Energy predictions see a big future

It’s hard not to get a big ego, what with all the predictions about U.S. energy that have come out over the past month or so.

Several suggest the United States will become the largest global oil producer by the end of the decade, overtaking Saudi Arabia and going on to export oil to the rest of the world by 2030.

Good news, right? But of course there’s a caveat, including the fact that our stint at No. 1 is expected to last only a few years.

And those hopes for natural gas-powered passenger cars and a solar panel on every house? Probably not anytime soon.

“The forecasts tell us a lot about what industry is thinking,” said Ken Medlock, senior director of the Center for Energy Studies at Rice University’s Baker Institute for Public Policy. “Of course, there’s always the unforeseen. You can’t predict what you can’t see.”

The International Energy Agency got forecast season rolling in November with its World Energy Outlook, a wide-ranging roundup of oil and gas, power generation, global energy markets and related issues.

Exxon Mobil released its annual forecast a few weeks later, looking at global energy issues through 2040. A number of energy research firms followed with their own predictions.

Among the highlights:

1 The United States becomes the largest global oil producer by 2020, while fuel-efficiency measures reduce demand here, resulting in dropping U.S. imports and, by 2030, exporting oil. (International Energy Agency)

1 Oil will remain the No. 1 global fuel through 2040; natural gas overtakes coal for the No. 2 spot. (Exxon Mobil)

1 Use of nuclear power and renewable energy grows, but renewable energy is still less than 10 percent of total supply by 2040. (Exxon Mobil)

1 Global spending for exploration and production of oil and gas reaches a record $644 billion in 2013. (Barclays)

1 Power companies spend $250 billion for new generating plants and transmission assets by 2020. (Deloitte Center for Energy Solutions)

1 Gasoline prices continue to swing wildly over the next year. (FuelQuest)

Medlock suggests that a new world of plentiful energy here at home underlies many of the forecasts.

“The center of gravity in the energy world has shifted to the western hemisphere,” he said. “For the last 30 or 40 years, we were talking about the Middle East and Russia.”

The change grew out of the U.S. shale fields, where horizontal-drilling technology and hydraulic fracturing has made it possible to unlock oil and natural gas from dense shale rock, dramatically boosting domestic output.

The result was a burst of natural-gas production and a resulting plunge in prices, from above $12 per million British thermal units in 2008 to around $3.50 now.

That has prompted expansions at petrochemical plants, which use components of natural gas as a feedstock, and efforts to gain political support for exporting gas to Asia and elsewhere.

There is also talk about using it as a transportation fuel – natural gas-powered cars are common in Pakistan and Iran, among other countries – and several of the forecasts predict natural gas will be used primarily for long-haul trucking and fleet vehicles over the next few decades.

Hybrid vehicles, however, are expected to grow in popularity. Exxon Mobil predicted hybrids will comprise 40 percent of all vehicles on the road by 2040, with natural gas accounting for just 4 percent of the global transportation fuel mix by then, up from 1 percent today.

There’s no market and won’t be for at least the next five or 10 years, said Edward Hirs, an energy economist at the University of Houston.

But he thinks there could be a market for electric cars, especially with two-car families that could use one car for short-hop commutes.

The gasoline pump will continue its hold on the rest of us.

FuelQuest, a Houston-based firm that helps companies manage fuel costs, predicts continuing price swings in 2013.

“A lot of factors in the global market are going against each other,” said Ryan Mossman, vice president and general manager of fuel services at FuelQuest. “Unrest in the Middle East is putting upward pressure on prices. The economy in the U.S. has a downward pressure.”

Some forecasts see oil prices dropping over the next year, dramatically in some cases.

But the U.S. Energy Information Administration forecast projects that West Texas Intermediate, the U.S. benchmark, will average $88 per barrel in 2013, close to current prices.

Medlock’s watchword for the coming year, meanwhile, is predictable.

“For you and me, going to the pump, heating our homes, the forecasts don’t mean a lot, other than … there will be stability,” he said.

Unless, of course, there isn’t.

“The one constant in life is change,” Medlock said. “There will be unforeseen events.”