Crude petroleum and natural gas - Industry Overview

US Industrial Outlook, Annual, 1992

The Clean Air Act of 1990 includes more stringent emission standards for most offshore drilling activities. This Act also creates special programs for California vehicles, urban buses, and private- and government-owned fleet vehicles that encourage, and in some cases mandate, the use of alternatives to gasoline and diesel fuel (see chapter 4). This will likely be favorable to producers of natural gas.

Outlook for 1992

The outlook for crude petroleum and natural gas is based on many assumptions, the most important of which relate to economic growth, OPEC production, and world oil prices.

Economic growth for the countries that are members of the Organization for Economic Cooperation and Development (OECD), which includes.the United States, is assumed to increase gradually from the low rate of 1991. The higher rate is expected to result in a 2-percent increase in aggregate petroleum consumption by the world's market economies in 1992. Part of the increase in demand will be met by increased supplies from OPEC and the North Sea, and by a drawdown of petroleum stocks. Crude petroleum supplies from the rest of the world will decrease by somewhat less than I million barrels per day, with the largest part of the decrease originating in the Soviet Union. World crude oil prices are expected to increase by 6 percent (or about $1.00 a barrel) from a year earlier.

Total U.S. energy consumption is projected to increase by 2.8 percent in 1992, to nearly 84 quadrillion British thermal units (Table 2). Natural gas consumption will increase by 3 percent, as use by the residential and other major sectors grows. Coal consumption will increase by about 30 million tons, reflecting a significant increase in demand by the electric utilities (Table 3). Petroleum consumption is also expected to increase, by 340 thousand barrels a day (2 percent).

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Table 3: U.S. Consumption of Energy by Selected
                   Source

          Petroleum
          Products   Natural                      Nuclear
          (million     Gas              Coal      Power
          barrels    (trillion       (million   (quadrilion
Year      per day)   cubic feet)   short ton)      Btu)

1987      16.67           17.21        836.9         4.906
1988      17.28           18.03        883.7         5.661
1989      17.33           18.80        890.6         5.677
1990      16.99           18.83        894.6         6.186
1991(1)   16.58           18.78        896.9         6.250
1992(2)   16.92           19.36        928.3         6.230
(1) Estimate
(2) Forecast
SOURCE: U.S. Department of Energy, Energy Information
Administration.

The increase in U.S. production of primary energy is expected to be about one-tenth of the 1992 rise in U.S. energy consumption; the remainder would be imported. The production increases will be in coal, natural gas, and hydroelectric power, and these will more than offset the expected substantial decline in crude oil production (Table 4).

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