The People of America's Oil and Natural Gas Indusry

Forecasting and Our Energy Reality

Mark Green

Mark Green
Posted September 25, 2013

A few words of support for Adam Sieminski and his professional team at the U.S. Energy Information Administration (EIA). When it comes to collecting data about our energy past, analyzing trends and projecting future energy supply and demand, no one does it better than EIA. Which is why reported grousing over EIA’s forecasts for renewable energy raise an eyebrow, or two.

POLITICO picks up on the grousing in Sieminski’s response to an earlier letter from some groups, in which it’s clear some in the environmental community are concerned that EIA’s renewable projections are lower than recent growth trends. Again, from Sieminski’s response, some have suggested that EIA’s projections haven’t been grounded in science.

EIA has a reputation for calling them as it sees them, so the complaint is a little surprising. With the candor he showed in addressing the Renewable Fuel Standard at a House hearing in June, Sieminski provided a direct response:

The Annual Energy Outlook (AEO) projections are not intended to “reflect recent growth rates” for any particular technology or energy resource. Rather, they are intended to reflect our assessment of how the market will evolve under the specific economic and policy conditions established in our various projection cases.

EIA also is known for adjusting its projections when conditions change. Sieminski notes that when the Production Tax Credit for wind was extended cover to plants that begin construction this year, EIA updated its projection to reflect the policy effect – and forecast that energy generation from renewables would reach 17 percent in 2040. Sieminski:

Clearly, growth in renewable generation during the past 10 years has been supported by several key federal and state subsidies and incentive programs. … In EIA’s Reference case projections, the scheduled expiration of subsidies increases the net cost of renewable generation, reducing its competitiveness. In addition, many state-level renewable portfolio standards (RPS) are at or near capacity and will not incentivize new builds until RPS targets ramp-up. … Lower current and projected natural gas prices also affect the competitiveness of renewables, especially once federal tax incentives expire.      

Perhaps that last line helps explain the antipathy some have toward natural gas, even though it is benefiting individual U.S. households and lifting entire economic sectors. Viewing the growth of one energy source as a taking market share from another – or potentially threatening another’s subsidy – is an example of zero-sum energy thinking that loses sight of the goal: providing safe, reliable energy so Americans can prosper and our economy can grow.

Oil and natural gas do just that. They supply 62 percent of the energy we use now, and EIA says they will supply 60 percent of our energy in 2040 (more grousing, perhaps?). They make our lives better, and they’re integral to an all-of-the-above approach to energy. Greater domestic oil and natural gas production increases U.S. energy security – that is, the assurance that we will have the energy to meet our future needs.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.