The Michigan Public Service Commission (MPSC) today released the "Michigan Energy Appraisal: Summer 2008."  The appraisal, published since 1978, reviews the projected prices and availability of energy in Michigan over the summer months.

Gasoline demand in Michigan is expected to continue its decline, and prices are expected to remain high in Michigan and across the nation this summer.  G asoline prices are likely to peak in June, and then trend down slightly and level off for the balance of the summer, and remain well above last year's levels. This assumes that no major international oil disruptions or major hurricanes affect oil and gas production.  Electric power supplies should be adequate to meet the peak summer air conditioning season.

Electricity - The 2008 summer combined peak demand in Detroit Edison and Consumers Energy service areas is projected to be 21,136 MW.  Excluding retail open access and interruptible loads, the peak demand is projected to be 19,985 MW.  The in-state generating capacity including existing capacity contracts totals 20,061 MW so the difference between projected summer peak demand and available capacity is only 76 MW.  Edison and Consumers have and will purchase additional power to assure a reserve of nearly 14 percent above the projected peak demand.

Natural Gas -  Natural gas prices in 2008 are expected to be higher than in 2007.  Natural gas demand for 2008 is projected to increase by 8.1 percent over 2007, assuming normal temperatures.  A potential exists for this year's hurricane season to be severe.  If there is serious hurricane damage to the oil and gas production facilities in the Gulf of Mexico, natural gas prices will go up. The price of natural gas for residential customers including the cost of gas, distribution and customer charges for 2008-2009 could be up as much as 19 percent over last year.

Petroleum - World oil demand is expected to increase in 2008 by 1.2 million barrels per day (m/b/d) to a total of 86.6 m/b/d.  This projection is from the EIA's May 2008 "Short-Term Energy Outlook."  Some of the major uncertainties that could cause a further run up in petroleum prices include: unrest in the Middle East and other key oil producing countries, an increase in global demand, little or no increase in global production, a reduction in operating capacity at refineries, and the continued flow of investment funds into energy commodities. On May 21^st c rude oil reached a new record high of $133 per barrel on the NYMEX for July deliveries.

Motor Gasoline - Record high gasoline prices continue in Michigan and across the nation, although they are predicted to trend down slightly after the Memorial Day, but remain high for the summer.  For 2008, gasoline consumption is projected to decrease 1 percent from last year's levels.  This follows a 4 percent decline last year, and continues the trend of declining gasoline usage seen in Michigan over the last three years.  For 2008, gasoline use will be down nearly 393 million gallons from 2004, the last year in which gasoline sales increased.  Further information see:  http://michigan.gov/gasprices . 

Distillate Fuel Oil - Distillate sales for Michigan in 2008 are projected to remain flat, increasing slightly by 0.1 percent to just over 1.1 billion gallons.  This continues a trend seen over the last few years and is likely to continue into 2009.  Diesel fuel remains the prime component of distillate demand, with the majority being used by trucks on highways.  Because of this, increases in the cost of crude oil, specifically refined diesel fuel, are having a depressing effect on total distillate usage in Michigan.

Michigan Energy Use and Expenditures - Michigan has a diversified energy supply with coal, natural gas, and petroleum products contributing similar amounts with a smaller amount coming from nuclear power.  Total energy use in Michigan in 2005 totaled 3.2 quadrillion Btu while total energy expenditures were $32.4 billion dollars (nominal).  Petroleum met 32 percent of the State's energy needs at a cost of 56 percent of total expenditures, electricity accounted for 38 percent of the total energy use and 24 percent of expenditures and natural gas was 25 percent of use and 22 percent of expenditures.  _______________________________________________________________________________________ 

The Michigan Energy Appraisal is prepared every six months.  The Energy Appraisal is available on the Commission's Website at:  http://www.dleg.state.mi.us/mpsc/reports/energy .  The MPSC is an agency within the Department of Labor & Economic Growth.