Changes in U.S. Energy Prices
When we look at the U.S. energy prices of late, everything revolves around the demand issue. A prime example of this is the higher demand in oil, which makes gas prices soar. Even though we would have expected a steep decline, the demand in other countries has kept the prices high.
In between the late seventies up to 2004, the oil consumption rose by 28.6%. This year's increase in China was 25.8%. The demand in South Korea skyrocketed over this time by 344%. It's hard to believe that before the turn of the 21st century, the cost for a barrel of oil was $12. Today it has risen to around $70.
The price of crude oil directly influences the cost of other fuels. Whether it be for production or generation, crude oil and other fossil fuels are vital to electricity, gasoline, and petroleum. Although oil prices dropped in the first half of 2009, due to a fall in consumption of 1.25 million barrels a day, the price will rise again in 2010 as industry recovers from the recession and demand begins to rise once more.
However, you will see a drop again around the latter part of 2009. When we reach the increase though, you can expect to see a rise of 40c per gallon on gasoline. Even though this will be a major cost increase throughout each month, the good news is there will be a slight decline in the electricity side of things.
Even though the economy is unstable, the U.S energy costs will be even more uncertain. If small businesses and other companies can no long afford their production, then the demand will become lower. This usually occurs when fuel prices reach a threshold that is considered to be too high. Even though this can seem like a downfall, the industry will be able to pick back up again. It's basically a balance between crude oil sales and the industry having to rely on one another. Once the crude oil prices pick up though, it's only a matter of time before the fuel prices do as well.
The first half of 2009 saw a substantial fall in electricity consumption, in the U.S. Electricity sales declined as businesses and residential properties cut back to save money. An uncertain economic climate was responsible for a 4.4% decrease in comparison with 2008. However, the second half of 2009 was more positive. The decline leveled out at a less significant 2.3% decrease in electricity consumption. U.S. energy prices should remain low in the fourth quarter of 2009 before steadily rising again next year as industry improves and the economy settles. Electricity prices are not exempt from this, with estimated declines of 2% in 2010.
The economy is mentioned constantly in relation to U.S. energy prices. As the international recession is far from over, it is expected to take at least a year for demand for fuel to rise back to the peaks of previous years. Since early 2008, prices have steadily declined in response to the sudden uncertainty in finance and industry that had led to worldwide economic recession.
Crude oil prices seem to try to preempt the economy at every step of the way. When figures were released to suggest that the U.S. economy was recovering, prices jumped up, boosting the retail price of gasoline and petroleum. However, these prices dropped again almost immediately as it was made clear that a select amount of data was not the go ahead for a stable economy. For instance, although unemployment benefit claims have declined, the levels of unemployment at still not at a healthy level. While the economy recovers, U.S. energy prices will remain volatile.
Oddly enough, the lowered demand for energy has still left the fuel stockpile prices higher then we expected. Keep in mind this is lowering the price since more is available. However, items such as natural gas have reached a new 5-year high. Thinking ahead; it will be a long while before demand supersedes the supply and prices rise. If the industry stays encouraged during this time, it will be well on its way to recovery.
Overall, U.S. energy prices have seen a decline in response to the lack of demand from industry and exports. While the worldwide economy stays uncertain, prices will only be able to rise so much before being cut back again. Electricity and gasoline prices have decreased in the fourth quarter of 2009 and will stay low in early 2010 before seeing gradual rise before the end of the year.
In between the late seventies up to 2004, the oil consumption rose by 28.6%. This year's increase in China was 25.8%. The demand in South Korea skyrocketed over this time by 344%. It's hard to believe that before the turn of the 21st century, the cost for a barrel of oil was $12. Today it has risen to around $70.
The price of crude oil directly influences the cost of other fuels. Whether it be for production or generation, crude oil and other fossil fuels are vital to electricity, gasoline, and petroleum. Although oil prices dropped in the first half of 2009, due to a fall in consumption of 1.25 million barrels a day, the price will rise again in 2010 as industry recovers from the recession and demand begins to rise once more.
However, you will see a drop again around the latter part of 2009. When we reach the increase though, you can expect to see a rise of 40c per gallon on gasoline. Even though this will be a major cost increase throughout each month, the good news is there will be a slight decline in the electricity side of things.
Even though the economy is unstable, the U.S energy costs will be even more uncertain. If small businesses and other companies can no long afford their production, then the demand will become lower. This usually occurs when fuel prices reach a threshold that is considered to be too high. Even though this can seem like a downfall, the industry will be able to pick back up again. It's basically a balance between crude oil sales and the industry having to rely on one another. Once the crude oil prices pick up though, it's only a matter of time before the fuel prices do as well.
The first half of 2009 saw a substantial fall in electricity consumption, in the U.S. Electricity sales declined as businesses and residential properties cut back to save money. An uncertain economic climate was responsible for a 4.4% decrease in comparison with 2008. However, the second half of 2009 was more positive. The decline leveled out at a less significant 2.3% decrease in electricity consumption. U.S. energy prices should remain low in the fourth quarter of 2009 before steadily rising again next year as industry improves and the economy settles. Electricity prices are not exempt from this, with estimated declines of 2% in 2010.
The economy is mentioned constantly in relation to U.S. energy prices. As the international recession is far from over, it is expected to take at least a year for demand for fuel to rise back to the peaks of previous years. Since early 2008, prices have steadily declined in response to the sudden uncertainty in finance and industry that had led to worldwide economic recession.
Crude oil prices seem to try to preempt the economy at every step of the way. When figures were released to suggest that the U.S. economy was recovering, prices jumped up, boosting the retail price of gasoline and petroleum. However, these prices dropped again almost immediately as it was made clear that a select amount of data was not the go ahead for a stable economy. For instance, although unemployment benefit claims have declined, the levels of unemployment at still not at a healthy level. While the economy recovers, U.S. energy prices will remain volatile.
Oddly enough, the lowered demand for energy has still left the fuel stockpile prices higher then we expected. Keep in mind this is lowering the price since more is available. However, items such as natural gas have reached a new 5-year high. Thinking ahead; it will be a long while before demand supersedes the supply and prices rise. If the industry stays encouraged during this time, it will be well on its way to recovery.
Overall, U.S. energy prices have seen a decline in response to the lack of demand from industry and exports. While the worldwide economy stays uncertain, prices will only be able to rise so much before being cut back again. Electricity and gasoline prices have decreased in the fourth quarter of 2009 and will stay low in early 2010 before seeing gradual rise before the end of the year.
About the Author:
Author: Jerry Dyess has specialized in Electricity for the past 7 years. Get more information on Business Electric rates.
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