MAE issues 2016 summer energy appraisal

May 19, 2016

Contact: Judy Palnau, 517-284-8300
Agency: Michigan Agency for Energy

Michigan consumers continue to benefit from abundant production and supply of natural gas, crude oil, and petroleum products, resulting in decreased prices, according to the Michigan Agency for Energy’s (MAE) 2016 summer energy appraisal issued today.

This summer, residents should enjoy dramatically lower prices at the pump – right now, gasoline prices are approximately 13 percent lower than last year -- as well as lower natural gas prices.  Additionally, distillate fuel oil, which is heavily used in the logistics sector, is nearly 20 percent less expensive than last year, which should reduce overall transportation costs for goods.  Natural gas prices are expected to be slightly lower year-over-year as well, with residents expected to save more than $25 per year overall than last year’s heating season (absent any weather-related demand increases). Successful energy waste reduction efforts are noticeable in electricity demand, where the baseline usage is expected to decrease by 0.9 percent despite a rise in economic activity and slightly increased usage by the industrial sector.

Electricity – Absent demand-related weather fluctuation, Michigan’s total electric sales for 2016 are projected to decrease by 0.9 percent to 100.8 thousand gigawatt-hours (GWh) compared to 2015. Both residential and commercial sectors are expected to reduce their consumption by 1.5 and 1.3 percent respectively. Industrial sector demand for electricity, which is less dependent on weather fluctuations and more highly correlated to economic activity, is expected to rise slightly with a 0.2 percent growth. The Michigan Public Service Commission (MPSC) previously determined that there should be an adequate supply of electricity over the summer and for the remainder of the year.

Natural Gas – Natural gas sales in Michigan are expected to increase by 1.2 percent due to increased demand in the electric generation sector. Residential and commercial usage is expected to decline, while the industrial sector may see a slight increase in consumption. Total sales for 2016 are projected to 852.9 billion cubic feet (Bcf), a 1.2 percent increase over 2015 consumption of 842.9 Bcf. In addition to weather influenced demand, consumption for electricity generation is likely to be heavily influenced by the price of natural gas as well as planned coal plant retirements in the state. Michigan is expected to add 0.6 gigawatts of natural gas fired capacity between the years 2016 and 2018.

Petroleum Products – Both gasoline and distillate fuel oil demand are expected to increase slightly over 2015 levels (1.3 percent and 1.1 percent, respectively).  This correlates with a continuing drop in prices for both products.  Retail gasoline prices for May 2016 are approximately 30 percent lower than this time last year, and distillate fuel oil prices are 19 percent lower.  These trends are largely driven by sharp decreases in global crude oil prices.  MAE monitors local prices for impacts based on specific infrastructure but petroleum pricing is not regulated by the state.

The appraisal, published since 1978, reviews the projected prices and availability of energy in Michigan over the summer months.

For more information about MAE, please visit www.michigan.gov/energy.