Energy Appraisals

Summer 2018 Energy Appraisal
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Energy use in Michigan is expected to be on an upward trajectory when compared to last year for all energy commodities covered in this year’s Summer Energy Appraisal including gasoline, distillate fuel, electricity, and natural gas.

That generally reflects supply and demand shifts that have been underway for several years following the Great Recession. Since 2010, the state has seen real Gross Domestic Product (GDP) increase at a rate of about 2 percent annually, population and employment are growing again after several years of decline, and an emerging era of historically anomalous weather which included the polar vortex of 2014 and three of the warmest summers on record.

Among the key issues in the energy sector that are also driving long-term changes is the construction of the Rover Pipeline in southeast Michigan, helping to replace declining in-state natural gas production and feed the electric power sector’s growing appetite for the fuel.

The core projections in this year’s edition of the Michigan Energy Appraisal were compiled from analyses by Michigan Agency for Energy staff or the federal Energy Information Administration. The report’s authors assume the rest of 2018 will have temperatures more in line with historical averages. Given that 2017 was a relatively mild year for both the heating and cooling season months, consumption of some temperature-correlated energy resources – such as electricity and natural gas – are projected to increase in 2018 due to increased demand for heating and cooling. 

Some key report findings for Michigan energy sectors:

  • Demand for motor gasoline continues its six-year long march upward, increasing 2.7 percent to 4.76 billion gallons in 2018, although higher prices may tone down the growth. The Energy Information Administration expects Midwest gasoline prices to be 16 percent higher in 2018 than they were in 2017. 
  • An estimated 171.6 million barrels of petroleum products were consumed in 2016, an increase of 1.4 percent compared to 2015.  Nationally, net imports of crude oil are expected to decline as prices rise; refiners are projected to pay $64 per barrel of crude in 2018, an increase of about 28 percent relative to 2017.     
  • Forecasts using assumptions of near normal weather conditions sees total electricity demand in Michigan rise about 1.5 percent compared to a relatively mild 2017. The largest increase is expected in the residential sector (2.7%), with the commercial (0.6%) and industrial (1.5%) sectors expected to increase, as well.  Residential electric rates are mixed, as customers of five investor-owned utilities saw a price decrease, and four, a price increase between May 2017 and May 2018.
  • Consumption of natural gas is expected to see an 8 percent increase in 2018, fueled in large part by Michigan’s growing demand for natural gas in the power sector, which has increased by 9.7 percent annually between 2010 and 2017. Michigan’s aging gas wells are expected to produce 91.3 Bcf in 2018, down 4.8 percent from last year.
  • Demand for distillates, the vast majority of which is diesel fuel, is projected to rise 2.6 percent to 1,211 million gallons in 2018. If realized, this would mark the third consecutive year of distillate demand growth in Michigan, primarily due to a strengthening industrial sector.
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Related Links
Short Term Energy Outlook
International Energy Outlook


 

This report was produced by the Michigan Agency for Energy,
Lansing, MI on May 22, 2018.
 E-mail questions or comments to moresea@michigan.gov