Michigan Agency for Energy sees jump in summer gasoline prices, increased demand for electricity, natural gas

Rick Snyder, Governor
Anne Armstrong Cusack, Executive Director

 

May 23, 2018  — FOR IMMEDIATE RELEASE

Contact: Nick Assendelft  T: 517-284-8300
Customer Assistance: 800-292-9555

 

LANSING, Mich. – Michigan drivers this summer will pay more at the pump for a gallon of gasoline, but they’re still expected to use more of the motor fuel for the sixth year in a row, according to the Summer Energy Appraisal released today by the Michigan Agency for Energy (MAE).

Demand for other forms of energy are also forecast to increase this summer over last year, with electricity up 1.5 percent, natural gas expected to jump 8 percent, and diesel fuel likely to rise 2.6 percent, according to the annual MAE analysis of trends in the state’s fuel and power sectors.

Nationally, gasoline prices are expected to be 20 percent higher this year than they were in 2017, with motorists paying an average of $2.90 per gallon during the April through September summer driving season, according to the federal Energy Information Administration. That’s up from $2.41 last summer. Due to higher per gallon prices, the annual household cost for gasoline will increase an average of $377 compared to the same period in 2017, according to MAE.

Gasoline demand in Michigan is expected to hit 4.76 billion gallons, up 2.7 percent from 2017. National inventories are near the top of the five-year range for this time of year. However, unforeseen refinery outages, political unrest, adverse weather conditions, or other national or world disruptions to supply could influence the price and supply of gas.

Key facts from MAE’s Summer Energy Appraisal:

  • The largest increase in electricity use is expected in the residential sector (2.7%), followed by industrial (1.5%), and commercial (0.6%).
  • MAE predicts normal to slightly higher temperatures throughout 2018, but should summer temperatures spike higher, electricity use would increase, mainly to meet the demands for increased air conditioning of homes and buildings.
  • The increase in natural gas use is driven mainly by Michigan’s growing demand in the power sector. Natural gas use in the power sector has increased by 9.7 percent annually between 2010 and 2017.
  • Lower natural gas inventories nationwide – 35 percent below storage levels of one year ago and 25 percent below the five-year average for the month of May – could lead to higher summer prices.
  • An estimated 171.6 million barrels of petroleum products, used mostly as motor fuel, were consumed in Michigan in 2016, up 1.4 percent compared to 2015.
  • Demand for distillates, most of which is used as diesel fuel for trucks and trains, is projected to rise 2.6 percent this years to 1,211 million gallons. It would be the third consecutive year of distillate demand growth, mainly due to a strengthening industrial sector.
  • One of the issues driving long-term changes in the state’s energy sector is the construction of the Rover Pipeline in southeast Michigan. The pipeline will help to replace declining in-state natural gas production and feed the electric power sector’s growing appetite for the fuel.
  • Michigan’s aging natural gas wells are expected to produce 91.3 billion cubic feet in 2018, down 4.8 percent from last year and continuing a production decline trend.

Other state summer driving resources:

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