Mich. Energy Appraisal: Gas Prices Will Remain High Through Summer
DETROIT (WWJ) - The Michigan Public Service Commission released the "Michigan Energy Appraisal: Summer 2011" on Tuesday. The Appraisal, published since 1978, reviews the projected prices and availability of energy in Michigan over the summer months.
According to the report, the demand for energy in Michigan is expected to be relatively stable for 2011 with modest upticks for electricity and natural gas usage. These sectors are primarily influenced by deviations in normal weather patterns.
Projected growth in the U.S. and Michigan economies will place upward pressure on energy consumption in motor gasoline and distillate fuels; however, recent volatility in crude oil and transportation fuels prices will likely exert downward pressure on both the economy and consumption of these fuels counterbalancing any likely increases.
Due to above average reserves, no supply issues are anticipated for the summer or winter seasons.
Gasoline prices are expected to remain higher throughout the summer, averaging around $4 per gallon.
Prices are expected to remain higher heading into the summer driving season due to the rise in world crude oil prices and building fears of supply disruptions stemming from floods in the U.S. refining sector.
According to the EIA's "Short Term Energy Outlook," national gasoline prices for the summer driving season will average about $3.89 per gallon for 2011, up $0.90 from last summer. As a result, the average U.S. household is expected to pay about $675 more for vehicle fueling costs than in 2010.
Assuming normal summer temperatures, Michigan's total electric sales are projected to increase by 2.3 percent in 2011, following a 6.1 percent increase in 2010. Contributing to this increase is a projected 4.3 percent growth in the industrial production index for the State.
Natural gas prices continue to remain stable in the face of an increasingly volatile crude oil and petroleum market. Total annual natural gas sales in Michigan for 2011 are projected to be 780.7 billion cubic feet, an increase of 2.4 percent over 2010.
Natural gas usage is predominately dictated by winter weather conditions. Predictions for 2011 include the 2010/11 winter season that was 3 percent colder than normal and an expectation of normal winter weather for the beginning of the 2011/12 season.
The Michigan Energy Appraisal is a semi-annual assessment of Michigan's energy markets. The assessment assists in identifying potential supply problems, including adequacy of supply, weaknesses in the distribution system, and changes in energy prices.
This report is focused on recent events impacting supply and prices, expected conditions and changes over the next six months.
To view the full report, click here.
