of U.S. energy prices will remain historically high through 2023, including oil, natural gas, coal, and electricity, according to EIA’s June 2022 Short-Term Energy Outlook (STEO).

“We continue to see historically high energy prices as a result of the economic recovery and the repercussions of Russia’s full-scale invasion of Ukraine,” said EIA Administrator Joe DeCarolis. “Although we expect the current upward pressure on energy prices to lessen, high energy prices will likely remain prevalent in the United States this year and next.”

EIA forecasts that high natural gas and coal prices will result in an increased share of renewables in U.S. generation, largely offset by a decline in coal’s share. Wind and solar generation will likely contribute more than 11% of U.S. electricity this summer, after providing less than 10% in the summer of 2021. The natural gas share is forecast to decline over the next two years although at a slower rate than coal.

Key takeaways from the STEO forecast include:

  • The Brent crude oil price will average $108 per barrel during the second half of 2022, as tight global inventories and significant geopolitical uncertainties continue to put upward pressure on crude oil prices despite an increase in production to pre-pandemic levels.
  • U.S. refinery utilization will average 94% in the third quarter of 2022, close to the highest levels of the past five years. A 5% decrease in refinery capacity between 2019 and 2022 will keep refining margins above the five-year average.
  • The Henry Hub natural gas price will average $8.69 per million British thermal units during the third quarter of 2022, up from May’s average of $8.13. This increase is due to strong demand for U.S. LNG exports and for natural gas in the electric power sector, which will keep U.S. natural gas inventories below their previous five-year average.
  • Electricity generation will increase by 2.1% in 2022, with the largest increases from renewable energy. With the forecast addition of 20 GW of solar capacity, solar power will account for nearly half of all the new U.S. generating capacity this year.